CIT Vs Steinle Machine Fabric India
High Court of Himachal Pradesh
I.T.A No. 36 of 2005
Decided on: 6 May 2011
This appeal was admitted on the following substantial question of law:-
“Whether the Ld. Tribunal was right in law in not considering the CIT’s main ground for order u/s 263 regarding the Assessing Officer’s failure to invoke the mandatory provisions of sub-sections (8) and (10) of section 801A (sic) and not giving its finding on this issue and yet set aside the order u/s 263 of the CIT. Assessee’s all sales had been made to the sister concern, M/s.Kandhari Beverages Pvt. Ltd. And many of the essential expenses were either very little or totally absent in the P&L account. It is matter of record that the Assessing Officer neither considered nor raised a query about this aspect and, therefore, the question of forming a view, much less a substantial one, by the A.O. did not arise.”
2. At the time of hearing of the appeal, Sh.Vishal Mohan, learned counsel for the respondent raised a preliminary objection that the appeal is not maintainable since the tax effect is less than 4 lacs.
3. In the present case, the entire declared income for the relevant year was Rs.3,94,839/- and, therefore, the tax effect is definitely much less than Rs.4 lacs. Reliance has been placed by Sh.Vishal Mohan, Advocate on Circular No.279/126/98-IT dated March 27, 2000 issued by the Central Board of Direct Taxes.
4. On the other hand, Sh.Vinay Kuthiala, learned counsel for the appellant- revenue submits that clause-3 of the instructions states that where a case involves a substantial question of law of importance or where the same question of law is involved in a number of cases then the appeal may be filed on merits without being hindered by the monetary limits.
5. Sh.Kuthiala in support of his contention has relied upon two judgments of Bombay High Court in Commissioner of Income Tax v Shivaji Works Ltd. 2007 (295) ITR 542 and Commissioner of Income Tax v Chhajer Packaging and Plastics P.Ltd. 2008 (300) LTR 180.
6. In our view, these judgments are not applicable. The Circular is specific that in group cases also, each single case must be taken up individually to decide the monetary limits. It appears that these instructions were issued to avoid unnecessary litigation and also litigation where the tax effect was much less and it waste time and money recovering small amounts but we hasten to add that dismissal of such appeals on the ground that the tax effect is low does not mean that we have given any decision on merits nor have we decided such questions of law. These questions can be decided in appropriate proceedings where the tax effect is more than the limit prescribed in the circular.
7. The argument of Sh. Kuthiala cannot be accepted since the instructions itself clearly state that the monetary limits would apply with reference to each case take singly. The Circular itself envisages that where group cases are involved, each case shall individually satisfy the monetary limits. No doubt, clause-3 of the instructions states that where a case involves a substantial question of law of importance or where the same question of law is involved in a number of cases then the appeal may be filed on merits without being hindered by the monetary limits. This clause envisages despite the effect being not within the monetary limits due to compelling reasons spelt out in this clause the revenue feels that it is necessary to have a judgment of the High Court. No doubt, if such important question is identified and the revenue makes out a case that it had taken a conscious decision to file an appeal, the appeal can be entertained.
8. In the present case, there was no such averment in the ground of appeal that any such conscious decision had been taken. However, we may clarify that we have disposed of the appeal on the ground of maintainability and have not touched the merits of the contentions and our decision shall not be treated as res judicate in any other proceedings. The appeal is disposed of in the aforesaid terms. No costs.