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Dy Commissioner of Income Tax Circle 8, Ahmedabad Versus Soma Textiles & Industries Limited

2015 (12) TMI 967 - ITAT AHMEDABAD

Maintainability of appeal - monetary limit - Held that:- We need to take note of a very pragmatic initiative, taken by the Central Board of Direct Taxes last week, for reducing litigation in direct taxes. Vide circular no. 21/ 2015 dated 10th December 2015, the Central Board of Direct Taxes has, inter alia, announced that, subject to certain exceptions- which are not relevant in the present context, henceforth, no departmental appeals will be filed against relief given by the CIT(A), before this .....

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he Tribunal, this will be a legal nullity.

While we have checked and rechecked each case individually and we are satisfied that in none of these cases tax effect involved is not more than ₹ 10,00,000, we accept that human errors are possible and no such error should be allowed to prejudice legitimate interests of the revenue. The liberty is, therefore, specifically granted to the Assessing Officers to approach this Tribunal in case there are any cases, inadvertently included in .....

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under the Income Tax Act,1961, all these appeals call into question correctness of the relief granted to the taxpayers by the Commissioners (Appeals) and, most importantly, the tax effect involved in all these appeals does not exceed ₹ 10,00,000 in each of these appeals. In the lead case, the issue involved is whether or not the learned CIT(A) was justified in deleting, vide his order dated 20th November 2013 and for the assessment year 1994-95, the penalty of ₹ 7,43,060 imposed on .....

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015 dated 10th December 2015, the Central Board of Direct Taxes has, inter alia, announced that, subject to certain exceptions- which are not relevant in the present context, henceforth, no departmental appeals will be filed against relief given by the CIT(A), before this Tribunal, unless the tax effect, excluding interest, exceeds ₹ 10,00,000. What is even more important is that not only that such a taxpayer friendly measure will be implemented in all future tax litigation, even the pendi .....

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ereunder: - S No Appeals in Income-tax matters Monetary Limit (in Rs) 1. Before Appellate Tribunal 10,00,000/- 2. Before High Court 20,00,000/- 3. Before Supreme Court 25,00,000/- It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case. 4. For this purpose, tax effect means the difference between the tax on the total income assessed and the tax th .....

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he tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against. 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. lf, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or .....

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and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if the tax effect is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which tax effect exceeds the monetary limit prescribed. In case where a composite order/ judgement involves more than one assessee, each assessee shall be dealt with separately. 3. So far as retrospective operation of this measure is .....

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able in the light of the circular no. 21/2015 dated 10th December, 2015. However, in all fairness to the revenue authorities, this proposal was subject to following conditions to safeguard their legitimate interests: (a) In terms of paragraph 6 and 7 of the said circular, this dismissal will be without any prejudice to the rights of the revenue authorities to raise the same issue, in the case of the relevant assessee or any other assessee, as and when the tax effect involved in such litigation c .....

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specified in this instruction . Further, in such cases, there will be no presumption that the Income-tax Department has acquiesced in the decision on the disputed issues. The Income-tax Department shall not be precluded from filing an appeal against the disputed issues in the case of the same assessee for any other assessment year, or in the case of any other assessee for the same or any other assessment year, if the tax effect exceeds the specified monetary limits. 7. In the past, a number of i .....

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the Tribunal or the Court that the appeal in such cases was not filed or not admitted only for the reason of the tax effect being less than the specified monetary limit and, therefore, no inference should be drawn that the decisions rendered therein were acceptable to the Department. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any precedent value. As the evidence of not filing appeal due to this instruction may have to be produced in courts, the ju .....

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ested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: (a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or (b) Where Board s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign asset .....

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s of the aforesaid circular are reinstated and decided on merits. He also submits that it is humanly impossible to verify tax effect in all these cases, and seeks time so as to call for a report from the Assessing Officer concerned. He also submits that in the cases of composite orders involving more than one assessment year in the case of a single assessee, even if tax effect is less than ₹ 10,00,000 is certain assessment years, the appeals are to be filed for all the years nevertheless. .....

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h only support the conclusions arrived at by the CIT(A), the dismissal of the cross objections could damage interests of the assessee in the cases involving substantive grounds. Shri Sanjay Shah submitted that in some of the cases, even appeal documents are not served on the respondent assessees and, as such, the assessee s rights to file the CO are adversely affected by dismissal of appeals. Ms Urvashi Shodhan points out that in one of the cases, listed at item no. 93, the assessee has also fil .....

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en wrongly included in this bunch of appeals, the same will be recalled in accordance with the law. Learned Departmental Representative is at liberty to point out the specific cases, if any, for appropriate remedial action. 6. While we have checked and rechecked each case individually and we are satisfied that in none of these cases tax effect involved is not more than ₹ 10,00,000, we accept that human errors are possible and no such error should be allowed to prejudice legitimate interest .....

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on maintainable. Without any prejudice to the generalities of the legal rights of both the parties, this dismissal is specifically subject to the liberty granted to the revenue authorities in terms of the assurances in the paragraphs 4 and 6 above. 8. We have also noted that in seven of the cases, as a result of the appeals having been filed by the revenue, the assessees have also filed the cross objections. However, the right to file a cross objection arises only when the appeal filed by the ot .....

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equired to be dismissed as infructuous. All the cross objections are, therefore, dismissed. 9. As we part with these appeals, we would like to place on record our appreciation for the information regarding the issuance of the CBDT circular having been quickly circulated by www.itatonline.org. Within a day of the CBDT circular having been issued, www.itatonline.org was able to put this information in public domain and also send the intimation emails to everyone who has opted to be in their databa .....

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