ACIT, Circle - 52, Kolkata, Kolkata v. M/s. East West Enterprises, Kolkata

IN THE INCOME TAX APPELLATE TRIBUNAL : BENCH B KO LKATA [BEFORE HONBLE SHRI B.R. MITTAL J.M. AND HONBLE SHRI B.K. HALDAR A.M.] ITA NO. 810 (KOL) OF 2010 : ASSESSMENT YEAR : 2 006-07 ASSTT. COMMISSIONER OF INCOME TAX -VS.- M/S. EAST WEST ENTERPRISES CIRCLE-52 KOLKATA. KOLKATA [PAN : AAAFE 8423 F ] [APPELLANT] [RESPONDENT] APPELLANT BY : SHR I S.I. BAR SR. D.R. RESPONDENT BY : SHRI D. NIYOGI / ORDER PER B. R. MITTAL J. M. IN THIS REVENUES APPEAL THE REVENUE HAS AGITATED THE FOLLOWING GROUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN ADJUDGING THE AMOUNT OF RS.5 06 193/- UNDER THE HEA D OTHER LIABILITY AS CAPITAL RECEIPT AND CONCLUDED THAT THE AMOUNT WAS NOT CHARG EABLE TO TAX EITHER U/S. 41 OR U/S. 28. THIS DECISION OF THE LD. CIT(A) IS FLAWED BECAU SE THE ASSESSEE DESPITE BEING GIVEN AMPLE OPPORTUNITY FAILED TO PROVE THAT THE LIABILIT Y IN QUESTION IS STILL SUBSISTED. THE LD. CIT(A) FAILED TO APPRECIATE THIS POINT OF VIEW HELD BY THE A.O. 2. THE APPEAL FILED BY THE DEPARTMENT IS TIME BARRE D BY 20 DAYS. THE DEPARTMENT HAS FILED APPLICATION DATED 23.04.2010 PRAYING TO CONDO NE DELAY. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE HAS NOT OBJECTED TO THE PRAYER OF THE DEPARTMENT. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THE CONTENTS OF TH E APPLICATION WE ARE OF THE CONSIDERED VIEW THAT THERE IS A REASONABLE CAUSE FOR DELAY IN FILIN G APPEAL. HENCE WE CONDONE THE DELAY AND CONSIDER THE APPEAL. 3. AT THE TIME OF HEARING THE LD. AUTHORISED REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE TAX EFFECT IS LESS THAN RS.2 LAKHS. 4. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT DIS PUTED THE FACT THAT THE TAX EFFECT IS LESS THAN RS.2 LAKHS. HE COULD NOT MAKE OUT A CASE THAT IT FALLS IN ANY OF THE EXCEPTIONS. THE LD. DEPARTMENTAL REPRESENTATIVE WAS ASKED WHY THE APPEA L OF THE REVENUE SHOULD NOT BE TREATED AS UNADMITTED IN VIEW OF THE CIRCULAR F. NO. 279/MI SC.- 64/05-ITJ DATED 24TH OCTOBER 2005 AND THE DECISION OF THE HONBLE HIGH COURT IN THE C ASE OF CIT VS. CAMCO COLOUR CO. [ 254 ITR 565 (BOM)] AND THE HONBLE APEX COURT IN THE CASE O F COMMISSIONER OF CUSTOMS VS. INDIAN OIL CORPORATION LTD. [ 267 ITR 272 (SC) ]. THE LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF RANI PALIWAL VS. CIT [268 ITR ITA NO. 810/KOL/2010 2 220 ] AND ALLAHABAD HIGH COURT IN THE CASE OF JUGAL KISHORE ARORA VS. DCIT [ 269 ITR 133 ] HAVE TAKEN THE VIEW THAT ONCE AN APPEAL IS FILED BY THE REVENUE THE TRIBUNAL SHOULD DISPOSE OF THE APPEAL ON MERITS AND THE ASSESSEE CANNOT RAISE THE OBJECTION AGAINST THE MAINTAINABILITY OF SUCH APPEAL. 5. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT TH E CBDT VIDE INSTRUCTION NO. 2/2005 DATED 24TH OCTOBER 2005 ISSUES GUIDELINES TO THE R EVENUE AUTHORITIES WITH REGARD TO FILING OF APPEAL BEFORE THE TRIBUNAL HIGH COURT AND SUPREME COURT. FROM THE ABOVE INSTRUCTION IT IS EVIDENT THAT SINCE 1987 THE CBDT IS INSTRUCTING IT S OFFICERS NOT TO FILE THE APPEAL WHERE THE TAX EFFECT IS BELOW CERTAIN MONETARY LIMITS. VIDE INSTR UCTION NO. 1903 DATED 28 TH OCTOBER 1992 THE MONETARY LIMIT WAS REVISED UPWARD AND THE OFFIC ERS WERE DIRECTED NOT TO FILE THE APPEAL BEFORE THE INCOME-TAX APPELLATE TRIBUNAL WHERE THE TAX EFFECT WAS BELOW RS.25 000/-. THE ABOVE MONETARY LIMIT WAS FURTHER REVISED UPWARD BY INSTRUCTION NO. 1979 DATED 27TH MARCH 2000 AND THE OFFICERS WERE DIRECTED NOT TO FILE THE APPEAL TO ITAT WHERE THE TAX EFFECT IS BELOW RS. 1 LAC. THEREAFTER IN PARTIAL MODIFICATION OF TH E ABOVE INSTRUCTION THE BOARD VIDE INSTRUCTION NO. 2/2005 DATED 24.10.2005 FURTHER RAISED THE ABO VE MONETARY LIMIT TO RS.2 LAKHS WITH THE SAME DIRECTIONS. THUS THE CBDT SINCE 1987 HAS NOT ONLY TAKEN A CONSISTENT APPROACH OF INSTRUCTING ITS OFFICERS FOR NOT FILING THE APPEAL WHERE THE TAX EFFECT IS BELOW THE MONETARY LIMIT BUT SUCH MONETARY LIMIT IS ALSO REVISED UPWARD FROM TIME TO TIME. THE CIRCULAR UNDER INSTRUCTION 1979 DATED 27.3.2006 WAS CONSIDERED BY THE BOMBAY HIGH COURT IN THE CASE OF CAMCO COLOUR CO. (SUPRA ) AND THEIR LORDSHIPS HELD AT PAGE 568 AS UNDER:- IT APPEARS THAT DESPITE THE ABOVE CIRCULAR THE RE VENUE HAS CHOSEN TO FILE THE PRESENT APPEAL KNOWING FULLY WELL THAT THE CORRIDOR S OF THE COURTS ARE FLOODED WITH PENDING LITIGATIONS. THE PRESENTATION OF THIS APPEAL IS QUITE CONTRARY TO THE INSTRUCTION ISSUED IN THE CIRCULAR WHICH IS BIN DING ON THE REVENUE. IN THE ABOVE VIEW OF THE MATTER CONSIDERING THE IN STRUCTIONS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES WE ARE SATISFIED THA T THE BOARD HAS TAKEN A POLICY DECISION NOT TO FILE APPEAL IN A TYPE OF CAS E IN HAND AND THE SAME IS BINDING ON THE REVENUE (APPELLANT HEREIN). IN THE R ESULT WE DISMISS THIS APPEAL ON THIS COUNT IN LIMINE WITH NO ORDER AS TO COSTS. 