TMI BlogAppeal of Assessee dismissed for low tax demandX X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal of Assessee dismissed for low tax demand - By: - CA DEV KUMAR KOTHARI - Income Tax - Dated:- 19-8-2015 - - Honourable Supreme Court refused to entertain the appeal of assessee due to low tax effect- with due respect, author feels the urgent need of reconsideration to render justice. ALEXANDER GEORGE Versus COMMISSIONER OF INCOME-TAX 2015 (8)TMI 519 - SUPREME COURT . COMMISSIONER OF INCOME-TAX AND ANOTHER Versus CENTURY PARK 2015 (8) TMI 522 - SUPREME COURT . Alexander George Versus Commissioner of Income-Tax 2003 (1) TMI 49 - KERALAHIGH COURT Alexander George. Versus Income-Tax Officer 1997 (12) TMI 146 - ITAT COCHIN The Supreme Court- last hope of justice : The Supreme Court is whereupon pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic look hopefully as last source of justice. Justice by Supreme Court is important for citizens of India and also foreigners who have dealing in India. In our country, justice is practically denied due to delays in justice. In such scenario, if the Supreme Court denies to consider the appeal of a citizen, this will amount to total denial of justice. The order of the Supreme Court on appeal of Alexander George: In this case the Supreme Court held as follows: The tax effect in the present case is ₹ 4,22,830. On this ground alone, we refuse to entertain the appeal and to decide the same on the merits. The appeal is, accordingly, dismissed. Observations of author: The amount of ₹ 4,22,830 may be pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty for Government or a rich person. However, for assessee, it may be a big sum, and that is reason that he was pursuing appeals. It may have cascading effect on appellant and his family, because similar issues may be involved in his own case or in case of his family members. The assessment year involved is AY 1986-87 that is previous year ended 31.03.1986- a thirty year old matter. The tax demand at that time was ₹ 4,22,830 on consideration of simple inflation this amount would be around ₹ 70 lakh not a small sum even for rich people. Appeal fees: The appellant being a tax payer assessee has to pay a fees for filing of appeal before CIT(A) ITAT, High Court and also the Supreme Court. Therefore, any court before whom a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal is filed and an appeal fees is also paid must get an order on appeal after due consideration, a dismissal of appeal for technical reasons or even absence of appellant or his representative, should be rare because appeal can very well be decided by considering appeal documents and earlier orders etc. One can say that when a fees is charged, there should be a consideration in form of well-reasoned order on appeal. If no such order is passed, there is complete denial of justice and it may be in nature of lack of service / inadequate service as against service expected by the public from the system of justice. Consequences of non-consideration / dismissal of appeal: The consequence of order of the Supreme Court is that asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is liable to pay interest, he may be levied penalty he may be prosecuted for concealing particulars of income. In other years also he will face same consequences, All these are serious points which must have been considered by honourable judges, before passing the order. Another order of the Supreme Court on appeal of CIT: In COMMISSIONER OF INCOME-TAX AND ANOTHER Versus CENTURY PARK 2015 (8) TMI 522 - SUPREME COURT the Supreme Court has considered judgment of High Court in which the High Court dismissed appeal of revenue on ground of low tax effect. In this case the Supreme Court was very liberal towards appellant and condoned delay in filing of appeal and gave liberty to the Department to move the High Court pointing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut that the Circular dated February 9, 2011, should not be applied ipso facto, particularly, when the matter has a cascading effect. There are cases under the Income-tax Act, 1961 , in which a common principle may be involved in subsequent group of matters or large number of matters. In our view, in such cases if attention of the High Court is drawn, the High Court will not apply the Circular ipso facto. For that purpose, liberty is granted to the Department to move the High Court in six weeks' time from today. Observation of author: The CBDT has from time to time fixed limits for tax effect, and directed to file appeal only when tax effect is more than the limit fixed, except some exceptions. In view of author each year and each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case should be considered for applicability of limit because considering the purpose of reducing litigation , by not filing appeal in case of lower revenue effect, cumulative revenue effect need not be considered merely because appeals of more than one year are disposed of at a time or are being considered at one time. For each year being separate case for each year separate appeal is required to be filed before ITAT/ High Court and the Supreme Court, as the case may be. For each year, at all levels tax payers as well as governments time and cost are to be spent to handle appeals. Therefore, revenue impact of each year only must be considered, to avoid litigation on petty matters, considered by way of relief allowed in each year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circulars of CBDT cannot be applied to tax payer: Limits fixing minimum tax effect, for filing appeal are for revenue authorities, and not for tax payer. The circular of CBDT cannot be considered while considering appeal of assessee. Appeal of Alexander George before the Supreme Court: Appellant , Alexander George preferred appeal before the honourable Supreme Court in hope of relief he considered allowable, which was not allowed at any stage from assessment to appeal before High Court. The matter involved many serious points for decision, including inter alia: Whether, the land acquired by the State Government was transferred in the previous year relevant to Assessment Year 1987-88 as contended by assessee or 1986-87, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held by authorities? Whether, the land acquired was a capital asset or not? Whether, the notification of 1972 will determine character of land as capital asset or the subsequent notification of 1994 which superseded the notification of 1972 will prevail to determine character of such land, which was acquired? Whether, the notification of 1994 was to correctly determine character of land as not falling within scope of capital asset for the purpose of section 2(14). Rural agricultural land - capital asset or not: Undoubtedly the land of assessee which was acquired was rural agricultural land falling within a gram panchayat hence should not be treated as capital asset . However, it could be treated as capital asset, if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t fell within certain limits from any municipal area or cantonment area etc. based on population of that area and population of village in which land situate, as provided in section 2 (14). As per notification of 1972, the impugned land was treated as rural agricultural land but falling in notified area and hence treated as capital asset. However, as per notification of 1994 the land was not a capital asset for the purpose of section 2 (14) and tax under head capital gains. This point was raised before ITAT by way of an additional ground which was admitted. However, ITAT held that at the time of acquisition by government and transfer by assessee, the 1972 notification was in force, so the land was capital asset. General perception: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Considering growth of population and development in various areas between 1972 and 1994, general thought which comes into mind is that a rural area which was considered as capital asset being within certain limits from municipal area, in 1972 could not become a non- capital asset in 1994. Due to growth of area and population both, a non-capital asset could become capital asset during this period, but opposite of this happening that is a capital asset becoming non capital asset seems unlikely. This can only be due to reason of some mistakes in notification of 1972 which was rectified in 1994. However, there is no mention of reasons for notification of 1994 bringing such changes. If there was a mistake in 1972 notification, then certainly n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification of 1994 must be considered as prevailing. However, there is no mention in this regard at any stage so far appear from reported judgments of ITAT, High Court and the Supreme court in this case. Applicable year: Whether the gain should be assessed in AY 1986-87 or 1987-88 is also a serious point for consideration. Merely because land was acquired under urgency clause, it cannot be said that land was transferred on possession taken under urgency clause. In case the gain is taxable, it is also important to see that gains should be taxed only after gains are actually realised. When cash basis of accounting is allowed for business and profession and other sources, there is no reason that only after receipt of consideration, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gain should be taxable because otherwise from where, transferor shall pay tax and instalments of advance tax. Conclusion: With due respect and regards, and also considering order of the Supreme Court in case of Park author feels that the order of honourable Supreme Court in case of Century Park , the judgment in case of Alexgendra need reconsideration. If this is not done, author is afraid that even first appealate authority like CIT(A) may try to take advantage of the judgment of the Supreme Court in case of Alexgendra and dismiss appeals just to full fill target for disposal of appeals. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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