ACIT, New Delhi v. M/s. C.G.E.C. Co-op Society Ltd., New Delhi

1835-2010-C GEC 1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI K. G. BANSAL ACCOUNTANT MEMBER I.T.A. NO.1835/D/2010 ASSESSMENT YEAR : 2005-06 ASSTT. C.I.T. VS. M/S C.G.E.C. CO-OP SOCIETY CIRCLE 23(1) LTD. E-WIND PUSHPA BHAWAN NEW DELHI MADAN GIRI ROAD NEW DELHI PAN NO.AAAFC 5403 F (APPELLANT) (RESPONDENT) APPELLANT BY : MS. MONA MOHANTY SR. DR RESPONDENT BY: SHRI R.K. GUPTA ORDER PER K.G. BANSAL: AM: THE ASSESSEE HAD FILED ITS RETURN ON 30.10.2005 DECLARING TOTAL INCOME AT `10 37 12 060/-. THE RETURN WAS PROCESSED U/S 143(1) O N 31.03.2007. THEREAFTER THE CASE WAS PICKED UP FOR SCRUTINY AND NOTICES WERE ISSU ED U/SS 143(2) AND 142(1). IT WAS FOUND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN CONSUMER GROCERY AND STATIONERY ITEMS IN THE NAME OF KENDRIYA BHA NDAR. THE ASSESSEE IS A COOPERATIVE SOCIETY AND IT COMES UNDER THE MINISTRY OF PER SONNEL PUBLIC GRIEVANCES & PENSIONS. 2. IN THE COURSE OF ASSESSMENT IT WAS INTER ALIA FOUND T HAT THE ASSESSEE INCURRED EXPENSES IN RELATION TO INCOME WHICH WAS NOT INCLUDIBLE IN ITS TOTAL INCOME. THE MATTER WAS DISCUSSED WITH THE REPRESENTATIVE OF THE ASSESSEE AND FINALLY THE DISALLOWANCE OF `19 80 000/- WAS MADE FROM INTEREST EXPEN SES AND OTHER EXPENSES BEING SALARIES AND WAGES. THE ASSESSEE AGITATED THE MATTER BEFORE THE 1835-2010-C GEC 2 CIT(A)-XXIII NEW DELHI WHO DISPOSED OFF THE APPEAL ON 10.02.2010 IN APPEAL NO.139-07-08. HE FOLLOWED THE DECISION OF HONBLE PUNJA B & HARYANA HIGH COURT IN THE CASE OF CIT VS. HERO CYCLES LIMITED (2009) 31 DTR 301 IN WHICH IT HAS BEEN INTER ALIA HELD THAT FOR MAKING DISALLOWANCE U/S 14 A THERE SHOULD BE A FINDING THAT THE EXPENDITURE HAS ACTUALLY BEEN INCURRED FOR EARNING INCOME WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME. AGGRIEVED BY THIS ORDER THE REVENUE IS IN APPEAL BEFORE US. THE ONLY GROUND TAKEN BEFORE REVENUE IS THAT TH E LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF `19.80 LAC IGNORING THE FAC T THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80P AND THE ASSESSING OFFICER MADE A DISALLOWANCE BY INVOKING THE PROVISIONS CONTAINED IN SECTION 14A OF T HE ACT READ WITH RULE 8D OF THE I.T. RULES 1962. 2.1 THE CASE WAS FIXED FOR HEARING ON 30.08.2010 AND 11 .01.2011 TO ASCERTAIN WHETHER COD APPROVAL IS REQUIRED BY THE REVENUE FOR PROSECUT ING THE APPEAL. ON 17.01.2011 BOTH THE PARTIES INFORMED THAT SUCH APPROV AL IS REQUIRED AND THAT SUCH AN APPROVAL HAS NOT BEEN OBTAINED BY THE REVENUE. ACCORD INGLY IT WAS PRAYED BY THE LEARNED DR THAT EITHER THE APPEAL MAY BE KEPT PENDING TI LL SUCH APPROVAL IS OBTAINED OR THE APPEAL MAY BE DISMISSED WITH THE LIBERTY T O REVENUE TO REVIVE IT AS AND WHEN THE APPROVAL IS RECEIVED. 