The ITO, Ward-1(1),, Bhavnagar v. Smt. Ashaben Nileshkumar Gupta, Bhavnagar

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER ITA NO.1372/AHD/2008 ASSESSMENT YEARS: 2002-2003 I.T.O. WARD-1(1) INCOME TAX OFFICER BHAVNAGAR. V/S SMT. ASHABEN NILESHKUMAR GUPTA 12/A RADHAKRASHNA ANJANESHWAR PARK TILAKNAGAR BHAVNAGAR. PAN NO. (APPELLANT) (RESPONDENT) FOR DEPT. : SHRI RAJA RAM SAH SR. DR FOR ASSESSEE : SHRI DHIREN SHAH C.A. O R D E R PER SHRI N.S.SAINI A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(APPEALS)-XX AHMEDABAD DATED 28.12.2007 FOR ASS ESSMENT YEAR 2002- 2003 BY TAKING THE FOLLOWING GROUNDS OF APPEAL. 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1 00 000/- MADE BY THE ASSESSING OFF ICER ON SUBSTANTIVE BASIS ON ACCOUNT OF SALE TRANSACTION O F SHOP ON 2.8.2001 AS UNEXPLAINED INVESTMENT U/S 69 OF THE I. T.ACT. 2. THE LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE C ASE IN DELETING THE ADDITION OF RS.12 000/- BY THE ASSESSING OFFICER O N SUBSTANTIVE BASIS ON ACCOUNT OF KVP AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T.ACT. 3. THE LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE C ASE IN DELETING THE ADDITION OF RS.1 43 679/- BY THE ASSESSING OFFICER ON PROTECTIVE BASIS ON ACCOUNT OF F.D. WITH BANK AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T.ACT. 4. THE LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE C ASE IN DELETING THE ADDITION OF RS.57 705/- MADE BY THE ASSESSING OFFIC ER ON SUBSTANTIVE BASIS ON ACCOUNT OF SB A/C. IN VARIOUS BANKS AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T.ACT. 5. THE LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE C ASE IN DELETING THE ADDITION OF RS.70 000/- MADE BY THE ASSESSING OFFIC ER ON 2 SUBSTANTIVE BASIS ON ACCOUNT OF GOLD ORNAMENTS AND JEWELLERY AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T.ACT. 6. THE LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE C ASE IN DELETING THE ADDITION OF RS.15 000/- MADE BY THE ASSESSING OFFIC ER ON SUBSTANTIVE BASIS ON ACCOUNT OF XEROX MACHINE AS U NEXPLAINED INVESTMENT U/S 69 OF THE I.T.ACT. 7. THE LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE C ASE IN DELETING THE ADDITION OF RS.85 700/- MADE BY THE ASSESSING OFFIC ER ON SUBSTANTIVE BASIS ON ACCOUNT OF FURNITURE AND TV E TC. AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T.ACT. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 2. BOTH THE PARTIES AGREED BEFORE US THAT THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) HAS DELETED THE VARIOUS ADDITIO NS MADE BY THE AO TOTALLING TO RS.4 84 084/- AND THEREFORE THE TAX EFFECT IN T HIS APPEAL IS BELOW RS.2 00 000/-. IN VIEW OF THE CBDT INSTRUCTION NO.2/2005 DATED 24- 10-2005 THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. 3. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT V. CONCORD PHARMACEUTICALS REPORTED IN (2009) 317 ITR 395 (GUJ ) HAS FINALLY SETTLED THE ISSUE REGARDING TAX EFFECT CASES. HONBLE HIGH COURT IN THIS CASE HAS HELD AS UNDER:- 20. THERE IS ALSO DIFFERENCE OF OPINION AMONGST TH E COURTS WITH REGARD TO THE APPLICABILITY OF THE CIRCULAR. IF ON THE DA TE OF FILING OF AN APPEAL A CIRCULAR IS NOT IN FORCE OR CERTAIN EXCEPTIONS ARE NOT THERE OR MONETARY LIMIT IS LESS THAN WHAT WAS THERE AT THE TIME OF DE CIDING THIS APPEAL IN SUCH CASES THE TRIBUNAL WILL HAVE TO GIVE DUE WEIG HTAGE TO THE PROVISIONS CONTAINED