Subject: M/s Sound Craft is dismissed, Cross Objection becomes infructuous
Referred Sections:
Section 268 of the Act
Section 115JB
Section 115JC
Section (4)
Section 268A of the Income-tax Act,
sub-section (1)
Section 12A/12AA of the IT Act,
Section 268A of the Income-tax Act
Referred Cases / Judgments
M/s Sound Craft, 13, Daryaganj, New Delhi. vs ACIT, Central Circle-52(1) New Delhi.
DCIT, Circle-18(2) New Delhi. vs M/s Nippom Auditronix Ltcd. N-191, Greater Kailash-1, New Delhi.
Income-tax Officer, Ward 6(4) New Delhi. vs M/s Creation Industries Pvt. Ltd., A-15/5, Vasant Vihar
DCIT, Central Circle-11 Faridabad. vs Santosh Kumar Soni Urf Jitender Soni, 243-L, Model Town, Rewari.
DCIT, Central Circle-11 New Delhi. vs Subhash Chand Soni , 243-L, Model Town, Rewari.
Referred Sections:
Section 268 of the Act
Section 115JB
Section 115JC
Section (4)
Section 268A of the Income-tax Act,
sub-section (1)
Section 12A/12AA of the IT Act,
Section 268A of the Income-tax Act
Referred Cases / Judgments
M/s Sound Craft, 13, Daryaganj, New Delhi. vs ACIT, Central Circle-52(1) New Delhi.
DCIT, Circle-18(2) New Delhi. vs M/s Nippom Auditronix Ltcd. N-191, Greater Kailash-1, New Delhi.
Income-tax Officer, Ward 6(4) New Delhi. vs M/s Creation Industries Pvt. Ltd., A-15/5, Vasant Vihar
DCIT, Central Circle-11 Faridabad. vs Santosh Kumar Soni Urf Jitender Soni, 243-L, Model Town, Rewari.
DCIT, Central Circle-11 New Delhi. vs Subhash Chand Soni , 243-L, Model Town, Rewari.
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `G', NEW DELHI
BEFORE SHRI. N. K. SAINI, ACCOUNTANT MEMBER
AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER
ITA No.3064/Del/2015
Assessment Year:2009-10
ACIT, Central Circle-52(1) vs M/s Sound Craft,
New Delhi. 13, Daryaganj,
New Delhi.
PAN: AACFS6679K
CO No.443/Del/2015
(In ITA No.3064/Del/2016)
Assessment Year:2009-10
M/s Sound Craft, vs ACIT, Central Circle-52(1)
13, Daryaganj, New Delhi.
New Delhi.
PAN: AACFS6679K
ITA No.5754/Del/2015
Assessment Year:2011-12
DCIT, Circle-18(2) vs M/s Nippom Auditronix Ltcd.
New Delhi. N-191, Greater Kailash-1,
New Delhi.
PAN: AAACN2163L
ITA No.5769/Del/2015
Assessment Year:2002-03
Income-tax Officer, Ward 6(4) vs M/s Creation Industries Pvt. Ltd.,
New Delhi. A-15/5, Vasant Vihar
New Delhi.
PAN: AAACC5136E
2
ITA No 2997/Del/2014
Assessment Year:2010-11
DCIT, Central Circle-11 vs Santosh Kumar Soni Urf Jitender Soni,
Faridabad. 243-L, Model Town,
Rewari.
PAN: AQDPS5293C
ITA No 2996/Del/2014
Assessment Year:2008-09
DCIT, Central Circle-11 vs Santosh Kumar Soni Urf Jitender Soni,
Faridabad. 243-L, Model Town,
Rewari.
PAN: AQDPS5293C
ITA No 2617/Del/2014
Assessment Year:2006-07
DCIT, Central Circle-11 vs Subhash Chand Soni ,
New Delhi. 243-L, Model Town,
Rewari.
PAN: AXPPS6241M
ITA No.5321/Del/2015
Assessment Year:2010-11
ACIT, Central Circle-26, vs Mayfield Projects,
New Delhi. C Block Site Office,
Gurgason
PAN: AAAAM3127D
( Appellant) (Respondent)
3
Revenue by: Shri S.K. Tewari, Sr. DR
Shri S.S. Rana, CIT DR,
Assessee by: None
Date of hearing: 02.08.2018
Date of pronouncement: 02.08.2018
ORDER
PER BENCH:
All these appeals are preferred by the Revenue challenging the orders
of the ld. Commissioner of Income-tax (Appeals) (in short ld. CIT(A)". Cross
Objection No.443/Del/2015 is filed by the assessee M/s Sound Craft on the
ground that the appeal filed by the revenue, being within the limit prescribed
by CBDT Circular No.21/2015, is not maintainable
2. We have heard the learned DR and perused the material on
record. It is noticed that that the tax effect involved in these
appeals is less than Rs.20,00,000/-, therefore, in view of the
Circular No. 3/2018 issued by the CBDT and the provisions
contained in Section 268A of the Income Tax Act, 1961
(hereinafter to be referred as the Act), the Department is bound
to withdraw the appeals.
