The ITO, Ward-3,, Bharuch v. The ONGC Employees Co.Op.Credit & Consumer So.Ltd.,, Bharuch

ITA 856/AHD/2008 | 2001-2002
Pronouncement Date: 06-08-2010 | Result: Dismissed

Appeal Details

RSA Number 85620514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 856/AHD/2008
Duration Of Justice 2 year(s) 4 month(s) 30 day(s)
Appellant The ITO, Ward-3,, Bharuch
Respondent The ONGC Employees Co.Op.Credit & Consumer So.Ltd.,, Bharuch
Appeal Type Income Tax Appeal
Pronouncement Date 06-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 06-08-2010
Date Of Final Hearing 29-07-2010
Next Hearing Date 29-07-2010
Assessment Year 2001-2002
Appeal Filed On 07-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. N. PAHUJA AM) ITA NO.856/AHD/2008 A. Y.: 2001-02 THE INCOME TAX OFFICER WARD 3 BANK OF BARODA BUILDING STATIN ROAD BHARUCH VS THE ONGC EMPLOYEES CO-OP. CREDIT & CONSUMER SOCIETY LTD. C/O. B. C. MEHTA ADVOCATE 15 AJANTA NAGAR BHARUCH. PA NO. - - (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. M. MAHESH DR RESPONDENT BY SHRI M. K. PATEL AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI BARODA DATED 13 -12-2007 FOR ASSESSMENT YEAR 2001-02 CHALLENGING CANCELLATION OF PENALTY U/S 271 (1) ( C ) OF THE IT ACT IN A SUM OF RS.1 23 328/-. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT RETURN O F INCOME WAS FILED DECLARING TOTAL INCOME OF RS.2 75 866/- AND THE ASS ESSMENT WAS FINALIZED U/S 143(3) OF THE IT ACT DETERMINING TOTAL INCOME O F RS.6 86 890/-. WHILE FINALIZING THE ASSESSMENT THE AO HAS DISALLOWED AS SESSEES CLAIM OF VARIOUS RESERVE CLAIM AS DEDUCTION FROM THE TOTAL I NCOME OF VARIOUS HEADS AMOUNTING TO RS.4 11 092/-. ON DISALLOWANCE O F THE EXPENSES THE AO NOTED THAT THE ASSESSEE HAS CONCEALED INCOME OF RS.4 11 092/- AND VIDE SEPARATE ORDER IMPOSED PENALTY U/S 271(1) ( C) OF THE IT ACT. THE LEARNED CIT(A) VIDE IMPUGNED ORDER CANCELLED THE PE NALTY AND ALLOWED THE APPEAL OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE PENALTY WAS RS.1.23 LACS AND AS SUCH TAX EFFECT IS BELOW RS.2.00 LACS AND THEREFORE APPEAL OF THE REVENUE IS NOT MAINTAINABLE. HE HAS FURTHER SUBMITTED THAT ITAT A HMEDABAD BENCH IN ITA NO.856/AHD/2008 ITO 3 BHARUCH VS ONGC EMPLOYEES CO-OP CREDIT & CON SUMER SOCIETY LTD. 2 THE CASE OF THE SAME ASSESSEE FOR SAME ASSESSMENT Y EAR IN ITA NO.829/AHD/2005 SET ASIDE THE ORDERS OF THE AUTHORI TIES BELOW VIDE ORDER DATED 09-07-2010 ON THE ABOVE ISSUE AND DIREC TED THE AO TO RE- EXAMINE THE ISSUE AFRESH. COPY OF THE ORDER IS FILE D ON RECORD. THE LEARNED DR DID NOT DISPUTE THE FACT THAT TAX EFFECT IS BELOW RS.2.00 LACS. THE ABOVE FACTS WOULD SHOW THAT THE MATTER IN ISSUE ON WHICH PENALTY WAS IMPOSED ON DISALLOWANCE OF STATUTORY RESERVES A MOUNTING TO RS.4 11 092/- HAVE BEEN RESTORED TO THE FILE OF THE AO ON MERIT FOR RE- CONSIDERATION. HENCE NO BASIS IS LEFT FOR IMPOSITI ON OF PENALTY. FURTHER TAX EFFECT IS BELOW RS.2.00 LACS THEREFORE THE AP PEAL OF THE REVENUE WOULD NOT BE MAINTAINABLE. 3. IT IS STATED THAT TAX EFFECT IS BELOW RS.2 LACS IN THIS APPEAL THEREFORE DEPARTMENTAL APPEAL IS NOT MAINTAINABLE BEING COVERED BY THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS CONCORD PHARMACEUTICALS REPORTED IN 317 ITR 395. THE LEARNE D DR DID NOT DISPUTE THE ABOVE FACTS. 