IN THE CIRCULAR PREVALENT ON THE DATE OF FILING OF APPEAL AND NOT ON THE DATE OF THE DECISION OF THE APPEAL. IN CIT V. CHHAGER PACKAGING & PLASTICS (P) LTD. (2008) 214 CTR 389 (BOM) THE BOM BAY HIGH COURT TOOK THE VIEW THAT CIRCULARS / INSTRUCTIONS ISSUED BY THE BOARD ARE APPLICABLE ONLY PROSPECTIVELY AND IF THERE IS NO RE FERENCE TO THEIR APPLICABILITY TO THE PENDING MATTERS SUCH PENDING MATERS CANNOT BE DECIDED ON THE BASIS OF CIRCULARS / INSTRUCTIONS. IN CIT V. PITHWA ENGINEERING WORKS 276 ITR 519 (BOM) THE BOMBAY HIG H COURT TOOK THE VIEW THAT TAKING JUDICIAL NOTICE OF THE MONEY VALUE HAVING GONE DOWN AND COST OF LITIGATION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES THE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CIRCULAR EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDIVIDED. THE D EPARTMENT SHOULD NOT HAVE PROCEEDED WITH THE APPEALS / REFERENCES WHEREI N THE TAX IMPACT IS MINIMAL IRRESPECTIVE OF THEIR DATE OF FILING. 3 21. THERE IS NO DISPUTE ABOUT THE FACT THAT WHERE S UBSTANTIAL QUESTION OF LAW OF IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS REPEATEDLY ARI SING OR WHERE THE ISSUE IS COVERED BY THE JUDGMENT OF TERRITORIAL HIGH COUR T OR SUPREME COURT THE TRIBUNAL WILL HAVE TO DECIDE THE APPEAL ON MERITS A ND IN TERMS OF THE LAW DECLARED BY THE SUPREME COURT OR BY THE TERRITORIAL HIGH COURT. HOWEVER ON THIS GROUND THE MATTERS CANNOT BE REMANDED TO TH E TRIBUNAL DIRECTING THE TRIBUNAL TO DECIDE THE SAME AFRESH. IF NO OBJE CTIONS ARE RAISED BY THE DEPARTMENTAL REPRESENTATIVE AT THE TIME OF HEARING OF THE APPEAL AGAINST THE APPLICABILITY OF THE CIRCULAR DESPITE THERE BEI NG AN EXCEPTION THE DEPARTMENT HAS MISSED THE BUS AND SECOND INNING CAN NOT BE GRANTED FOR THAT PURPOSE. HOWEVER IN MATTERS WHERE SUCH OBJEC TIONS ARE RAISED AND DESPITE THOSE OBJECTIONS OR WITHOUT DEALING WITH TH OSE OBJECTIONS IF THE TRIBUNAL HAS DISMISSED THE APPEAL ONLY ON THE GROUN D OF LOW TAX EFFECT IN SUCH MATTER AN INDULGENCE IS REQUIRED TO BE SHOWN BY THIS COURT AND FOR THIS LIMITED PURPOSES THE DEPARTMENT IS PERMITTED TO MOVE AN APPROPRIATE APPLICATION BEFORE THE TRIBUNAL FOR DECIDING THE AP PEAL ON MERITS. 22. WE ARE OF THE VIEW THAT SIMPLY BECAUSE THE APPE AL IS FILED BY THE DEPARTMENT IN CONTRAVENTION OF THE CIRCULAR THE TRI BUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERITS. DUE WEIGHTAGE SHOULD INVARIABLY BE GIVEN BY THE TRIBUNAL TO THE CIRCULAR ISSUED BY THE BOARD. EVEN OTHERWISE THE NEWLY INSERTED PROVISIONS CONTAINED IN SECTION 268A (4) MAKE IT OBLIGATORY FOR THE TRIBUNAL TO CONSIDER SUCH CIRCUL AR. IT IS NOT OPEN FOR THE DEPARTMENT TO CONTEND THAT CIRCULARS ARE INTERNAL M ATTERS OF THE DEPARTMENT AND ASSESSEE CANNOT OBJECT TO FILING OF AN APPEAL ON THE BASIS OF SUCH CIRCULAR. IT IS TRUE THAT FILING OF AN APP EAL IS A STATUTORY RIGHT BUT IT CAN CERTAINLY BE REGULATED BY THE BOARD BY ISSUANCE OF ORDERS INSTRUCTIONS OR CIRCULARS. THIS WOULD NOT AMOUNT TO TAKING AWAY THE RIGHT OF FILING OF APPEAL OR THAT SUCH RIGHT IS PROHIBITED BY EXECUTIV E INSTRUCTIONS. SECTION 268A(1) OF THE ACT NOW RECOGNIZES SUCH RIGHT OF THE BOARD TO REGULATE THE FILING OF APPEAL OR APPLICATION BEFORE THE TRIBUNAL OR THE COURT. IT IS ALSO TRUE THAT WHEN THE HONBLE SUPREME COURT OR THE TER RITORIAL HIGH COURT HAVE DECLARED THE LAW ON A QUESTION IT IS NOT OPEN TO THE TRIBUNAL TO DIRECT THAT THE CIRCULAR ISSUED BY THE BOARD PRESCRIBING T HE MONETARY LIMIT SHOULD BE GIVEN EFFECT TO AND NOT THE DECISION OF H ONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT. IT IS HOWEVER EQUA LLY TRUE THAT THE TRIBUNALS ATTENTION MUST BE DRAWN BY THE DEPARTMEN TAL REPRESENTATIVE TO SUCH DECISION OF THE HONBLE SUPREME COURT OR THE H IGH COURT. AN OBJECTION MUST BE RAISED BY THE DEPARTMENTAL REPRES ENTATIVE. 