C.I.T. vs. KAILASH KU. AGRAWAL

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ITA/159/1999HC ChhattisgarhCGHC01002488199908 April 2009Author: HON'BLE SHRI JUSTICE DHIRENDRA MISHRA,HON'BLE SHRI JUSTICE RANGNATH CHANDRAKAR8 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal, while hearing the appeal filed by the Revenue, considered the Instruction No. 5/2008 dated 15.5.2008 issued by the Central Board of Direct Taxes (CBDT) and Section 268A of the Act. The Instruction stipulated monetary limits for filing departmental appeals. The tax effect in the present appeal was Rs. 92,200/-. The Tribunal noted that the appeal was pending since 1999. Considering the binding instructions of the Board and the negligible tax effect, the Tribunal was of the opinion that there was no justification to proceed with the appeal. Therefore, the Tribunal dismissed the appeal on the grounds of negligible tax effect, without going into the merits of the case. The Tribunal also noted that Clauses 8 & 9 of the Instruction, which mandate contesting appeals irrespective of tax effect in certain circumstances, were not applicable. No decision was made on the merits of the additions.

What were the facts?

The Revenue filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the order of the Commissioner of Income Tax (Appeals) which had deleted additions made by the Assessing Officer. The additions were Rs. 1,61,500/- on account of suppression of receipt from toll tax barrier and Rs. 69,000/- on account of unexplained cash credit in the name of Smt. Bhawaridevi Jain. The assessee, M/s Kailash Kumar Agrawal, had undergone a search and seizure operation. The Assessing Officer had computed the profit for the year 1992-93 at Rs. 27,92,912/- against shown receipts of Rs. 22,50,159/-, leading to an addition of Rs. 1,61,500/-. The cash credit of Rs. 69,000/- was claimed to be disclosed under Section 132(4) of the Income Tax Act, 1961.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the learned Tribunal was legally justified in deleting the addition of Rs. 1,61,500/- made by the Assessing Officer on account of suppression of receipt from Toll Tax Barrier? (Question of law) 2. Whether on the facts and in the circumstances of the case, the learned Tribunal was legally justified in deleting the addition of Rs. 69,000/- made by the Assessing Officer on account of unexplained cash credit appearing in the name of Smt. Bhawaridevi Jain under Section 68 of the Income Tax Act, 1961? (Question of law) Assessee's contentions: The assessee argued that the Rs. 69,000/- was disclosed under Section 132(4) and was taken into consideration for computing total income. The Commissioner accepted the submission that Smt. Bhawaridevi Jain had no other source of income apart from the respondent firm. Revenue's contentions: The Revenue argued that the assessee did not maintain accounts and the Assessing Officer computed profit based on seized documents. The addition of Rs. 69,000/- was made under Section 69 as income disclosed under Section 132(4). The Revenue contended that the Tribunal erred in deleting the Rs. 69,000/- addition.

Which sections of the Income-tax Act were involved?