4. THUS IT IS NOTICED THAT THE TAX EFFECT IN THIS APPEAL IS BELOW THE PRESCRIBED LIMIT UNDER INSTRUCTION NO.2/2005 DATED 24-10-2005 AND THE TAX EFFECT ON THIS IS LESS THAN RS.2 LACS. WHEN THIS WAS CONFRONTED TO THE DR HE HAS NOT DISPUTED THE SAME. 5. IT SEEMS THAT RECENTLY HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT V. CONCORD PHARMACEUTICALS IN TAX APPEAL NO.402/2001 (SUPRA) HAS FINALLY SETTLED THE ISSUE REGARDING TAX EFFECT CASE S. HONBLE HIGH COURT IN THIS CASE HAS HELD AS UNDER:- 25. THERE IS ALSO DIFFERENCE OF OPINION AMONGST TH E COURTS WITH REGARD TO THE APPLICABILITY OF THE CIRCULAR. IF ON THE DATE 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 DECIDING THIS APPEAL IN S UCH CASES ITA NO.856/AHD/2008 ITO 3 BHARUCH VS ONGC EMPLOYEES CO-OP CREDIT & CON SUMER SOCIETY LTD. 3 THE TRIBUNAL WILL HAVE TO GIVE DUE WEIGHTAGE 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 A PPEAL. IN CIT V. CHHAGER PACKAGING & PLASTICS (P) LTD. (2008) 214 CTR 389 (BOM) THE BOMBAY HIGH COURT TOOK THE VIEW THAT CIRCULARS / INSTRUCTIONS ISSUED BY THE BOARD ARE AP PLICABLE ONLY PROSPECTIVELY AND IF THERE IS NO REFERENCE TO THEIR APPLICABILITY TO THE PENDING MATTERS SUCH PENDING MATERS CANNOT BE DECIDED ON THE BASIS OF CIRCULARS / INSTR UCTIONS. 26. IN PITHWA ENGINEERING WORKS CASE [2005] 276 I TR 519 THE BOMBAY HIGH COURT TOOK THE VIEW THAT TAKING JUDICIA L NOTICE OF THE MONEY VALUE HAVING GONE DOWN AND COST OF LITIGA TION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES THE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CI RCULAR EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDIVIDED. TH E DEPARTMENT SHOULD NOT HAVE PROCEEDED WITH THE APPEA LS / REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL IRRES PECTIVE OF THEIR DATE OF FILING. 27. 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 ARISING OR WHERE THE ISSUE IS COVERED BY THE JUDGMENT OF TERRITORIAL HIGH COURT 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 CA NNOT BE REMANDED TO THE TRIBUNAL DIRECTING THE TRIBUNAL TO DECIDE THE SAME AFRESH. IF NO OBJECTIONS ARE RAISED BY THE DE PARTMENTAL REPRESENTATIVE AT THE TIME OF HEARING OF THE APPEAL AGAINST THE APPLICABILITY OF THE CIRCULAR DESPITE THERE BEING A N EXCEPTION THE DEPARTMENT HAS MISSED THE BUS AND SECOND INNING CANNOT BE GRANTED FOR THAT PURPOSE. HOWEVER IN MATTERS W HERE SUCH OBJECTIONS ARE RAISED AND DESPITE THOSE OBJECTIONS OR WITHOUT DEALING WITH THOSE OBJECTIONS IF THE TRIBUNAL HAS D ISMISSED THE APPEAL ONLY ON THE GROUND OF LOW TAX EFFECT IN SUCH MATTER AN INDULGENCE IS REQUIRED TO BE SHOWN BY THIS COURT AN D FOR THIS LIMITED PURPOSES THE DEPARTMENT IS PERMITTED TO MO VE AN APPROPRIATE APPLICATION BEFORE THE TRIBUNAL FOR DEC IDING THE APPEAL ON MERITS. 28. WE ARE OF THE VIEW THAT SIMPLY BECAUSE THE APPE AL IS FILED BY THE DEPARTMENT IN CONTRAVENTION OF THE CIRCULAR THE TRIBUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERITS. DUE WEIG HTAGE SHOULD INVARIABLY BE GIVEN BY THE TRIBUNAL TO THE C IRCULAR ITA NO.856/AHD/2008 ITO 3 BHARUCH VS ONGC EMPLOYEES CO-OP CREDIT & CON SUMER SOCIETY LTD. 4 ISSUED BY THE BOARD. EVEN OTHERWISE THE NEWLY INS ERTED PROVISIONS CONTAINED IN SECTION 268A(4) MAKE IT OBL IGATORY FOR THE TRIBUNAL TO CONSIDER SUCH CIRCULAR. 