3. On the other hand, the ld. D.R., although supported the
orders of the learned Assessing Officer, but could not controvert
this fact that tax effect in these appeals is less than
Rs.20,00,000/-.
4. After considering the submissions of both the parties and
the material available on record, it is noticed that Section 268A
has been inserted by the Finance Act, 2008 with retrospective
effect from 01/04/99. The said section 268 of the Act provides
4
that the Board may issue instruction or directions to the other
income-tax authorities fixing monetary limits for not filing the
appeals before the Appellate Tribunal or the Courts, said
instructions/directions are binding on the income tax authorities.
5. It is noticed that the CBDT has issued Circular No. 3 of 2018
dated 11.07.2018, vide which it has revised the monetary limit to
Rs.20,00,000/- for not filing the appeal before the Tribunal, the
said circular reads as under:
"Subject: Revision of monetary limits for filing of appeals
by the Department before Income Tax Appellate Tribunal,
High Courts and SLPs/appeals before Supreme Court-
measures for reducing litigation-Reg.
Reference is invited to Board's Circular No. 21 of 2015
dated 10.12.2015 wherein monetary limits and other
conditions for filing departmental appeals (in Income-tax
matters) before Income Tax Appellate Tribunal, High
Courts and SLPs/ appeals before Supreme Court were
specified.
2. In supersession of the above Circular, it has been
decided by the Board that departmental appeals may be
filed on merits before Income Tax Appellate Tribunal and
High Courts and SLPs/ appeals before Supreme Court
keeping in view the monetary limits and conditions
specified below.
3. Henceforth, appeals/ SLPs shall not be filed in cases
where the tax effect does not exceed the monetary limits
given hereunder:
Appeals/SLPs in Income-tax Monetary
S No
matters Limit (in Rs)
1 Before Appellate Tribunal 20,00,000/-
2 Before High Court 50,00,000/-
3 Before Supreme Court 1,00,00,000/-
5
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.
4. For this purpose, `tax effect' means the difference
between the tax on the total income assessed and the tax
that would have been chargeable had such total income
been reduced by the amount of income in respect of the
issues against which appeal is intended to be filed
(hereinafter referred to as `disputed issues). Further, `tax
effect' shall be tax including applicable surcharge and
cess. However, the tax will not include any interest
thereon, except where chargeability of interest itself is in
dispute. In case the chargeability of interest is the issue
under dispute, the amount of interest shall be the tax
effect. In cases where returned loss is reduced or assessed
as income, the tax effect would include notional tax on
disputed additions. In case of penalty orders, the tax
effect will mean quantum of penalty deleted or reduced in
the order to be appealed against.
5. The Assessing Officer shall calculate the tax effect
separately for every assessment year in respect of the
disputed issues in the case of every assessee. If, in the
case of an assessee, the disputed issues arise in more than
one assessment year, appeal can be filed in respect of
such assessment year or years in which the tax effect in
respect of the disputed issues exceeds the monetary limit
specified in para 3. No appeal shall be filed in respect of
an assessment year or years in which the tax effect is less
than the monetary limit specified in para 3. In other
words, henceforth, appeals can be filed only with
reference to the tax effect in the relevant assessment
year. However, in case of a composite order of any High
Court or appellate authority, which involves more than one
assessment year and common issues in more than one
assessment year, appeals shall be filed in respect of all
such assessment years even if the tax effect is less than
the prescribed monetary limits in any of the year(s), if it is
decided to file appeal in respect of the year(s) in which tax
effect exceeds the monetary limit prescribed. In case
6
where a composite order/judgment involves more than one
assessee, each assessee shall be dealt with separately.
6. Further, where income is computed under the provisions
of section 115JB or section 115JC, for the purposes of
determination of `tax effect', tax on the total income
assessed shall be computed as per the following formula-
(A -- B) + (C -- D)
where,
A = the total income assessed as per the provisions
other than the provisions contained in section 115JB or
section 115JC (herein called general provisions);
B = the total income that would have been chargeable
had the total income assessed as per the general
provisions been reduced by the amount of the disputed
issues under general provisions;
C = the total income assessed as per the provisions
contained in section 115JB or section 115JC;
D = the total income that would have been chargeable
had the total income assessed as per the provisions
contained in section 115JB or section 1I5JCwas reduced
by the amount of disputed issues under the said
provisions:
However, where the amount of disputed issues is
considered both under the provisions contained in section
115JB or section 115JC and under general provisions, such
amount shall not be reduced from total income assessed
while determining the amount under item D.