23. CONSIDERING ALL THE AFORESAID ISSUES WE DISMIS S ALL THESE TAX APPEALS RESERVING LIBERTY TO THE DEPARTMENT ONLY ON THOSE CASES TO APPLY TO THE TRIBUNAL TO DECIDE THE APPEAL ON MERITS WHER E THE OBJECTIONS WERE RAISED BEFORE THE TRIBUNAL EITHER IN THE APPEAL MEM O OR AT THE TIME OF HEARING OF APPEAL RAISING A SPECIFIC CONTENTION THA T A PARTICULAR APPEAL IS COVERED BY AN EXCEPTION AND DESPITE THIS OBJECTION THE TRIBUNAL HAS NOT 4 DEALT WITH THE SAID CONTENTION AND DISMISSED THE AP PEAL ON THE GROUND OF LOW TAX EFFECT. IT IS EXPECTED FROM THE TRIBUNAL TO CONSIDER THIS BROAD PARAMETERS WHILE APPLYING THE RELEVANT CIRCULAR TO THE FATS OF THE CASE AT THE TIME OF DECIDING APPEALS. 4. AT THE TIME OF HEARING BEFORE US THE LD. DEPAR TMENTAL REPRESENTATIVE WAS SPECIFICALLY ASKED BY THE BENCH WHETHER THIS APPEAL FALLS UNDER ANY OF THE EXCEPTIONS AS PROVIDED IN BOARDS INSTRUCTION NO.2/2005 DATED 24-10-2005 THE SUBJECT-MATTER OF THE APPEALS ARE C OVERED BY ANY OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT OR OF SUPREME COURT A NY SUBSTANTIAL QUESTION OF LAW IS INVOLVED OR NOT. THE LD. DR STATED THAT IN THIS APPEAL THE ISSUES ARE FACTUAL AND DOES NOT FALL IN ANY OF THE EXCEPTIONS AS PROVI DED BY BOARDS INSTRUCTION OR ANY OF THE CRITERIA LAID DOWN BY THE HONBLE HIGH C OURT IN THE CASE OF CONCORD PHARMACEUTICALS (SUPRA). THE RELEVANT EXCEPTIONS A S PROVIDED IN BOARDS INSTRUCTION NO.1979/2000 DATED 27-03-2000 READS AS UNDER:- 3. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING SHO ULD BE CONTESTED IRRESPECTIVE OF REVENUE EFFECT: (I) WHERE REVENUE AUDITED OBJECTION IN THE CASE HA S BEEN ACCEPTED B THE DEPARTMENT (II) WHERE THE BOARDS ORDER NOTIFICATION INSTRUC TION OR CIRCULAR IS THE SUBJECT-MATTER OF AN ADVERSE ORDER. (III) WHERE PROSECUTION PROCEEDINGS ARE CONTEMPLATE D AGAINST THE ASSESSEE. (IV) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVI SIONS OF THE ACT ARE UNDER CHALLENGE. 5. WE FIND THAT THIS APPEAL RELATES TO LOW TAX EFF ECT AND COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CO NCORD PHARMACEUTICALS (SUPRA). RESPECTFULLY FOLLOWING CONCORD PHARMACEUTI CALS (SUPRA) WE DISMISS THIS APPEAL OF THE REVENUE. 6. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON THIS 19 TH DAY OF APRIL 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 19 TH DAY OF APRIL 2010 5 PARAS* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-XX AHMEDABAD. 4. THE CIT. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT AHMEDABAD BENCHES AHMEDABAD. DATE INITIALS 1. DRAFT DICTATED ON 19.04.2010 --------------- ---- 2. DRAFT PLACED BEFORE AUTHORITY 19.04.2010 ----- -------------- 3. DRAFT PROPOSED & PLACED 19.04.2010 ------------ ------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 19.04.2010 ----------- -------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON 20.04.2010 --------- ----------- 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE -------------- -- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------