ACIT, CIRCLE -1, DURGAPUR, DURGAPUR vs. M/S. NIRMAN CONSTRUCTION, DURGAPUR

The captioned cross appeals filed by the Revenue and assessee , pertaining to assessment year 2007-08, are directed against the common order passed by the M/s Nirman Construction Assessment Year:2007-08 Commissioner of Income Tax (Appeal)-Durgapur in appeal no. 54/CIT(A)/DGP/2009-10, which in turn arise out of common assessment order passed by the Assessing Officer u/s143(3) of the Income Tax Act, 1961 (in short the ‘Act’) dated 31/12/2009.

Since these two appeals pertain to the same assessee, common and identical issues are involved, therefore these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.

At the time of hearing none appeared on behalf of assessee in spite of issuance of notice for hearing more than one occasion and Ld. Departmental Representative(DR), was present for the appellant Revenue. In the absence of any appearance by the assessee, the appeal is being disposed of ex parte qua the assessee, after hearing Ld. DR for the Revenue on merits in terms of Rule 24 of the Income Tax Appellate, Tribunal, Rules, 1963.

First we shall take revenue’s appeal in A.Y. 2007- 08 where we noticed that revenue has raised ground in respect of addition deleted by the ld. CIT(A) of Rs. 97,20,743/-, which comes in the ambit of tax effect of CBDT Circular vide Circular No. 17/2019 dated 08.08.2019.

Recently the CBDT has issued Circular No. 17/2019 dated 08.08.2019, whereby the monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court have been increased as measure for reducing Litigation. The revised monetary limits laid down in para-2 of this Circular are as follows:

Before Appellate Tribunal Rs. 50,00,000/- 2. Before High Court Rs.1,00,00,000/- 3. Before Supreme Court Rs. 2,00,00,000/-

It is a settled law that the Circulars issued by CBDT are binding on the Revenue. This position was confirmed by the Apex Court in the case of Commissioner of Customs vs Indian Oil Corporation Ltd. reported in 267 ITR 272 wherein their Lordships examined the earlier decisions of the Apex Court with regard to binding nature of the Circular and laid down that when a circular issued by the Board remains in operation then the Revenue is bound by it and cannot be allowed to plead that it is not valid or that it is contrary to the terms of the statute. The appeal under consideration has certainly been filed contrary to the Circular issued by the CBDT Circular No.17 dated 08.08.2019

In the event, the Revenue finds at a later point of time that the tax effect in the appeal is more than Rs.50 lakhs or despite low tax effect the appeal of the revenue is maintainable, the revenue is at liberty to move this Tribunal for recalling of this order.

In view of the above, we hold that the appeal filed by the Department, against the impugned order of the Ld. CIT(A), is contrary to the policy decision of the Department and as such the appeal filed by the Department in is dismissed in limine.

Now, we shall take assessee’s appeal in for A.Y. 2007-08 wherein the grounds of appeal

At the outset itself, having gone through the ld. CIT(A)’s order we note that the assessee has challenged the addition of Rs. 73,10,365/- which has been confirmed by the lower authorities on account of bogus and unexplained cash credit. We note that the ld. CIT(A) has adjudicated the issue by taking into account the individual creditors vide detailed discussion of the ld. CIT(A)’s order, page 17 to 29 of his order wherein he analyzed the individual sundry creditors and reached on conclusion based on the findings and documents submitted by the assessee. Having scrutinized the individual creditors, the ld. CIT(A) deleted some of additions where he found that the assessee has submitted documents confirmation and proof in respect of sundry creditors.For balance creditors wherein the ld. CIT(A) noticed that the assessee has failed to file a requisite documents statement and confirmation and proof of existence of sundry creditors, he sustained the addition made by Assessing Officer. We have gone through the detailed reasoning given in the appellate order vide page no. 17 to 18 of the ld. CIT(A)’s order and we note that the conclusion reached by the ld. CIT(A) need not to be interfered therefore we confirm the addition of Rs. 73,10,365/- .

The addition of Rs. 6,82,689/- relating to inflated sundry liabilities which has been confirmed by the ld. CIT(A) as the assessee has failed to file the reconciliation of the sundry liabilities before the lower authorities. We have gone through the findings of the assessment order and findings of the appellate order. The ld. CIT(A) pointed out that assessee has not filed the reconciliation and Page | 4

In the result, the appeal of the Revenue in is partly allowed for statistical purposes.