7. In a case where appeal before a Tribunal or a Court is
not filed only on account of the tax effect being less than
the monetary limit specified above, the Pr. Commissioner
of Income-tax/ Commissioner of Income Tax shall
specifically record that "even though the decision is not
acceptable, appeal is not being filed only on the
consideration that the tax effect is less than the monetary
limit specified in this Circular". Further, in such cases,
there will be no presumption that the Income-tax
7
Department has acquiesced in the decision on the disputed
issues. The Income-tax Department shall not be precluded
from filing an appeal against the disputed issues in the
case of the same assessee for any other assessment year,
or in the case of any other assessee for the same or any
other assessment year, if the tax effect exceeds the
specified monetary limits.
8. In the past, a number of instances have come to the
notice of the Board, whereby an assessee has claimed
relief from the Tribunal or the Court only on the ground
that the Department has implicitly accepted the decision
of the Tribunal or Court in the case of the assessee for any
other assessment year or in the case of any other assessee
for the same or any other assessment year, by not filing an
appeal on the same disputed issues. The Departmental
representatives/counsels must make every effort to bring
to the notice of the Tribunal or the Court that the appeal
in such cases was not filed or not admitted only for the
reason of the tax effect being less than the specified
monetary limit and, therefore, no inference should be
drawn that the decisions rendered therein were acceptable
to the Department. Accordingly, they should impress upon
the Tribunal or the Court that such cases do not have any
precedent value and also bring to the notice of the
Tribunal/ Court the provisions of sub section (4) of section
268A of the Income-tax Act, 1961 which read as under :
"(4) The Appellate Tribunal or Court, hearing such
appeal or reference, shall have regard to the orders,
instructions or directions issued under sub-section (1)
and the circumstances under which such appeal or
application for reference was filed or not filed in respect
of any case."
9. As the evidence of not filing appeal due to this Circular
may have to be produced in courts, the judicial folders in
the office of Pr. CsIT/CsIT must be maintained in a
systemic manner for easy retrieval.
10. Adverse judgments relating to the following issues
should be contested on merits notwithstanding that the
8
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 fires, 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.
11. The monetary limits specified in para 3 above shall not
apply to writ matters and Direct tax matters other than
Income tax. Filing of appeals in other Direct tax matters
shall continue to be governed by relevant provisions of
statute and rules. Further, in cases where the tax effect is
not quantifiable or not involved, such as the case of
registration of trusts or institutions under section 12A/
12AA of the IT Act, 1961 etc., filing of appeal shall not be
governed by the limits specified in para 3 above and
decision to file appeals in such cases may be taken on
merits of a particular case.
12. It is clarified that the monetary limit of Rs. 20 lakhs
for filing appeals before the ITAT would apply equally to
cross objections under section 253(4) of the Act. Cross
objections below this monetary limit, already filed, should
be pursued for dismissal as withdrawn/ not pressed. Filing
of cross objections below the monetary limit may not be
considered henceforth. Similarly, references to High Courts
and SLPs/ appeals before Supreme Court below the
monetary limit of Rs. 50 lakhs and Rs. 1 Crore respectively
should be pursued for dismissal as withdrawn/ not
pressed. References before High Court and SLPs/ appeals
below these limits may not be considered henceforth.
13. This Circular will apply to SLPs/ appeals/ cross
objections/ references to be filed henceforth in
SC/HCs/Tribunal and it shall also apply retrospectively to
9
pending SLPs/ appeals/ cross objections/references.
Pending appeals below the specified tax limits in pare 3
above may be withdrawn/ not pressed.
14. The above may be brought to the notice of all
concerned.
15. This issues under Section 268A of the Income-tax Act
1961."
6. From Clause 12 & 13 of the above said circular, it is clear
that these instructions are applicable to the pending appeals also
and as per clause 13, there is clear cut instruction to the
department to withdraw or not to press the appeals filed before
the ITAT wherein tax effect is less than Rs.20,00,000/-. These
instructions are operative retrospectively to the pending appeals.
7. Keeping in view the CBDT Circular No. 3 of 2018 dated
11.07.2018 and also the provisions of Section 268A of Income Tax
Act, 1961, we are of the view that the Revenue should have
withdrawn the instant appeals filed before the Tribunal.
8. In the result, all the appeals of the Revenue are dismissed. As the
appeal of the revenue in the case of M/s Sound Craft is dismissed, Cross
Objection becomes infructuous and is dismissed as such.
Order pronounced in the open Court on 02/08/2018.
Sd/- Sd/-
[K. NARASIMHA CHARY]
ACCOUNTANT MEMBER JUDICIAL MEMBER
DATED: 2nd August, 2018
VJ
10
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
Draft dictated on 02.08.2018
Draft placed before author 02.08.2018
Draft proposed & placed before the second 02.08.2018
member
Draft discussed/approved by Second Member. 02.08.2018
Approved Draft comes to the Sr.PS/PS 02.08.2018
Kept for pronouncement on 02.08.2018
Date of uploading order on the website 03.08.2018
File sent to the Bench Clerk 03.08.2018
Date on which file goes to the AR
Date on which file goes to the Head Clerk.
Date of dispatch of Order.
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