Section 260A,Section 132(4),Section 68,Section 69,Section 268A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
:3a< t27' ^=T -4|^M^t, e'Tll'y'l®,FSI<'ll'Mll< *11Nt11 (hNith 311^? 'q'RT (1cll3«lVt) ^T 3?{^T W*tfGti TOIIW ^Eiftg sii^i D.B. HON'BLE SHRI DHIRElNDRA MISHRA. & HON'BLE SHRI R.N CltlANDRAKAR, 3J I.T.A.Nb.159 oU.999 Appellant Revenue Respondent Assessee Commis; M/s Kail^sh Jashpuri] 13RDER (Passed 0(1 9In April, 2009) Per Dhirendra Mishra.JI Shri S. Rajeshwar Rao, le; The appellant has filed Income Tax Act, 1961 on the fo 1. "Whether on the facts the case, the learned sustaining the order o Income Tax (Appeal; Rs.1,61,500/- made account of suppressic]n Barrier?" "Whether on the fact case, the learned Tril upholding the order of Income Tax (Appeali Rs.69,000/- made b} account of unexplainec *l<<[?l<fl-< H14cif 4 ftT?t <I«l«;l<. ^TSTRm 311^1 sioner of Income Tax, Raipur tfersus Kumar Agrawal, agar, Raigarh (MP) ith ^rned counsel for the appellant. t(iis appeal under Section 260A of the lowing substantial questions of law: and in the circumstances of ribunal was legally justified in the learned Commisioner of |) deleting the addition of ^y the Assessing Officer on of receipt from Toll Tax fc and circumstances of the |unal was legally justified in |the learned Commissioner of O deleting the addition of the Assessing Officer on cash credit appearing in the •sNiT^w ira"—FS/95—11/2008—1,00,000. -^- a-S ~3^ •^l'Mld^, ®Tllyis,fsfWiyy *<i*i<ii <»*ll<ab •WI, 200 an^ Slt) 311^1 V\ ft-fi'* ^l <ffl^9E »*ll<!ft 6WIW ^ifei SIltW name cif Smt. Bhawaridl the Income Tax Act, 19f 02. Briefly stated, facts of tltx operation was carried out under| 1961 at the residential premis^s During the search operation, ce| were seized, which revealed th^t were comparatively higher. The the year 1992-93 at Rs.27,92,91 assessee of Rs.22,50,159/-. expenditure incurred by the net profit of the assessee for Rs.5,94,067/-. After deductinb Section 132(4) of the Act from Rs.1,61,500/- was added to tl| account of suppression of receipt 03. In reply to the notice of tt Account and showed initial in| Bhawaridevi Jain, partner of th| filed explaining the amount of i| that she received an amount d TDR, Rs.80,000/- from Shri deposited in the bank by way y •tiwfi'til^ tii*<<"ff ^i fs%t <f»it<;it ^i'sjfman^r evi Jain, under section 68 of ll?" le case are that search and seizure |Section 132(5) of the Income Tax Act, ts of one Shri Hanuman Prasad Jain. Itain loose papers and note books etc. |t total tax received from the toll tax, pkssessing Officer assessed receipts for !2/- against the receipts shown by the After making allowances towards and amount payable to PWD, the financial years was worked out at the total disclosed amount under :he net profit for the year, balance of le total income of the assessee on 1s from the toll tax barrier. ass^ssee the |e Revenue, the assessee filed Capital 1/estment of Rs.2,01,000/- by Smt. ^ Firm. The written submission was fiitial investment and it was disclosed Rs.51,162/- by way of maturity of 1-1P Jain as loan and Rs.69,000/-, {>f cash, was claimed to be disclosed ^T^^PT^S"!!^-- •..- - -FS/95—11/2008—1,00,000. 2^i '3'^ "4l'41d'4, yal'M'is, [si<yii'y'j,< <nwn thNith 311^1 ''WP ('jql^^) sn^rw Vw^i 'ECT <*n^?i ss*(ilft <;M<im<<1Ti *ii^<"ff ^ fs^ <^('<^i< ^yaffiiff 3(i^n under Section 132(4). The saic) consideration for computing Section 68 of the Act vide Annel amount of Rs.69,000/- was taken into otal income of the assessee under ;ure A. 04. The Commissioner of I| preferred by the assessee, nol Assessing Officer and estimatijig months of the year, calculated| less than the disclosure under addition of Rs.1,61,500/- was the submission of the Rs.69,000/- on account of Bhawaridevi Jain in the books o< jicome Tax (Appeals) in the appeal relying upon the submission of the the expenditure for the last three a profit of Rs.3,94,616/-, which was ISection 132(4) of the Act. Thus, the leleted. The Commissioner, accepting also deleted the addition of dash credit in the account of Smt. the respondent firm. asselssee T1he 05. Aggrieved by the above before the Appellate Tribunal. of the Commissioner of Incorfie appeal. order, the Revenue preferred appeal

Appellate Tribunal upheld the order Tax (Appeals) and dismissed the 06. Shri S. Rajeshwara Rao Revenue submits that the asse; the receipts and expenses and Officer computed the profit of papers and documents seized After allowing due deductions learned counsel appearing for the tsee did not maintain the accounts for |in these circumstances, the Assessing |the respondent on the basis of loose [during search and seizure operation. towards expenses, an addition of ^ra^T^pT^rr )5—11/2008—1,00,000. 2.^> ~?5E; •<||A||<n-q, (9-fll'M'IG, (slCII'My <n*«i(tt»*<i<ti sn^ ^fv^t Sil^I Vt !<-< trar Qii^r st>*iicf> wnw ^fta aii^i •Z1 4iiiit'i'<l'i iiiiit ^i 'fesft <I"it>;i< ^siRm aii^i Rs.69,000/- was made under 3< found to be income disclosej However, the Appellate Tribui|ial appellant that Smt. Bhawarid^\ other sourceof income other ft deleted the amount of Rs.69,00p/- ection 69 of the Act as the same was under Section 132(4) of the Act. accepting the submissions of the v\ Jain, partner of the firm, had no han the income from respondent firm

07.

We have heard learned admission. counsel for the revenue/appellant on 08. Before entering into th^ consider the case in the 15.5.2008 issued by the Centi) 268A of Act. merits of the case, we propose to lifeht of Instruction No.5/2008 dated tal Board of Direct Taxes and Section 09. The Central Board of Dir^c instructions to the income-tax from time to time. The Boal 15.5.2008, in supersession of income-tax authorities regardir^g for filing departmental appeal; Courts and Supreme Court. Ini limits, Instruction No.4 defines 8 & 9 mention the conditions, contested irrespective of the ta^ |ct Taxes (in short "the Board") issues ]authorities by way of issuing circulars |-d, vide Instruction No.5/2008 dated ]the earlier instructions, instructed the the monetary limits and conditions before the Appellate Tribunals, High jtruction No.3 deals with the monetary (he tax effect, whereas Instructions No. jn which adverse judgments are to be effect. iiT^*tiTaiiiR -11/2008—1,00,000. 's^t •^iww^, wx\\ww, hwvy. ^iicir wn<s gn^wiaq> dll^!'! ^I l<-li+ Wff 3H^? a>*iiq) 'hlltct'fl-f >ll><ci11"'ff'fe'St <Ia|t<;K ^siRmsn^i

10.

Clauses No. 3, 4, 8 and| 15.5.2008, are reproduced as uhder "

3.

Appeals will henceforth\ effect exceeds monetary liml^ 9 of the Instruction No.5/2008 dated be filed only in cases where the tax ts given hereunder:- s/. No. 1. 2. 3. Appeals in matters Jncbme-tax Appeal before Tribunal Iftppellate Appeal under sectifpn 260A before High Court Appeal before Court fsupreme Monetary Limit (In Rs.) 2,00,000 4,00,000 10,00,000

4.

For this purpose, 'tax eft\ tax on the total income chargeable had such total ii) income in respect of the /ss( be filed (hereafter referred tax will not be include any notional tax effect should b^ penalty orders, the tax effecj or reduced in the order to be\ efPect' means the difference between the as psed and the tax that would have been it)come been reduced by the amount of iss^ie against which appeal is intended to fo as 'disputed issues'). However, the iriferest thereon. Similarly, in loss cases ^ taken into account. In the cases of will mean quantum of penalty deleted 1 appealed against. •^ftTiiSiUildlU'l-ik'IM—FS/95—11/2008—1,00,000. ^-L 'TSET "4|^|<-)<<, ®T)1<H'IS, [c<<vll^^< IIICTI a»Ni<t» 311^! 'fflf) dll^l ^T R'li'* ? •an^w s*>*ii<ft i^roT^firaM^t c +!<ii<'i<fl-< iiidi'? reIA <I"i«;i< ^affim sii^i

8.

