THE COMMISSIONER OF INCOME TAX V. M/S ABCON ENGINEERING & SYSTEMS PVT LTD

ITA/410/2007

AI Insights

The case involves three Income Tax Appeals (ITA.NO.410/2007, ITA.NO.408/2007, ITA.NO.409/2007) filed by the Commissioner of Income Tax and the Assistant Commissioner of Income Tax against M/s Abcon Engineering & Systems Pvt Ltd. The appeals were related to the assessment years 1994-95 and 1995-96, challenging the orders passed by the Income Tax Appellate Tribunal (ITAT), Bangalore, which had confirmed the orders of the Appellate Commissioner. The primary legal contention revolved around the substantial questions of law concerning the tax assessments for the specified years. However, the appeals were dismissed based on the monetary threshold set by the Central Board of Direct Taxes (CBDT) instructions, which stipulate that appeals with a tax effect below Rs. 4,00,000 are not maintainable unless they involve significant legal principles or have a broader impact on similar cases.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 740374 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 22-01-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: TANMAYEE RAJKUMAR
• Assessee Lawyers: K V ARAVIND
• Keywords: Maintainability of Appeals; Substantial questions of law; Tax effect; Tax effect; Cascading effect
• Section: 268A; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 22nd DAY OF JANUARY 2014 PRESENT THE HON’BLE MR. JUSTICE DILIP B BHOSALE AND THE HON’BLE MR. JUSTICE B MANOHAR ITA.NO.410/2007 C/W ITA.NO.408/2007 & ITA.NO.409/2007 BETWEEN 1. THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, C.R.BUILDING QUEENS ROAD BANGALORE 2. THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE - 4(1), C.R. BUILDING QUEENS ROAD BANGALORE ... APPELLANTS (BY SRI K V ARAVIND, ADV.,) AND M/S ABCON ENGINEERING & SYSTEMS PVT LTD 505, BRIGADE TOWERS, 135 BRIGADE ROAD BANGALORE ... RESPONDENT (BY MS TANMAYEE RAJKUMAR, ADV., FOR M/S KING & PARTRIDGE) THIS ITA.NO.410/2007 FILED U/S 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 28-11-2006 PASSED IN I.T.A.NO.603/BANG/1997, FOR THE ASSESSMENT YEAR 1994- 2 95, PRAYING THIS HON’BLE COURT TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT, BANGALORE IN ITA NO. 603/BANG/1997 DATED 28/11/2006 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-4(1), BANGALORE. THIS ITA.NO.408/2007 & ITA.NO.409/2007 FILED U/S 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 28- 11-2006 PASSED IN I.T.A.NO.991/BNG/1998, FOR THE ASSESSMENT YEAR 1995-96, PRAYING THIS HON’BLE COURT TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE IN ITA NO. 991/BNG/1998 DATED 28/11/2006 CONFIRM THE ORDERS OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-4(1), BANGALORE IN THE INTEREST OF JUSTICE AND EQUITY. THESE ITA’s COMING ON FOR FINAL HEARING, THIS DAY, Dilip B. Bhosale J. DELIVERED THE FOLLOWING: 3 PC: Learned counsel for the respondent, at the outset, invited our attention to Instruction No.2/2005 dated 24.10.2005 issued by the Central Board of Direct Tax, to submit that since the tax effect, in these cases, do not exceed Rs.4,00,000/-, the appeals are not maintainable. In support, she also invited our attention to Section 268A of the Income Tax Act, 1961 (for short ‘I.T.Act’). 2. Having confronted with this, Mr.K.V.Aravind, learned counsel appearing for the revenue invited our attention to the order dated 29.08.2011 passed by the Supreme Court, in some other matter, which reads thus: “Liberty is given to the Department to move the High Court pointing out that the Circular dated 9th February, 2011, should not be applied ipso facto, particularly, when the matter has a cascading effect. There are cases under the Income-Tax Act, 1961, in which a common principle may be involved in subsequent group of matters or large number of matters. In our view, in such cases if attention of the High Court is drawn, the High Court will not apply the Circular ipso facto. For that purpose, liberty is granted to the Department to move the High Court in two 4 weeks. The special leave petition is, accordingly, disposed of” 3. In view of the order of the Supreme Court, on 20.01.2014, we passed the following order: “Mr.Aravind, learned counsel appearing for the revenue seeks time till 22-01-2014 to file an affidavit of the concerned officer stating that though in these three appeals of the same assessee, for three assessment years, are having tax effect less than Rs.4,00,000/-, still it will have cascading effect and/or that the substantial questions of law raised are having effect on subsequent group of matters or large number of matters of the same or similarly placed assesses. Mr.Kumar, learned Senior counsel submits that so far as the present assessee is concerned, the issue/question of law that is raised in these appeals has not recurred after 1997-98 till this date. S.O. to 22-01-2014.” 4. Today, learned counsel appearing for the revenue fairly states that it is not possible for the Department to file affidavit as per the order dated 20.01.2014. In other words, he submits that they do not have any material on record to show that the matter has cascading effect or if the question raised herein is not 5 decided or decided in favour of the Revenue, that will have effect on any subsequent group of matters or large number of matters. 5. From perusal of the orders passed in these three appeals, in respect of the very same assessee, pertaining to three assessment years, it is clear that the tax effect therein is less than Rs.4,00,000/-. It further appears to us, that the question raised in these appeals has not recurred after 1997-98 till this date in respect of the assessee. In the circumstances, we dismiss all these appeals as not maintainable in the light of the Instruction No.2/2005 dated 24.10.2005 issued under Section 268A of the I.T. Act. Sd/- JUDGE Sd/- JUDGE TL "