INCOME TAX DEPARTMENT vs. M/S KRISHNA WAREHOUSE

The High Court Of Madhya Pradesh ITA-75-2019 (INCOME TAX DEPARTMENT Vs M/S KRISHNA WAREHOUSE) Indore, Dated : 16-01-2020 Ms. Veena Mandlik, learned counsel for the appellant. Shri Hitesh Chimnani, learned counsel for the respondent. Heard. The tax effect in the present case is less than Rs.2.00 lacs. 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. 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 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.â€​ 7 . Mr. Pinto would submit that this is a conditional withdrawal permitted. The Revenue’s Circular, therefore, cannot b e 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. 1 ITA-75-2019 Digitally signed by Geeta Pramod Date: 17/01/2020 18:23:23 (S.C.SHARMA) JUDGE (SHAILENDRA SHUKLA) JUDGE 9. In the circumstances, we find that this is an attempt t o 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. 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 and therefore, present income tax appeal stands disposed of keeping in view the CBDT circulars dated 10.12.2015 and 11.07.2018. gp

2 ITA-75-2019 Digitally signed by Geeta Pramod Date: 17/01/2020 18:23:23