6. THE LD. D.R. HAS RELIED UPON THE CONTRARY DECIS IONS GIVEN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF RANI PALIWAL (SUP RA) AND ALLAHABAD HIGH COURT IN THE CASE OF JUGAL KISHORE ARORA ( SUPRA ). HOWEVER WE FIND THAT RECENTLY THE APEX COURT HAS CONSIDERED THE EFFECT OF CIRCULAR ISSUED BY THE CBD T IN THE CASE OF COMMISSIONER OF CUSTOMS VS. INDIAN OIL CORPORATION LTD. REPORTED IN 267 ITR 272. THEIR LORDSHIPS EXAMINED THE EARLIER ITA NO. 810/KOL/2010 3 DECISIONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THE FOLLOWING PRINCIPLES AT PAGE 277 OF THE REPORTS:- THE PRINCIPLES LAID DOWN BY ALL THESE DECISIONS AR E - (1) ALTHOUGH A CIRCULAR IS NOT BINDING ON A COURT O R AN ASSESSEE IT IS NOT OPEN TO THE REVENUE TO RAISE A CONTENTION THAT IS CONTRA RY TO A BINDING CIRCULAR BY THE BOARD. WHEN A CIRCULAR REMAINS IN OPERATION THE REV ENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID NOR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. (2) DESPITE THE DECISION OF THE COURT THE DEPARTME NT CANNOT BE PERMITTED TO TAKE A STAND CONTRARY TO THE INSTRUCTIONS ISSUED BY THE BOARD. (3) A SHOW CAUSE NOTICE AND DEMAND CONTRARY TO EXIS TING CIRCULARS OF THE BOARD ARE AB INITIO BAD. (4) IT IS NOT OPEN TO THE REVENUE TO ADVANCE AN ARG UMENT OR FILE AN APPEAL CONTRARY TO THE CIRCULARS. ( EMPHASIS SUPPLIED ) FROM THE ABOVE IT IS EVIDENT THAT THE HONBLE APEX COURT HAS LAID DOWN THAT IT IS NOT OPEN TO THE REVENUE TO ADVANCE AN ARGUMENT OR FILE AN APPEA L CONTRARY TO THE CIRCULAR. THE APPEAL UNDER CONSIDERATION HAS CERTAINLY BEEN FILED CONTRA RY TO THE CIRCULAR ISSUED BY THE CBDT VIDE CIRCULAR F. NO. 279/MISC- 64/05-ITJ DATED 24TH OCTO BER 2005. THEREFORE THE ABOVE DECISION OF THE HONBLE APEX COURT WOULD BE SQUARELY APPLICA BLE. EVEN OTHERWISE THE REVENUE HAS BEEN TAKING A CONSISTENT APPROACH SINCE 1987 NOT TO FILE APPEAL WHERE THE REVENUE EFFECT IS BELOW CERTAIN MONETARY LIMIT TO REDUCE THE LITIGATI ON PENDING BEFORE THE TRIBUNAL AND THE COURTS. IF THE APPEALS CONTRARY TO SUCH CIRCULAR AR E ADMITTED IT WOULD FRUSTRATE THE PURPOSE OF ISSUING SUCH INSTRUCTIONS. IN THE ABOVE CIRCUMSTANC ES WE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF INDIAN OIL CO RPORATION LTD. (SUPRA) AND THE BOMBAY HIGH COURT IN THE CASE OF CAMCO COLOUR CO. ( SUPRA) HOLD THAT THE REVENUE SHOULD NOT HAVE FILED THE APPEAL CONTRARY TO THE CIRCULAR BY THE CB DT. ACCORDINGLY THE SAME IS NOT ADMITTED AND DISMISSED IN LIMINE. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10. 02. 2011 [ B. K. HALDAR ] [ B. R. MI TTAL ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10 TH FEBRUARY 2011. ITA NO. 810/KOL/2010 4 COPY OF THE ORDER FORWARDED TO: 1. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-52 AAYA KAR BHAWAN DAKSHIN 2 GARIAHAT ROAD (S) KOLKATA-700 068. 2 M/S. EAST WEST ENTERPRISES 1/502 GARIAHAT ROAD JODHPUR PARK KOLKATA-700068. 3. CIT 4. CIT(A) 5. DR KOLKATA BENCHES KOLKATA [TRUE COPY] BY ORDER DEPUTY /ASSTT. REGISTRA R I.T.A.T KOLKATA. [KKC]