COMMISSIONER OF INCOME TAX,RAIPUR vs. PRAHLAD RAI AGRAWAL

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TAXC/17/2009HC ChhattisgarhCGHC01013159200926 January 2010Author: HON'BLE SHRI JUSTICE DHIRENDRA MISHRA,HON'BLE SHRI JUSTICE RANGNATH CHANDRAKAR2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal did not delve into the merits of the case. The learned counsel for the revenue, on instructions, submitted that the tax effect involved in the appeal was less than the minimum monetary limit of Rs. 4 lacs prescribed by the Central Board of Direct Taxes (CBDT) vide its instruction No. 5/08 dated 15.5.2008 for preferring appeals before the High Court. The CBDT instruction sets out monetary limits and conditions for filing departmental appeals. In view of this instruction and Section 268A of the Act, the Tribunal deemed it unnecessary to go into the merits. Accordingly, the appeal was dismissed for having negligible tax effect. No finding was recorded on the substantial question of law.

What were the facts?

The assessee, Prahlad Rai Agrawal, for Assessment Year 2005-06, claimed exemption under Section 10(38) of the Income Tax Act, 1961, on long-term capital gains exceeding Rs. 5 lacs. The Assessing Officer (AO) completed the assessment under Section 143. The Commissioner of Income Tax (CIT), exercising powers under Section 263, found the AO's assessment to be erroneous and prejudicial to the interest of revenue due to lack of proper and adequate inquiry. The CIT set aside the AO's order for a fresh assessment. The assessee appealed to the Income Tax Appellate Tribunal (ITAT), which quashed the CIT's order, holding that the AO's assessment was not erroneous or prejudicial to revenue and that Section 263 was not applicable.

What were the issues?

1. Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in quashing the order passed under Section 263 and holding that the assessment order was not erroneous and prejudicial to the interest of revenue, and that adequate inquiry was not made by the Assessing Officer? (Question of law, turning on Section 263 of the Income Tax Act, 1961). Assessee's contentions: The ITAT held that the CIT was not justified in invoking Section 263. The Tribunal found that the AO's order allowing exemption under Section 10(38) was not erroneous or prejudicial to the interest of revenue and that the case was not fit for invoking Section 263. Revenue's contentions: The revenue argued that the AO completed the assessment without proper and adequate inquiry, making the order erroneous and prejudicial to the interest of revenue. The revenue preferred the appeal against the ITAT's order.

Which sections of the Income-tax Act were involved?

Section 260A,Section 10(38),Section 143,Section 263,Section 268A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
'^JL^J^^:^-^^^.M^^1:^i^^^^^^^^^^ HON'BLE SHR! R.N. CHANDRAKAR. JJ TaxC&seNQ.17of; (Kevenue) (Assesseel Commissioner of Income Tax, Raipur. Prahlad Rai Agrawai, S/'o Sunderiai Agrawai, Near Telephone Exchange Bastar Road, Dhamtari. Fresem: Shri Raieev Shrivasiava, Standing Counsel ror the appeiiant. Sh" Nss'abh Dubsy, counse! for the respondent.

AL ORDER {pgacc9d cn 27m J^nu^r1/. 2010) fer Dtiirenwa Mishra. J The instant appeai preferred by the appeilant/revenue under Section 260A of the income Tax Act, 1961 i'in short "the Act") against the order of the income Tax Appeiiate Tnbunai, Biiaspur Bersch, Camp at Raipur iin short "Tribunai'") has been admitted on the foiiowing substantial question ot law: "Wttetner in rr/e i'acis ana circumsiances oi tlie case, tk^ fn^onj^ Tsix A^^s'iists Tnbt'ns'f wss f'j'stfHffci ^n •lsw. in quashing Sie Oi'dei' passed undsi' Seciion 263 and in hofrifrl€s ihat th^ Bs$tA-3^m£int ofc^f ws^.s not £inv^n€ous ^nCt ps^sJCfsCictf ^O 'U'sS IHi&^SSt 07 svV&iiUS IHGUQn p^Opas and adequate inQuiiy was noi made by tne Assesssng *^e/ ^-^ tvri:iM11v r f i'1"^ ~-^^- ^uj'r\^-'"-f ::^J r^r .H ; .r''t.:y S I \ ^- S ^—:^r/J/

2.

Brieriy staieo, racis of tne case are inat the assessee nad shown incorne irom Long i.erm i^apitai yain exceeding Ks. ^ lacs and ciaimed exempiion uncier aec'uon 'lu(,.ii3i o'i' tne Ac't i'or tne assessment yeai" 2005-06. The Assessing OffiCSt' (in short "AO") cuinpleied assessment uncier oection 14oiy) oi ine Hct. ^. Learned i-urnniissioner, jrifcorn® i ax (in snon: "iJi i j exercising povi/ers under aecuon 2o3 ot ine Act nonced that the AO nas compietea assessrnent wiinout proper ana aaequaie enauiry, wnicn was ironeous and preiuaiciat to ine interest o'f trte revenue, ana ineretore, . set aside ine said order under Section 263 for making fresh assessrnent aiter conauciing proper enquiry. 4

^- The assessee aggrieved by the order of ihe CIT, preferred appeai befbre ihe Tfibunai. Learned Tribunai aiiowed the appeai by the impugned order with a flnding that ieai'ned CIT was not jusiified in hoidinfl tnat the AO aiiowed' exemption under Section i0(38) or the Act wiihout making proper enquiries, and furi:her heid that the order of the AO cannot be held to be erroneous or prejudiciai to the interest of the revenue and ihe present case was not fit for invoking provisions of oecuon <:oj or tne ACI. 3hri Rajeev Shrivastava, iearned counsei for tne appeiianu'revenue, on instructions from the department, before entering into merits or tne case, fairiy submits that even if the order passed by ieamed-CiT under Section 263 is upheld, tax efrect invoived in this appeal is iess than tne rn.nimum moneiary iirnrt or Ks.4 lac as uxea &y' ine uentrai Boara or Direct Taxes vide its instruciions HoS/Go dated 15.5.2008, according to which for preferring appeai before the High Court, the minimum tax efrect has been fixed at Rs.4 iacs. Meard iearned counsei tor the oarties. The Centrai Board of Direct Taxes (in short "the Board") issues insu-uctions .to the income-tax autnoniies by way or issutng cireuiars from time to time. The Boai'd, vide instruction No.5/08 dated 15.5.2008, in supersession of the eariier instructions, insti'ucted the income-tax authorities regarding the monetaiy iimlts and conaitions for nling departmeniai appeais before i.he Appeiiate Tribunais, High Courts and Suoreme Court. Instruciion No.3 deais with the rnonetary iimits, insiruction No.4 defines the tax eftect, whereas instructions No. 8 & a mention the conditions, in which adverse judgments are to be coniested irt'espective of the tax effect. As per above instt'uctions, for nling appeai before tne High Court, the! minimum monetary iimit has been tixed at Rs.4 iacs. Thus, in view of the iatest instruction dated 15.5.2008 and Section 268A of the Act, we do not deem it necessary to 90 into the merits of the case. Accofdinyiy, the appeai is uismissed for having negligibie tax effect. —" Dhirendra Mishra Judge R.N. Chandrakar Judge Y\

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