Commissioner Of Income Tax-I vs. Armour Finance & Commerce Ltd.

ITA No.343/2007, ITA No.47/2008, ITA No.76/2008, ITA No.25/2009, ITA No.85/2009 & ITA No.86/2009 01.02.2016 Shri R. L. Jain, learned Senior Counsel with Ms. Veena Mandlik, learned counsel for the appellant. Shri A. Goyal, learned counsel for the respondent. IA No.1012/2016, IA No.972/2016, IA No.971/2016, IA No.963/2016, IA No.964/2016 & IA No.965/2016 respectively have been filed by the respondent/assessee for dismissal of the appeal on the ground that as per circular No.21/2015 (Annexure-I), appeals can be filed by the department before the High Court only if the tax effect is more than Rs.20,00,000/-. It is submitted that in the present bunch of appeals, the tax effect is much less than Rs.20,00,000/- and therefore, in view of the aforesaid, the appeals be dismissed. He further submits that as per Clause 10, the Instructions will apply retrospectively. He also placed reliance on the decision of this Court in the case of Commissioner of Income Tax vs. Digvijay Singh reported in 11 ITJ 398 (MP) and prays for dismissal of the appeals. 2. Learned Senior Counsel for the appellant has very fairly submitted that in the present bunch of appeals, the aforesaid judgement will fully apply. 3. We have also decided number of appeals on the basis of CBDT circular No.21/2015. 4. Clause 3 and 10 of the Circular are relevant which reads as under :- “3. Henceforth, appeals/SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder :- 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. 10. This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/ not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.” 5. In the present bunch of appeals, the tax effect is much less than Rs.20,00,000/-. The Division Bench of this Court in the case of Commissioner of Income Tax V/s. Gautam Chand Jain by order dated 14.11.2014 passed in ITA No.368/2007 held as under :- "In this appeal, learned counsel for the respondent has raised an objection that as per CBDT Circular jurisdiction no.2 of 2005 dated 24.10.2005, the appeal will be filed by the Revenue under Section 260A of Income – Tax Act, 1961, if the tax liability/tax effect is more than Rs.4,00,000/-. He submits that in view of the Circular and law laid down by the Principal Seat at Jabalpur in the case of Commissioner of I.T.

v/s.

Ram Kishore, reported

as 2013 (II) MPJR SN 1 the appeal filed by the appellant is liable to be dismissed. On the other hand, learned counsel for the appellant has submitted that these appeals are admitted in pursuance to the remand passed by the Hon'ble Apex Court and, therefore, the aforesaid objection be over ruled and matter be heard finally. On due consideration of the aforesaid and considering the fact that in the case of Commissioner of I.T.

v/s.

Ram Kishore (Supra)

, the matter was admitted on 6.5.2005, thereafter, the aforesaid objection was raised and the Division Bench while considering the aforesaid objection found appeal incompetent and is dismissed the same. Order dated 12.2.2013 reads as under :- “1. “Whether on the facts and in the circumstances of the case the Hon. ITAT was justified in law in deleting the levy of penalty u/s 27 (1) (a) on the grounds that returns filed on these years were accepted even though it was beyond the limit prescribed under Section 139 (1) ? 2.Whether the Tribunal could allow the appeal without assigning any reason by mere recording the submissions of the appellant and respondent?

Stating aforesaid, it was submitted by Shri Jain that in these appeals, tax affect is less than Rs.2 lakh and may be dismissed only on this ground. He has relied on the two Division Bench judgments of this court in Commissioner of Income Tax vs. Suresh Chand Goyal [(2008) 298 ITR 277 (MP)] and Commissioner of Income Tax vs. Ashok Kumar Manibhai Patel & Co. [(2009) 317 ITR 386 (MP)] in support of his contention.

Shri Lal learned counsel appearing for the appellant though opposed the aforesaid prayer but could not refute the contention of the appellant that by the Board instructions No.1979 dated 27.3.2000, the Board had specifically directed that the Department shall file appeal only in cases where tax effect exceeds monetary limits of Rs.2 lakh in the matter of High court.

The instructions issued by this Board reads as thus :

Monetary limits for filling Departmental appeals / references before Income – tax appellate Tribunal, High Courts and Supreme Court – Measures for reducing litigation.

Reference is invited to the Board's Instruction No.1903, daed 28th October, 1992, (See Clarification Five) and Instruction No.1777, dated 4th November 1987, (See Clarification Five) wherein monetary limits of Rs.25,000 for Departmental appeals (in income-tax matters) before the Appellate Tribunal, Rs.50,000 for filing reference to the High court and Rs.1,50,000 for filing appeal to the Supreme Court were laid down. 2. In suppression of the above instruction, it has now been decided by the Board that appeals will be filed only in cases where the tax effect exceeds the revised monetary limits given hereunder :

(Tax effect) Rs. (i) Appeal before the Appellate Tribunal

(in come-tax matters)

1,00,000 (ii) Appeal under Section 260A/reference under Section 256 (2) before the High Court

2,00,000 (iii) Appeal in the Supreme Court 5,00,000

The new monetary limits would apply with reference to each case taken singly. In other words, in group cases, each case should individually satisfy the new monetary limits. The working out of monetary limits will therefore, not take into consideration the cumulative effect as envisaged in the Board's earlier instruction referred to above. 3. Adverse judgments relating to the following should be contested irrespective of revenue effect : (i) Where Revenue audit objection in the case has been accepted by the Department. (ii) Where the Board's order, notification, instruction or circular is the subject matter of an adverse order. (iii) Where prosecution proceedings are contemplated against the assessee. (iv) Where the constitutional validity of the provisions of the Act are under challenge. 4. Special leave petitions under Article 136 of the Constitution are filed before the Supreme Court only in consultation with the Ministry of Law. Therefore, where the Chief Commissioner decides to contest an adverse judgment by filing special leave petition before the Supreme Court, they should send the proposal to the Board for further processing. 5. These instructions will apply to litigation under other direct taxes also e.g., Wealth – tax, Gift – tax, Estate duty, etc. 6. These monetary limits will not apply to writ matters. 7. This instruction will come into effect from April 1, 2000.

Instruction

No.1979 [F.No.279/126/98-IT], dated 27.3.2000. [See Asst. CIT vs. Nimeshchandra vs. Vashi (ITA No.2794/Ahd./2003, dated 6.1.2005]. The aforesaid judgments specifically lays down that any appeal, if tax effect less than Rs.2 lakhs could not have been filed by the Department.

From the perusal of the instructions issued by the Board, we find that the Board has issued directions that the appeals will be filed only in cases where the tax effect exceeds Rs.2 lakhs in the matter of High Court in appeals U/s 260A or Reference U/ s 256 (2). The aforesaid circular is binding on all the authorities under the Board including the appellant Commissioner of Income Tax, Jabalpur. The Board had taken this decision in continuation to earlier directions issued by the Board on 28.10.1992 where the monitory limit was Rs.50,000/-. Now in view of the changed circumstances, as directed by the Board by instruction dated 27.3.2000, it is apparent that the appeal or reference below Rs.2 lakhs, could not have been filed. The instructions of the Board are binding to all the authorities working under the Board including the appellant. This appeal which was filed on 10.1.2005 is fully covered by the instructions issued by the Board on 27.3.2000, and this appeal could not have been filed. The aforesaid position has been clarified by two Division Bench of this Court in Suresh Chand and Ashok Manibhai (Supra).

In the result, this appeal is found incompetent and is dismissed with no order as to costs.” In view of the aforesaid, as per the memo of appeal and submissions made by the learned counsel for the assessee the 40% tax which is payable to the assessee comes to Rs.1,40,400/-. The total tax liability comes to Rs.1,40,400/-. For the reasons assigned in the memo of appeal as the tax liability / tax effect is less than Rs.4,00,000/-, we dismiss the appeal. Accordingly, it is dismissed.” 6. In view of the aforesaid and the law laid down by the Division Bench of this Court in the case of Commissioner of Income Tax V/s. Gautam Chand Jain (supra), we dispose of ITA No.343/2007, ITA No.47/2008, ITA No.76/2008, ITA No.25/2009, ITA No.85/2009 and ITA No.86/2009 leaving questions of law open. (P. K. Jaiswal) (J. K Jain) Judge Judge gp