High Court
Case Details
ITA 5/2012 BEFORE THE HON’BLE MR JUSTICE I A ANSARI
Legal Reasoning
10. We have given our anxious consideration to the rival submissions made be fore us. There is no dispute that Instruction No.05/2008, dated May 15, 2008, im poses a monetary limit of Rs.4,00,000/- for preferring an appeal under Section 2 60A of the Act nor is it in dispute before us that the net tax effect, in the ca se at hand, is less than Rs.4,00,000/- . It is also not in question before us, i n view of a catena of decisions of the Supreme Court on the issue, that the inst ructions, issued by the CBDT, are binding on the Revenue except where (a) the co nstitutional validity of the provisions of an Act or Rule is under challenge; (b ) the Board’s order, notification, instruction or circular has been held to be i llegal or ultra vires; and (c) a Revenue audit objection, in the case, has been accepted by the Department. Coupled with the above, it is also not in dispute that similar question 11. was raised in Commissioner of Income Tax Vs. Kironmoy Roy Choudhury, reported in [2011] 330 ITR 316 (Gauhati), and a Division Bench of this Court, speaking thro ugh Amitava Roy, J, (as his Lordship, then, was) held that an appeal, where ’tax effect’ was less than Rs.4,00,000/-, would not be maintainable, because of the instruction issued by the CBDT, which is also the instruction, which has been re lied upon by the assessee-respondent in this appeal. 12. We may point out that the Memorandum, containing the instruction, has de fined ’tax effect ’to mean the difference between the tax on the total income as sessed and tax that would have been chargeable, had such total income been reduc ed by the amount of income in respect of the issue against which appeal is inten ded to be filed. 13. Though what has been indicated above is sufficient to dispose of the pre sent appeal as not maintainable inasmuch as the appeal runs counter to the instr uctions, which have been issued by the CBDT, we deem it appropriate to point out that Section 268A has been inserted in the Act, with effect from April 1, 1999, by the Finance Bill, 2008. The Memorandum, explaining the provisions of the Fin ance Bill, 2008, while highlighting the underlying object of Section 268A, clear ly reflected the anxiety of the Parliament to reduce the litigation in small cas es and regulate the right of the Revenue to file or not to file appeal under Sec tion 260A. Consequently, there is an inherent limitation on the Revenue’s right to file appeal under Section 260A inasmuch as the condition precedent for prefe rring an appeal is existence of a substantial question of law. Section 260A does not, however, contemplate any monetary limit. This monetary limit has been impo sed, a indicated above, by the CBDT in exercise of its power under Section 268A. It is worth pointing out that Section 268A enjoys same legislative statu 14. s as Section 260A, both having been enacted by the Parliament. Undisputedly, Sec tion 268A is later in point of time. Having known and being conscious of the rig ht of appeal, which has been provided to the Revenue under Section 260A, the Par liament has nevertheless deemed it necessary to vest in the CBDT, by enacting Se ction 268A, the power to regulate appeal by prescribing monetary limit. When, thus, the CBDT has prescribed a monetary limit, no appeal, under S 15. ection 260A, can be filed by the Revenue except in the circumstances, which we h ave indicated above. The mere fact that the assessee-respondent has taken two di stinctly different stands, one, before the Income Tax Authority, and the other, before the Income Tax Appellate Tribunal, we do not deem it proper that such a c onflict can be of such a grave nature, which would allow the Revenue to override the prescription of Section 268A. 16. In the facts and attending circumstances of the present case, therefore, we are clearly of the view that the present appeal cannot be sustained and must fail. 17. We must, however, point out that in an appropriate case, the High Court may, perhaps, not apply the instructions, as regards monetary limits, ipso facto and may choose nevertheless to examine the substantial questions of law raised in an appeal. The present one, however, is, in our considered view, not such a c ase, where the High Court shall enter into determination of the substantial ques tion of law, which has been framed. We are, in this regard, conscious of the Sup reme Court’s order, dated 29.08.2011, passed in Special Leave to Appeal (Civil) No.13694/2011 (C.I.T Central -III Vs. Surya Herbal Ltd.), wherein the Court has observed: (cid:28)Delay condoned. Liberty is given to the Department to move the High Court pointing out t hat the Circular dated 9th February, 2011, should not be applied ipso facto, par ticularly, when the matter has a cascading effect. There are cases under the Inc ome Tax Act, 1961, in which a common principle may be involved in subsequent gro up of matters or large number of matters. In our view, in such cases if attentio n of the High Court is drawn, the High Court will not apply the Circular ipso fa cto. For that purpose, liberty is granted to the Department to move the High Cou rt in two weeks. (cid:29) The above observations, made in Surya Herbal Ltd. (supra), show that whe 18. re a common principle is involved in a large number of appeals, having cascading effect, the High Court may choose not to apply the CBDT Circular ipso facto. 19.
Arguments
THE HON’BLE MR. JUSTICE P. K. MUSAHARY JUDGMENT AND ORDER (Ansari, J) This is an appeal preferred under Section 260A of the Income Tax Act, 19 61, (hereinafter referred to as, ’the Act’) against the order, dated 05.09.2007, passed, in ITA No.40 (Gau) of 2005, by the learned Income Tax Appellate Tribuna l, Guwahati Bench, for the assessment year 2001-2002. By the order, which stands impugned in the present appeal, the appeal of the assessee-respondent has been While admitting the appeal, the substantial question of law framed was a allowed. 2. s under: (cid:28)Whether on the facts and in the circumstances of the case, the Tribunal was jus tified and correct in law in deleting the penalty imposed on the assessee u/s 27 1B of the Income Tax Act, 1961, when it was mandatory to get the accounts audite d u/s 33B of the said Act, even if the books of accounts have not been properly maintained? (cid:29) 3. Before, however, the appeal could be heard on merit, the maintainability of the present appeal has been put to challenge, at the very threshold, by the assessee-respondent deriving strength from the Instruction No.05/2008, dated May 15, 2008, issued by the Central Board of Direct Taxes (in short, CBDT). 4. We have heard Mr. G.K. Joshi, learned Senior counsel, for the appellant, and Mr. R. Goenka, learned counsel, for the respondent. 5. Relying upon Section 268A and the CBDT’s instructions, which has been re ferred to above, it has been submitted by Mr. R. Goenka, learned counsel, that i n terms of the instructions contained in the Instruction No. 05/2008, dated 15.0 5.2008, no appeal shall be filed by the Revenue, under Section 260A of the Act, from an order of a Income Tax Appellate Tribunal if the ’tax effect’ is less tha n Rs. 4,00,000/-. Thus, according to Mr. R. Goenka, learned counsel, since the ’tax effect’, in the present case, is less than Rs. 4,00,000/-, which is fixed a s monetary limit for preferring an appeal under Section 260A, the present appeal is per se not maintainable in law and deserve to be dismissed in limine. Mr. R. Goenka, learned counsel, in support of his above contention, subm 6. its that the instruction, issued by the CBDT under Section 268A, as in the case at hand, is binding on the Revenue. 7. Mr. Goenka seeks to reinforce this plea by pointing to the Memorandum ex plaining the objective behind the enactment of Section 268A of the Act and conte nding that as Section 268A aims at regulating the conditions for preferring an appeal, under the Act, contemplated by the Revenue, the Revenue’s right to prefe r appeal, in terms of the provisions embodied in Section 260A, has to be treated as circumscribed by the limitation, which has been imposed with the help of ena ctment of Section 268A, and since the CBDT has issued instructions, in exercise of its power under Section 268A, the Revenue’s right to prefer appeal is limited by instructions issued by the CBDT. 8. Mr. Joshi, learned Senior counsel, appearing for the appellant, does not dispute the fact that the instructions, issued by the CBDT, have binding effect on the Department of Revenue and that in the relevant year, the limit, fixed by the CBDT for preferring appeal by the Revenue, under Section 260A, was Rs.4,00, 000/- and, in the case at hand, the ’tax effect ’being less than Rs.4,00,000/-, the appeal, in the light of the instructions issued by the CBDT, could not have been filed, when the ’tax effect ’is less than Rs.4,00,000/-. At the same time and in the same breadth, Mr. Joshi, learned Senior coun 9. sel, however, submits that the assessee-respondent had taken inconsistent stand before the Income Tax authority, on the one hand, and the Income Tax (Appellate) Tribunal, on the other, and, hence, this appeal may, perhaps, be required to be decided on merit.
Decision
In the result and for the reasons discussed above, this appeal fails and the same shall accordingly stand dismissed. No order as to costs. 20. 21. Before parting with this appeal, we make it clear that we express no fin al opinion on the question as to whether an assessee can take two distinctly dif ferent stands, one, before the Income Tax Authority, and the other, before the I ncome Tax (Appellate) Tribunal, and we leave, therefore, this question for deter mination in some other appropriate case.