ACIT, Rohtak v. The Model Coop. L/C Society Ltd.,, Rohtak

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER & SHRI A.K. GARODIA ACCOUNTANT MEMBER ITA NO. 4329/DEL/2009 ASSESSMENT YEAR: 2006-07 ACIT VS. THE MODEL COOP. L/C SOCIETY LTD. ROHTAK CIRCLE ROHTAK. 1084/22 MANSAROVAR COLONY ROHTAK. PAN NO. AAAAT5247M (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MUKESH VERMA SR. DR RESPONDENT BY : NONE ORDER PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRE CTED AGAINST THE ORDER OF CIT(A) DATED 8 TH SEPTEMBER 2009 FOR A.Y. 2006-07. GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN THE LAW AND FACTS IN ALLOWING THE DEDU CTION U/S 80P(2)(A)(VI) OF THE INCOME TAX ACT 1961 WHEN THE ASSESSEE HAS PAID A SUM OF RS. 12 97 745/- TOWARDS PAYMENT OF LA BOUR CHARGES TO LABOURERS HIRED FROM OUTSIDE ITS MEMBERS. 2. WHEN THE ASSESSEE SOCIETY HAS INCURRED EXPENSES ON ACCOUNT OF HIRED LABOURERS THERE WAS NO COLLECTIVE DISPOSAL O F LABOUR BY IS MEMBERS AND DEDUCTION U/S 80P(2)(A)(VI) IS NOT ALL OWABLE. ITA NO. 4329/D/09 2 2. DURING THE COURSE OF HEARING IT WAS FOUND THAT AS AGAINST NIL INCOME RETUNED BY THE ASSESSEE THE ASSESSMENT HAS B EEN FRAMED AT A NET INCOME OF RS. 38 575/- AFTER GRANT OF DEDUCTION U/S 80P. THE ADDITIONS WHICH WERE AGITATED BY THE ASSESSEE BEFOR E CIT(A) WERE ONLY WITH REGARD TO ADDITION MADE BY THE AO OF A SUM OF RS. 15 000/- AND RS. 30 000/- IN RESPECT OF SUPERVISORY CHARGE AND COMMI SSION AND OUT OF WAGES RESPECTIVELY. THE AO HAS NOT MADE ANY ADDITI ON OF RS. 12 97 745/- WHICH AMOUNT IS DEPICTED IN GROUND NO. 1 BY THE REVENUE. THE TOTAL TAX EFFECT REFERRED TO IN THE ORDER OF CI T(A) IN RESPECT OF INCOME ASSESSED IS ONLY A SUM OF RS. 11 670/-. ALL THESE FACTS WERE BROUGHT TO THE NOTICE OF LD. DR AND HE COULD NOT CONTROVERT TH AT THE ADDITIONS WHICH HAVE BEEN DELETED BY LD. CIT(A) IN THE IMPUGNED ORD ERS ARE ONLY A SUM OF RS. 15 000/- AND RS. 30 000/-. THUS IT IS A CA SE IN WHICH THE TAX EFFECT IS ONLY A SUM OF RS. 11 670/-. ACCORDING TO THE C.B.D.T. INSTRUCTIONS NO. 2 DATED 24.10.2005 THE DEPARTMENT SHOULD NOT HAVE FILED THE APPEAL BEFORE THE TRIBUNAL IN A CASE WHER E TAX EFFECT IS LESS THAN RS.2 LACS. FOR THIS PURPOSE RELIANCE MAY BE P LACED ON THE DECISION ITAT DELHI BENCH IN CASE OF SHRI VIKRAM BHATNAGAR I TA NO. 60/D/2002 ORDER DATED 10-3-2006. 3. HONBLE BOMBAY HIGH COURT IN THE CASE OF PITHWA ENGG. WORKS (276 ITR 519) HAVE OBSERVED AS UNDER: ONE FAILS TO UNDERSTAND HOW THE REVENUE CAN CONTEN D THAT SO FAR AS NEW CASES ARE CONCERNED THE CIRCULA R ISSUED BY THE BOARD IS BINDING ON THEM AND IN COMPLIANCE WITH THE SAID INSTRUCTIONS THEY DO NOT FILE ITA NO. 4329/D/09 3 REFERENCES IF THE TAX EFFECT IS LESS THAN RS.2 LAKH S. BUT THE SAME APPROACH IS NOT ADOPTED WITH RESPECT TO THE OL D REFERRED CASES EVEN IF THE TAX EFFECT IS LESS THAN RS.2 LAKHS. IN OUR VIEW THERE IS NO LOGIC BEHIND THIS A PPROACH. THIS COURT CAN VERY WELL TAKE JUDICIAL NOTICE OF TH E FACT THAT BY PASSAGE OF TIME MONEY VALUE HAS GONE DOWN THE COST OF LITIGATION EXPENSES HAS GONE UP THE ASSESS EES ON THE FILE OF THE DEPARTMENTS HAVE INCREASED; CONSEQUENTLY THE BURDEN ON THE DEPARTMENT ALSO INCREASED TO A TREMENDOUS EXTENT. THE CORRIDORS OF THE SUPERIOR COURTS ARE CHOKED WITH HUGE PENDENCY OF CA SES. IN THIS VIEW OF THE MATTER THE BOARD HAS RIGHTLY T AKEN A DECISION NOT TO FILE REFERENCES IF THE TAX EFFECT I S LESS THAN RS. 2 LAKHS. THE SAME POLICY FOR OLD MATTERS NEEDS TO BE ADOPTED BY THE DEPARTMENT. IN OUR VIEW THE BOARDS CIRCULAR DATED MARCH 27 2000 IS VERY MUCH APPLICA BLE EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDECIDE D. THE DEPARTMENT IS NOT JUSTIFIED IN PROCEEDING WITH THE OLD REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL. THUS THERE IS NO JUSTIFICATION TO PROCEED WITH DECADES OLD REF ERENCES HAVING NEGLIGIBLE TAX EFFECT. 4. IT IS ALSO SEEN THAT RECENTLY THE HONBLE JURI SDICTIONAL HIGH COURT VIDE THEIR ORDER DATED 1.8.2007 IN ITA NO. 683/2007 IN THE CASE OF CIT V. MANISH BHAMBRI HAVE UPHELD THE ORDER OF TRIBUNAL VI DE WHICH THE APPEAL FILED BY THE REVENUE WAS REFUSED TO BE ENTERTAINED BECAUSE OF LOW TAX EFFECT. THE SAID ORDER OF HONBLE JURISDICTIONAL HIGH COURT IS REPRODUCED BELOW FOR THE SAKE OF CONVENIENCE:- THE REVENUE IS AGGRIEVED BY AN ORDER DATED 8TH AUGU ST 2006 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL D ELHI BENCH 'D' IN IT(SS) NO. 513/DEL/2003 RELEVANT FOR T HE BLOCK PERIOD 1ST APRIL 1990 TO 14TH FEBRUARY 2001. ITA NO. 4329/D/09 4 THE QUESTION THAT AROSE BEFORE THE ASSESSING OFFICE R WAS WITH REGARD TO CERTAIN DEPOSITS IN THE BANK ACCOUNT OF T HE ASSESSEE AND SINCE THE AMOUNTS WERE NOT EXPLAINED TAX WAS L EVIED. IN APPEAL THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE VIEW CANVASSED BY THE ASSESSEE AND HEL D THAT THE EXPLANATION GIVEN BY HIM WAS ACCEPTABLE AND IN ANY CASE THE ASSESSEE CANNOT BE EXPECTED TO RECOLLECT EACH AND E VERY ENTRY MADE IN THE BANK. IT MAY BE MENTIONED THAT THE AMOUNT IN DISPUTE IS R S.30 000/- FOR THE ASSESSMENT YEAR 1999-2000 AND RS.83 000/- F OR THE ASSESSMENT YEAR 2001-2002. IT MAY ALSO BE MENTIONED THAT FOR THE ASSESSMENT YEAR 1999-2000 THE ASSESSING OFFICE R HAS ALREADY ACCEPTED THE EXPLANATION WITH REGARD TO A GIFTOFRS.60 000/-. AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -AN APPEAL WAS FILED BEFORE THE INCOME TA X APPELLATE TRIBUNAL. THE TRIBUNAL FOUND THAT IN VIEW OF INSTRUCTIONS ISSUED BY THE CBDT WHERE THE TAX EFFEC T IS LESS THAN RS.L LAC THE DEPARTMENT SHOULD NOT FILE AN AP PEAL BEFORE THE TRIBUNAL. IN THE PRESENT CASE THE TAX EFFECT I S LESS THAN RS.L LAC. UNDER THE CIRCUMSTANCES THE TRIBUNAL DID NOT ENTERTAIN THE APPEAL. THE REVENUE FEELING AGGRIEVED BY THE DECISION OF T HE TRIBUNAL HAS COME UP BEFORE US UNDER SECTION 260A OF THE INCOME TAX ACT 1961. IT IS CONTENDED BY LEARNED CO UNSEL FOR THE REVENUE THAT THE TRIBUNAL IS A FACT FINDING AUT HORITY AND SHOULD HAVE ADJUDICATED THE MATTER ON MERITS. WE AR E OF THE VIEW THAT THE ISSUE RAISED BY THE REVENUE IS NOT AT ALL SUBSTANTIAL AND THE AMOUNT IN DISPUTE IS QUITE INSI GNIFICANT CONSIDERING THAT THE CASE IS ONE OF A BLOCK ASSESSM ENT. THERE IS NO JUSTIFICATION FOR THE INCOME TAX DEPARTMENT T O GO ON BURDENING THE TRIBUNAL THE COURT WITH EVERY CASE R IGHT UP TO THE END. APART FROM BURDENING THE TRIBUNAL AND COUR TS IT ALSO CAUSES AVOIDABLE EXPENSES TO THE ASSESSEE. IT IS CO MMON KNOWLEDGE THAT THE ASSESSEE HAS TO PAY FOR LEGAL FE ES AND MERELY BECAUSE THE INCOME TAX DEPARTMENT HAS GOT UN LIMITED RESOURCES THERE IS NO JUSTIFICATION THAT EVERY CAS E SHOULD BE DRAGGED ON. UNDER THE CIRCUMSTANCES WE ARE OF THE VIEW THAT TH E TRIBUNAL ITA NO. 4329/D/09 5 WAS JUSTIFIED IN REFUSING TO ENTERTAIN THE APPEAL B ECAUSE OF THE INSIGNIFICANT AMOUNT INVOLVED IN THE MATTER. NO SUB STANTIAL QUESTION OF LAW ARISES. WE THEREFORE DISMISS THIS APPEAL. 5. IN VIEW OF ABOVE DISCUSSION THE APPEAL FILED BY THE REVENUE IS DISMISSED BEING UN-ADMITTED ON ACCOUNT OF LOW TAX E FFECT. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 15.01.2 010 (A.K. GARODIA) (I.P. BANSAL) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED: *KAVITA CHOPRA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR