TaxTMI 
TaxTMI 
2022 (7) TMI 1530
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.... Baxi, Mr. Manish J Shah. CAV JUDGMENT PER : HONOURABLE MS. JUSTICE SONIA GOKANI 1. All the petitions since involve identical question of law and almost similar question of facts, they are being decided by a common judgment where the lead matter shall be Special Civil Application No. 9995 of 2021 and the facts shall be drawn from the same for the purpose of adjudication. 2. The present petition is preferred under Articles 226 and 227 of the Constitution of India against the judgment passed by the Income Tax Appellate Tribunal, Ahmedabad (ITAT for short) on 09.09.2020 dismissing the Misc. Application No. 46/Ahd/2020 in ITA No. 2772/Ahd/2017 filed by the petitioner - department against the order passed by the Tribunal on 14.08.2019 in ITA No. 2772/Ahd/2017. 2.1. By this earlier order of 14.08.2019, the appeal of the department had been dismissed by the Tribunal on the ground that the tax effect involved is below the limit prescribed by the Central Board of Direct Taxes (CBDT for short) in its Circular No. 17/2019 dated 08.08.2019. 2.2. The assessee- company had filed return of income for the assessment year 2010-11 on 01.10.2010 declaring th....
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....2017 for deciding the same on merits; (B) Any other appropriate and just relief/s be granted." 3. This Court issued notice on 10.08.2021. Learned Counsels in different matters appeared and resisted these petitions strenuously. 4. No affidavit-in-reply is filed by the respondent, however, additional affidavit on behalf of the petitioner has been filed stating therein that Misc. Application filed by the department before the Tribunal had been directed to be placed on record on 13.07.2021 and accordingly, a copy of Misc. Application No. 46/Ahd/2020 has been brought on record. 4.1. It appears that Misc. Application in respect of the assessee for the assessment year 2010-11 along with the true copies of the Memorandum dated 20.01.2020 issued by the Principal Commissioner of Income-Tax, Vadodara-2 was preferred under Section 254(2) of the IT Act requesting the Tribunal to recall its order dated 14.08.2019 wherein the Revenue's appeal was dismissed on account of the low tax effect in view of the Board Circular No. 17/2019 dated 08.08.2019. It has pleaded exception para 10(c) of the Board Circular No. 03/2018 dated 11.07.2018 and its amendment dated 20.08.2....
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....to refer to the Bombay High Court's findings thus: - "8. It is conceded that while seeking to restore Income Tax Appeal No. 254 of 2013 on the file of this Court, neither the Revenue's Circular dated 11-7 2018 is referred nor any condition therein. If the condition now relied upon is with regard to the Revenue Audit Objection, then, mere raising of this objection in terms of this Circular is not enough. The Revenue will have to point out that this audit objection has been accepted by the Department. We have no such record before us. 9. In the circumstances, we find that this is an attempt to get over the binding Circulars and in any case we shall not allow the Revenue to get over them in this manner. The Circulars continue to bind the Revenue and if they contain any conditions, whether such conditions are attracted or not would have to be proved and established by the Revenue. Once there is no such record before us, we do not countenance the oral request of Mr. Pinto. Consequently, we do not see any reason to entertain this appeal. It is dismissed." 5.4. The Tribunal in case of Bhavi Tours and Travels, on perusal of three Misc. Applications found that ....
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....e tax litigation. It referred to the CBDT circular dated 08.08.2019 whereby the department has further liberalized the policy for not filing appeals against the decisions of the appellate authorities wherein the tax involved is below certain threshold limits. Thus, it took a note that when a Commissioner (Appeals) give a taxpayer tax relief upto Rs. 50 lakhs in an appeal in an assessment year, the matter should receive the quiets and the relief so granted cannot be challenged before the Tribunal. When the Tribunal provides relief upto Rs. 1 Crore in a particular assessment year, the matter then cannot be challenged before this Court and likewise, if the High Court provides succor to the assessee to the tune of Rs. 2 Crores, no further challenge can lie before the Apex Court. 5.9. Noticing this threshold set-out by the circular of the CBDT except when the penalty itself is a subject matter of litigation, even the interest and other corollaries of the tax demands such as penalties are not to be regarded eulogizing the huge steps taken by the Government of India for cutting down the litigation, all the appeals have been dismissed as withdrawn and the related cross-ob....
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....d. According to him, the entire exercise of application of mind is carried out and this has been done in each matter, however, that was not placed before the Tribunal at the relevant time as there was no opportunity made available so even if the judgment of Bombay High Court was to be followed, the question also was with relation to the retrospectivity and even if that aspect was not to be considered in Misc. Application preferred under Section 254, the Tribunal could not have dismissed them without considering the recommendation of range head on the scrutiny report by the Assessing Officer. 7.2. According to learned Senior Standing Counsel Mr. Nikunt Raval, the circular is of the year 2015 being the Circular No. 21/2015 dated 10.12.2015 and the appeal is of the year 2014. The Revenue cannot be non-suited for the circular which was not even in the existence. 7.3. Learned Senior Advocate Mr. Bhatt has also relied on the decision rendered in case of Commissioner of Income Tax, Chennai vs. Acurus Solutions (P.) Ltd. [[2020] 120 taxmann.com 206 (Madras)], where it was a case where the Tribunal by an order dismissed the appeal of Revenue on account of low tax effect. The Cour....
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....he Substantial Question of Law No. 1 is answered in favour of the Revenue and consequently the order passed by the Tribunal is set aside. The natural consequence that will follow, when such orders are passed by the Courts, is to remit the matter to the Tribunal for fresh consideration. 7.4. This Court in case of The Principal Commissioner of Income Tax, Vadodara-1 vs. M/s. Fine Line Circuits Company [Misc.Civil Application No. 01/2019 in Tax Appeal No. 465/2019, decided on 03.09.2021], before this Court the Revenue had sought the recall of the order passed by this Court on 01.10.2019 while disposing of the Tax Appeal No. 465/2019 on the ground that the tax effect involved was below the prescribed monetary limit of Rs. 1 Crore as per the CBDT Circular No. 17/2019 dated 08.08.2019. Since the audit objection had been accepted by the department, it was a case of the Revenue that the matter would fall under the exceptional clause (c) of para 10 of the amended circular of Board Circular no. 03/2018 dated 20.08.2018 as modified by the Circular No. 17/2019 dated 08.08.2019. The objection raised by the respondent was to an effect that when the Revenue w....
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....audit objections raised at the relevant point of time. While noticing that the Assessment Order passed under Section 143 (3) read with Section 148 of the I.T. Act has already been decided by this Court in Tax Appeal No. 460 of 2019 and allied matters on 16.09.2019, the notice had been issued under Section 263 (1) of the I.T. Act on 17.10.2013 for the same assessment year seeking the dis-allowance of the incremental subsidy from exemption available under Section 10 B of the I.T. Act. On the part of the respondent, we could notice the objections essentially since the recall of the order dated 01.10.2019 passed by this Court if is if has arisen due to audit objections, the same ought to be placed on the record and without placing that material on record, no order of recall can be sought. 6. So as not to curtail the rights of the parties in raising all the contentions including that of the audit objections, more particularly, when raised keeping in mind the decision of the Bombay High Court, we have chosen to examine the material which has been placed before us and on satisfying ourselves on this issue, we are of the opinion that the request of the department to permit th....
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....e a suitable action as per his independent application of mind on the facts of each case. In case the Assessing Officer decides to choose as per Section 154 as the appropriate remedial measure, he shall initiate the action after approval of the Range head. The remedial action in case of accepted audit objection shall be initiated within three months and shall be completed within further period of six months from initiation. The objection shall be treated as settled once the intimation of completion of remedial action and issue of demand notice is given to concerned CAG officer. 8.2. Where the audit objection is not accepted, the PCIT also will send a reply to the concerned CAG officer specifying reasons for non-acceptance of objection within two months of receiving LAR. A copy of this also to be marked to the CIT(Audit). Once the view of PCIT is accepted, the objection will be dropped and no further action would be required, but, where the view of PCIT is not accepted and a rejoinder is received from concerned CAG officer with reasons for disagreement, the PCIT shall first get the contents of rejoinder entered in ITBA system. He shall then reconsider the objection in the light o....
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....ich would not amount to taking away right to file appeal or that such right is prohibited by executive instructions. The Court however held that when no objection has been raised by the departmental representatives at the time of hearing of the appeal against the applicability of the circular despite there being an exception and the Tribunal dismisses the appeal by applying that circular, matter cannot be remanded to the Tribunal for deciding the appeal on merits. However, in matters where such objections are raised and despite those objections or without dealing with them, Tribunal has dismissed the appeals only on the ground of low tax effect, an indulgence is required to be shown by the Court and the department can be permitted to move an appropriate application before the Tribunal for deciding the appeals on merit. Based on this judicial pronouncement and on the strength of the ambit of the circular, learned counsel has strenuously argued that no interference is desirable on the part of the Court. The relevant observations made by the Court are reproduced below:- "17. Having heard learned counsels appearing for the respective parties and having gone through the relevan....
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....orum approached and to insist that the question being covered by the exceptions contained in the circular, the same deserves to be considered. In A Rajendra Prasad & Ors., case (Supra), the A.P. High Court took the view that in case the Department finds a certain matter to be agitated by way of an appeal although it falls within the monetary limits of the circulars, the department should clearly plead in the memo of appeal itself that the appeal falls under the exceptions. In absence of such a pleading in the memo of appeal, normally appeal should not be entertained. In Kurian Abraham Pvt. Ltd.'s case (Supra) the Hon'ble Supreme Court took the view that whenever any binding circular is issued by the Board granting administrative relief, as long as such circular remains in force, it is not open to the subordinate officers to contend that the circular is erroneous and not binding on them. If such a contention is to be accepted, it would lead to chaos and indiscipline in the administration of tax laws. In Indian Oil Corporation case (Supra) the Hon'ble Supreme Court laid down certain propositions of law in relation to the binding nature of circul....
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....ound of low tax effect. It is expected from the Tribunal to consider this broad parameters while applying the relevant Circular to the facts of the case at the time of deciding appeals." 9.3. In our opinion, this decision on the contrary recognizes the obligation of the Tribunal to consider the circular as per the newly inserted provision contained in Section 268(A)(4). Due weightage is required to be given by the Tribunal to the circular issued by the Board. The circulars are not the merely internal matter of the department. At the same time, filing of the appeal though is a statutory right, but it can certainly be regulated by the Board by issuance of the orders, instructions or circulars. The Board can regulate the filing of the appeal or application before the Tribunal. However, it was obligatory on the part of the Tribunal also to consider as to whether once the Misc. Application was moved before it, that there was an audit objection raised in these matters. Considering the longdrawn procedure prescribed in the Instruction No. 07/2017 dated 21.07.2017 superseding many of other instructions, once accepted by the department, the aspect of low tax effect will pale into in....
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.... have been replied upon by the respondents which are necessary to be discussed at this stage. 13.1. In Improvement Trust, Ludhiana vs. Ujagar Singh and Others [(2010) 6 SCC 786], it was a case where considering the conduct, behavior and attitude of appellant, the Court found that it was not so callous and negligent in prosecuting the matter. The delay was also not huge and the Court however while condoning the delay directed the payment of cost of Rs. 50,000/-. 13.2. Before the Punjab and Haryana High Court in case of Commissioner of Income Tax vs. Oscar Laboratories (P) Ltd. [2009 LawSuit (P&H) 85], dealing with the Civil Misc. Application filed by the assessee against the order passed by the Tribunal approached before the Tribunal itself requiring the recall of the Tribunal's order on the ground that the assessee had not been served in the proceedings. On the issue of maintainability of the appeal, the objection had been raised. After the detailed discussion on Section 260(A) and Section 268(A), the Court held that the instructions issued by the CBDT laying down monetary limits for filing of appeals are mandatory and binding on the Revenue. Here also for revising the m....
