Principal Commissioner Of Income Tax (Central) vs. Shri Ramesh Chand Rai

ITA/283/2022HC Madhya Pradesh21 October 2024Bench: HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal could not be entertained. It relied on the Bombay High Court's decision in Principal Commissioner of Income-Tax, Mumbai vs. Nawany Construction Co. (P.) Ltd., which stated that mere raising of a Revenue Audit Objection is not enough; the department must demonstrate that the objection has been accepted. In this case, the appellant conceded that this condition was not met, and no record was produced to show acceptance of the audit objection. Furthermore, the Court noted the subsequent circular dated 15.03.2024, which superseded earlier circulars and raised the monetary limit for filing appeals to ₹2 crores. This new circular did not provide an exception clause for filing appeals below the monetary limit based on audit objections. Consequently, the appeal was disposed of considering the non-existence of an exception clause and the monetary limits prescribed by the circulars.

What were the facts?

The appeal was filed by the Principal Commissioner of Income Tax (Central) against Shri Ramesh Chand Rai. The tax effect in dispute was ₹29,92,480/-. The appellant argued that the appeal could not be disposed of due to an audit objection, referencing CBDT circulars dated 10.12.2015 and 11.07.2018. The respondent drew attention to a Bombay High Court judgment in Principal Commissioner of Income-Tax, Mumbai vs. Nawany Construction Co. (P.) Ltd. The High Court noted that the appellant's counsel conceded that mere raising of an audit objection was not enough and that the department had not pointed out that the audit objection had been accepted. The Court also noted the issuance of a subsequent circular dated 15.03.2024, which superseded earlier circulars and raised the monetary limit for filing appeals to ₹2 crores.

What were the issues?

1. Whether the appeal can be disposed of in view of CBDT circulars dated 10.12.2015 and 11.07.2018, considering the presence of an audit objection? (Question of law) Assessee's Contention: The respondent (assessee) relied on the Bombay High Court judgment in Principal Commissioner of Income-Tax, Mumbai vs. Nawany Construction Co. (P.) Ltd., arguing that merely raising an audit objection in terms of a circular is insufficient. The revenue must demonstrate that the audit objection has been accepted by the department, which was not done in this case. The circulars continue to bind the revenue, and any conditions therein must be proved to be attracted. Revenue's Contention: The appellant (revenue) argued that the appeal could not be disposed of due to an audit objection, citing CBDT circulars dated 10.12.2015 and 11.07.2018. However, the appellant conceded that the revenue had not pointed out that the audit objection had been accepted by the department, nor had any record been placed before the court to that effect.

Which sections of the Income-tax Act were involved?

None explicitly mentioned in the provided text beyond reference to CBDT circulars.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI & HON'BLE SMT. JUSTICE ANURADHA SHUKLA ON THE 21st OF OCTOBER, 2024 INCOME TAX APPEAL No. 283 of 2022 PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) Versus SHRI RAMESH CHAND RAI Appearance: Shri Siddharth Sharma - Advocate for the appellant. Heard on : 23.09.2024 Pronounced on : 21.10.2024 ..................................................................................................................................... ORDER Per: Justice Sushrut Arvind Dharmadhikari The tax effect in the present case is 29,92,480/-. 2. Learned counsel for the appellant has argued before this Court that the appeal cannot be disposed of in view of CBDT circular dated 10.12.2015 read with circular dated 11.07.2018 as there is an audit objection. 3. Learned counsel for the respondent has drawn the attention of this Court towards the judgement delivered by the Division Bench of Bombay High Court in the case of Principal Commissioner of Income-Tax, Mumbai vs. Nawany Construction Co. (P.) Ltd., (2018) 98 Taxmann.com 294 (Bombay). Paras-6 to 9 of the aforesaid judgement reads as under :- 6. However, the latter Circular dated 11.7.2018 contains para 10. The para 10 of this 1 ITA-283-2022 NEUTRAL CITATION NO. 2024:MPHC-JBP:52445 Signed by: ANAND KRISHNA SEN Signing time: 10/22/2024 11:27:59 AM Signature Not Verified

Circular reads as under: “10. Adverse judgments relating to the following issues should be contested 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 is 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 assets/bank accounts.” 7. Mr. Pinto would submit that this is a conditional withdrawal permitted. The Revenue’s Circular, therefore, cannot be read de hors or by omitting this condition. One of the conditions in Clause 10(c) of this Circular is, where the Revenue Audit Objection in the case has been accepted by the Department. 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 1172018 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. 4. Learned counsel for the appellant has merely stated that there was an audit objection and therefore, in light of the Division Bench judgement of the Bombay High Court, mere raising of this objection in terms of a circular is not enough. The Revenue has not pointed out that this audit objection has been accepted by the department nor any record has been placed before us. Moreover, subsequently, circular dated 15.03.2024, has been issued whereby circular dated 11.07.2018 and 08.08.2019 have been superseded wherein monitory limit for filing appeals by the department has been raised upto 2 2 ITA-283-2022 NEUTRAL CITATION NO. 2024:MPHC-JBP:52445 Signed by: ANAND KRISHNA SEN Signing time: 10/22/2024 11:27:59 AM Signature Not Verified

(SUSHRUT ARVIND DHARMADHIKARI) JUDGE (ANURADHA SHUKLA) JUDGE crores. 5. On perusal of the circular dated 15.03.2024, which supersedes the circular dated 11.07.2018 and 08.08.2019, it is seen that it does not provide exception clause wherein the appeal can be filed notwithstanding that the tax effect entailed is less than the monitory limits under the exception given. 6. In view of the aforesaid, the present Income Tax Appeal stands disposed of keeping in view non-existence of exception clause as well as monitory limit as per circulars dated 10.12.2015, 11.07.2018 and 15.03.2024. anand

3 ITA-283-2022 NEUTRAL CITATION NO. 2024:MPHC-JBP:52445 Signed by: ANAND KRISHNA SEN Signing time: 10/22/2024 11:27:59 AM Signature Not Verified

Recent GST High Court judgments

Search GST case law →