2.2 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIO NS MADE BEFORE US. IN THE CASE OF MAHA NAGAR TELEPHONE NIGAM LIMITED VS. CHA IRMAN CENTRAL BOARD DIRECT TAXES AND ANOTHER (2004) 267 ITR 647 IT HAS B EEN HELD THAT THE APPROVAL HAS TO BE OBTAINED BEFORE FILING THE APPEAL FAILING WHICH IT IS LIABLE TO BE DISMISSED IN LIMINE. THE RELEVANT PORTIONS OF THE JUDGMENT ARE REPRO DUCED BELOW UNDOUBTEDLY THE RIGHT TO ENFORCE A RIGHT IN A COURT O F LAW CANNOT BE EFFACED. HOWEVER IT MUST BE REMEMBERED THAT COURTS ARE OVERBURDENED WITH A LARGE NUMBER OF CASES. THE MAJORITY O F SUCH CASES PERTAIN TO GOVERNMENT DEPARTMENTS AND/OR PUBLIC SEC TOR UNDERTAKINGS. AS IS STATED IN CHIEF CONSERVATOR OF FOR ESTS CASE (2003) 3 SCC 472 IT WAS NOT CONTEMPLATED BY THE FRAMERS OF THE 1835-2010-C GEC 3 CONSTITUTION OR THE CIVIL PROCEDURE CODE THAT TWO DEPART MENTS OF A STATE OR UNION OF INDIA AND/OR DEPARTMENT OF THE GOVERNMEN T AND A PUBLIC SECTOR UNDERTAKING FIGHT A LITIGATION IN A COU RT OF LAW. SUCH A COURSE IS DETRIMENTAL TO PUBLIC INTEREST AS IT ENTAILS AV OIDABLE WASTAGE OF PUBLIC MONEY AND TIME. THESE ARE ALL LIMBS OF THE GO VERNMENT AND MUST ACT IN CO-ORDINATION AND NOT CONFRONTATION. T HE MECHANISM SET UP BY THIS COURT IS NOT AS SUGGESTED BY MR. ANDHYARU JINA ONLY TO CONCILIATE BETWEEN GOVERNMENT DEPARTMENTS. IT IS ALSO SET UP FOR PURPOSES OF ENSURING THAT FRIVOLOUS DISPUTES DO NOT CO ME BEFORE COURTS WITHOUT CLEARANCE FROM THE HIGH POWERED COMMITTEE. IF IT CAN RESOLVED THE COMMITTEE WOULD UNDOUBTEDLY GIVE CLEARANCE. HOWEVER THERE COULD ALSO BE FRIVOLOUS LITIGATION PROPOS ED BY A DEPARTMENT OF THE GOVERNMENT OR A PUBLIC SECTOR UNDERTAKI NG. THIS COULD BE PREVENTED BY THE HIGH POWERED COMMITTEE. IN SUCH C ASES THERE IS NO QUESTION OF RESOLVING THE DISPUTE. THE COMMIT TEE ONLY HAS TO REFUSE PERMISSION TO LITIGATE. NO RIGHT OF THE DEPART MENT/PUBLIC SECTOR UNDERTAKING IS AFFECTED IN SUCH A CASE. THE LITIG ATION BEING OF A FRIVOLOUS NATURE MUST NOT BE BROUGHT TO COURT. TO BE REMEMBERED THAT IN ALMOST ALL CASES ONE OR THE OTHER PARTY WILL NOT BE HAPPY WITH THE DECISION OF THE HIGH POWERED COMMITTEE. THE DISSATISFIED P ARTY WILL ALWAYS CLAIM THAT ITS RIGHTS ARE AFFECTED WHEN IN FACT NO RIGHT IS AFFECTED. THE COMMITTEE IS CONSTITUTED OF HIGHLY PLACED OFFICERS OF THE GOVERNMENT WHO DO NOT HAVE AN INTEREST IN THE DISPUTE IT IS THUS EXPECTED THAT THEIR DECISION WILL BE FAIR AND HONEST. EVEN IF