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....department for filing references to the High Court would be binding on the department. The Court observed as under:- "4. The above instructions dated 27th March, 2000 reflect the policy decision taken by the Board not to raise questions of law where the tax effect is less than the amount prescribed in the above circular with a view to reduce litigations before High Courts and Supreme Court. The said circular is binding on the Revenue though learned Counsel tried to contend that the said circular is not applicable to the old referred cases. However, he could not take his submission to a logical end. 5. One fails to understand how Revenue can contend that so far as new cases are concerned, circular issued by the Board is binding on them and in compliance with the said instructions, they do not file references if the tax effect is less than Rs. 2 lakhs. But the same approach is not adopted with respect to the old referred cases even if the tax effect is less than Rs. 2 lakhs. In our view, there is no logic behind this approach. 6. This Court can very well take judicial notice of the fact that by passage of time money value has gone down, cost of li....
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.... Accordingly, the Circular issued by the CBDT under Section 268A of the Act of 1961 is held binding on the Department thus appeal cannot be filed, if it is barred. It is, however, with a clarification that if the issue decided by the CIT (Appeals) or Tribunal is contrary to the judgments of the Supreme Court, the Department can prefer an appeal, however, care would be taken to file it only in those cases where the order passed by the CIT (Appeals) or the Tribunal is contrary to the ratio propounded by the Supreme Court on the same issue. In doing so, sanctity of Article 141 of the Constitution of India would be maintained, thereby, serious consequences of taking different view would also be avoided." 13.6. This Court decided the case of Commissioner of Income-Tax vs. Concord Pharmaceuticals [2008 LawSuit(Guj) 2755], where the question before this Court was as to whether the Tribunal had rightly dismissed the appeals filed by the Revenue without adjudicating the same on merits on the ground of low tax effect. In view of the instructions of the CBDT, the Court after detailed examination of law on the point has held that subject to certain directions, all the Tax Appeals deserve to....
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.... the circulars, the department should clearly plead in the memo of appeal itself that the appeal falls under the exceptions. In absence of such a pleading in the memo of appeal, normally appeal should not be entertained. In Kurian Abraham Pvt. Ltd.'s case (Supra) the Hon'ble Supreme Court took the view that whenever any binding circular is issued by the Board granting administrative relief, as long as such circular remains in force, it is not open to the subordinate officers to contend that the circular is erroneous and not binding on them. If such a contention is to be accepted, it would lead to chaos and indiscipline in the administration of tax laws. In Indian Oil Corporation case (Supra) the Hon'ble Supreme Court laid down certain propositions of law in relation to the binding nature of circulars issued by the Board. The Court held that despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board and that it is not open to the Revenue to advance an argument or file an appeal contrary to the circulars. 18. There is also difference of opinion amongst the Courts with regard to the appli....
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....e appeal on merits. 20. We are of the view that simply because the appeal is filed by the Department in contravention of the Circular the Tribunal is not bound to decide the appeal on merits. Due weightage should invariably be given by the Tribunal to the Circular issued by the Board. Even otherwise, the newly inserted provisions contained in Section 268A(4) make it obligatory for the Tribunal to consider such Circular. It is not open for the Department to contend that Circulars are internal matters of the Department and assessee cannot object to filing of an appeal on the basis of such Circular. It is true that filing of an appeal is a statutory right but it can certainly be regulated by the Board by issuance of orders, instructions or Circulars. This would not amount to taking away the right of filing of appeal or that such right is prohibited by executive instructions. Section 268A(1) of the Act now recognizes 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 Hon'ble Supreme Court or the territorial High Court have declared the law on a question, it is not open to the Tribunal to d....