Adverse j'udgments relati^ig to the following should be contested irrespective of the tax effect\ (a) Where the Constit0{tional validity of the provisions of an Act or Rule are und^r challenge. (b) Where Board's ord^i has been held to be\ (c) Where revenue Aitdit accepted by the Dejfartment. 'r, Notification, Instruction or Circular illegal or ultra vires. dit objection in the case has been 9. The proposal for fil^ 136 of the Constitution t/el cases, be sent to the Research), New Delhi Petition shall be in consliltation Justice." )ng Special Leave Petition under Article ^fore the Supreme Court should, in all \Directorate of Income-tax (Legal & the decision to file Special Leave with the Ministry of Law and aAd Section 268A, which wa; deals with filing of the appeal tax authorities. The above pr< retrospective effect from 1st Ap Tax Act is reproduced as under: ^ inserted by the Finance Act, 2008, (fir application for reference by income- (jivision has been made applicable with )|-il, 1999. Section 268A of the Income "268A. Filing of appeal income-tax authority. or application for reference by CTH'&f^sfCTipuil-^KW-IKi'li'!—FS/9S—11/2008—1,00,000. a.3> ••-\ J -3^Et ^il^ld'1!, ©•al'M'i®,(sidiyy WWII (8>*liq» sn^^IMa'ti dll^SII VI I<-li«b ^T •aii^i st>*li*n ?<aiw ^ifta aii^n -t *wid41-i 'WRif ^ fe€r•risi^rc ^? siRii sn^t (1) The Board may, fr\ instructions or directionsi fixing such monetary lin\ purpose of regulating fi^ reference by any income-} of this Chapter. m time to time, issue orders, to other income-tax authorities, its as it may deem fit, for the ng of appeal or application for ax authority under the provisions {2) Where, in pursuanc\ directions issued under authority has not filed reference on any issue /n| assessment year, it shall\ filing an appeal or applii^tion /ssue in the case of- of the orders, instructions or sub-section (1), an income-tax any appeal or application for the case of an assessee for any not preclude such authority from for reference on the same (a) the same assessee fi (b) any other assesse assessment year. thi r any other assessment year; or for the same or any other (3) Notwithstanding reference has been flldfl pursuant to the orders 01, under sub-section (1), it s1 being a party in any app\ the income-tax authority the disputed issue by not\ reference in any case. (4) The Appellate Tribui or reference, shall have directions issued unddf circumstances under whk reference was filed or not no appeal or application for by an income-tax authority instructions or directions issued fiall not be lawful for an assessee, ^al or reference, to contend that fias acquiesced in the decision on \filing an appeal or application for ja/ or Court, hearing such appeal rdgard to the orders, instructions or sub-section (1) and the 1fi such appeal or application for filed in respect ofany case. ^rra^'^R^n^T^ »—FS/95—11/2008—1,00,000. ,^.,.T ''%. I 'E.ffii ^ '& %'%11 i" d11%<l VI fSl-fi* tWI <W^I 9)*fl«ft V. '?ST •<41'i|l<'l*(,»Tfl'M'is, fadi'yy *n»inia»*<i<(» •WI,200 sn^r 'T^T (^?f3^?) ^(•irtiqK^rf^ci »ii^ _^j fi^ng (5) Every order, instru^tions issued by the Board appeal or application for |-i been issued under sub-^i sub-sections (2), (3) and\

11.

The iristant appeal ha 15.11.1999. Indisputably, the tdx

12.

Learned counsel for th| circumstances enumerated in No.5/2008 dated 15.5.2008, dc| into consideration that the ta{ negligible amount of Rs.92,2QP/ instructions of the Board, we justification to proceed With t^e having negligible tax effect.

13.

Thus, in view of the laf Section 268A of the Act, we dcj merits of the case. Accordin^ly negligible tax effect. However, there shall be nc) Dhirendra Mishra Judge +I^I^PTt^ Ml^cff "^ fe^F <M^K ^T3ifhH3n^i or direction which has been monetary lim/ts for filing an •eference shall be deemed to have •ection (1) and the provisions of (4) shall apply accordingly." been filed by the Revenue on effect in the matter is Rs.92,200/- appellant fairly submits that the Clauses 8 & 9 of the. Instruction not exist in the present case. Taking x effect, in the instant case, is the '- and keeping in view the binding are of the opinion that there is no instant appeal pending since 1999 |est Instruction dated 15.5.2008 and not deem it necessary to go into the we dismiss this appeal having |i order as to costs. R.N. Chandrakar judge

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