THE DEPARTMENT/PUBLIC SECTOR UNDERTAKING FINDS THE DECISION U NPALATABLE DISCIPLINE REQUIRES THAT THEY ABIDE BY IT. OTHERWISE THE WHOLE PURPOSE OF THIS EXERCISE WILL BE LOST AND EVERY PARTY AGA INST WHOM THE DECISION IS GIVEN WILL CLAIM THAT THEY HAVE BEEN WRONGED AND THAT THEIR RIGHTS ARE AFFECTED. THIS SHOULD NOT BE ALLOWED TO BE DONE. INS THIS CASE THIS IS ABSOLUTELY WHAT HAS HAPPENED. TH E APPELLANTS WANTED TO APPROACH THE COURT ONLY AGAINST A SHOW CAUS E NOTICE. IT IS SETTLED LAW THAT AGAINST A SHOW CAUSE NOTICE LITIGATION SHOULD NOT BE ENCOURAGED. THE DECISION OF THE HIGH POWERED COMMITTEE SET OUT HEREINABOVE MERELY EMPHASIZES THE WELL SETTLED POSITION. IT IS AN EMINENTLY FAIR AND CORRECT DECISION. THE PURPOSE OF THE DECIS8ION WAS TO PREVENT FRIVOLOUS LITIGATION. NO RIGHT OF THE APPEL LANTS IS BEING AFFECTED. IT HAS BEEN CLARIFIED THAT THE APPELLANTS COU LD MOVE A COURT OF LAW AGAINST AN APPEALABLE ORDER. BY NOT MAINTAININ G DISCIPLINE AND ABIDING BY THE DECISION /THE APPELLANTS HAVE WASTED P UBLIC MONEY AND TIME OF THE COURTS. THE CLARIFICATORY ORDER RELIED ON UPON BY MR. ANDHYARUJINA CLARIFIES IN PARAGRAPH 5 AS TO WHAT IS TO HAPPEN 1835-2010-C GEC 4 IF CLEARANCE IS NOT GIVEN BY THE COMMITTEE. IT IS SET OUT THAT IN THE ABSENCE OF CLEARANCE THE PROCEEDINGS MUST NOT BE PROCEEDED WIT H. THIS POSITION IS FURTHER CLARIFIED IN CHIEF CONSERVATOR OF FORESTS CASE (2003) 3 SCC 172 WHERE AGAIN THIS COURT HAS HELD THAT T HE DECISION TAKEN BY SUCH A COMMITTEE IS BINDING ON ALL DEPARTMENTS CONCERNED AND IT IS THE STAND OF THE GOVERNMENT. IN VIEW OF THIS SETTLED LAW WHICH IS BINDING ON US W E HOLD THAT AS CLEARANCE HAS NOT BEEN GIVEN TO THE APPELLANTS THESE PROCEEDI NGS CANNOT BE PROCEEDED WITH. THE HIGH COURT WAS WRONG IN D EALING WITH THE MERITS OF THE MATTER. WE THEREFORE DO NOT EXAMI NE WHETHER THE HIGH COURT WAS RIGHT ON THE MERITS. THE APPEAL ACCO RDINGLY STANDS DISPOSED OF WITH NO ORDER AS TO COST. 2.3 RESPECTFULLY FOLLOWING THIS JUDGMENT THE APPEAL IS DISMISSED WITH THE REVENUES RETAINING THE OPTION TO REVIVE IT ON RECEIPT OF T HE APPROVAL OF THE COD. 3. IN RESULT THE APPEAL IS DISMISSED. THIS ORDER WAS PRONOUNCED IN OPEN COURT ON 11.02.2011. SD/- SD/- ( RAJPAL YADAV ) ( K.G. BANSAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER DT. 11/02/2011 NS COPY FORWARDED TO:- 1. ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE 23 (1) NEW DELHI. 2. M/S C.G.E.C. CO-OP SOCIETY LIMITED E-WING PUSHPA BH AWAN MADAN GIRI ROAD NEW DELHI. 3. THE CIT 4. THE CIT (A) NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY BY ORDER (ITAT NEW DELHI).