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 T HAT FILING OF AN APPEAL IS A STATUTORY RIGHT BUT IT CAN CERTAINLY BE REGULATED BY THE BOARD BY ISSUANCE OF ORDERS INSTRUCTIONS OR CI RCULARS. THIS WOULD NOT AMOUNT TO TAKING AWAY THE RIGHT OF F ILING OF APPEAL OR THAT SUCH RIGHT IS PROHIBITED BY EXECUTIV E INSTRUCTIONS. SECTION 268A(1) OF THE ACT NOW RECOG NIZES 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 TERRITORIAL HIGH COURT HAVE DECLARED THE LAW ON A QUESTION IT IS NOT OPEN TO T HE TRIBUNAL TO DIRECT THAT THE CIRCULAR ISSUED BY THE BOARD PRESCR IBING THE MONETARY LIMIT SHOULD BE GIVEN EFFECT TO AND NOT TH E DECISION OF HONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT . IT IS HOWEVER EQUALLY TRUE THAT THE TRIBUNALS ATTENTION MUST BE DRAWN BY THE DEPARTMENTAL REPRESENTATIVE TO SUCH DE CISION OF THE HONBLE SUPREME COURT OR THE HIGH COURT. AN OB JECTION MUST BE RAISED BY THE DEPARTMENTAL REPRESENTATIVE. . CONSIDERING ALL THE AFORESAID ISSUES WE DISMISS ALL THESE TAX APPEALS RESERVING LIBERTY TO THE DEPARTME NT ONLY ON THOSE CASES TO APPLY TO THE TRIBUNAL TO DECIDE THE APPEAL ON MERITS WHERE THE OBJECTIONS WERE RAISED BEFORE THE TRIBUNAL EITHER IN THE APPEAL MEMO OR AT THE TIME OF HEARING OF APPEAL RAISING A SPECIFIC CONTENTION THAT A PARTICULAR APP EAL IS COVERED BY AN EXCEPTION AND DESPITE THIS OBJECTION THE TRIBUNAL HAS NOT DEALT WITH THE SAID CONTENTION AND DISMISSED THE APPEAL ON THE GROUND OF LOW TAX EFFECT. IT IS E XPECTED FROM THE TRIBUNAL TO CONSIDER THIS BROAD PARAMETERS WHIL E APPLYING THE RELEVANT CIRCULAR TO THE FACTS OF THE CASE AT T HE TIME OF DECIDING APPEALS. 6. AT THE TIME OF HEARING BEFORE US THE LD. DEPART MENTAL REPRESENTATIVE WAS SPECIFICALLY ASKED BY THE BENCH WHETHER THIS APPEAL FALLS UNDER ANY OF THE EXCEPTIONS AS PROVIDED IN BO ARDS INSTRUCTION NO.2/2005 DATED 24-10-2005 THE SUBJECT-MATTER OF THE APPEALS ARE COVERED BY ANY OF THE JUDGMENT OF JURISDICTIONAL HI GH COURT OR OF SUPREME COURT ANY SUBSTANTIAL QUESTION OF LAW IS I NVOLVED OR NOT. THE ITA NO.856/AHD/2008 ITO 3 BHARUCH VS ONGC EMPLOYEES CO-OP CREDIT & CON SUMER SOCIETY LTD. 5 LD DR STATED THAT IN THESE APPEALS THE ISSUES ARE F ACTUAL AND DOES NOT FALL IN ANY OF THE EXCEPTIONS AS PROVIDED BY BOARD S INSTRUCTION OR ANY OF THE CRITERIA LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CONCORD PHARMACEUTICALS (SUPRA). THE RELEVANT EXCEPTIONS AS PROVIDED IN B OARDS INSTRUCTION NO.1979/2000 DATED 27-03-2000 READS AS UNDER:- 3. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING SHOULD BE CONTESTED IRRESPECTIVE OF REVENUE EFFECT : (I) WHERE REVENUE AUDITED OBJECTION IN THE CASE HA S BEEN ACCEPTED BY 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. 7. WE FIND THAT THIS APPEAL RELATES TO LOW TAX EFFE CT AND COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CONCORD PHARMACEUTICALS (SUPRA). RESPECTFULLY FOLLOWING CONCORD PHARMACEUTICALS (SUPRA) WE DISMISS THIS APPEAL OF THE REVENUE. 8. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06-08-2010. SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 06-08-2010 LAKSHMIKANT/- ITA NO.856/AHD/2008 ITO 3 BHARUCH VS ONGC EMPLOYEES CO-OP CREDIT & CON SUMER SOCIETY LTD. 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD