ITAT criticizes department for filing appeal despite lower tax effects

IN THE ITAT JODHPUR BENCH

Income-tax Officer

Versus

Dr. Suresh Sharma

IT APPEAL NO. 658 (JUdh.) OF 2008

C.O. NO. 26 (JUdh.) OF 2009

[ASSESSMENT YEAR 2002-03]

DECEMBER 3, 2012

ORDER

Hari Om Maratha, Judicial Memebr

The appeal filed by the Revenue and cross objection by the assessee are directed against the order of the CIT(A), Udaipur, dated 17.09.2008 for A.Y. 2002-03.

2. During the course of hearing, learned counsel for the assessee submitted that the tax effect in this appeal is less than the amount prescribed by the CBDT where department ought not to have filed the appeal.

3. The ld. D.R. although supported the order of the Assessing Officer but could not controvert the aforesaid fact that tax effect in these appeals are less than Rs. 3,00,000/-.

4. After considering the rival submissions and the material on record, it is noticed that Section 268A has been inserted by the Finance Act, 2008 with retrospective effect from 01/04/99. The provisions contained in section 268A read as under:

“268A. (1) The Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal or application for reference by any income-tax authority under the provisions of this Chapter.

(2) Where, in pursuance of the orders, instructions or directions issued under sub-section (1), an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of-

(a)  the same assessee for any other assessment year; or

(b)  any other assessee for the same or any other assessment year.

(3) Notwithstanding that no appeal or application for reference has been filed by an income-tax authority pursuant to the orders or instructions or directions issued under sub-section (1), it shall not be lawful for an assessee, being a party in any appeal or reference, to contend that the income-tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case.

(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.

(5) Every order, instruction or direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub-section (1) and the provisions of sub-sections (2), (3) and (4) shall apply accordingly.]”

5. It is not in dispute that the Board’s instruction or directions issued to the other income-tax authorities are binding on those authorities, therefore, the department ought not to have filed the appeal in view of the above mentioned section 268A since the tax effect in the instant case is less than the amount prescribed for not filing the appeal.

6. It is noticed that the CBDT has issued Instruction No.3 of 2011, dated 09.02.2011, by which the CBDT has revised the monetary limit to Rs. 3,00,000/- for filing the appeal before the Tribunal.

7. Keeping in view the CBDT Instruction No.3 of 2011, dated 09.02.2011 and also the provisions of Section 268A of Income Tax Act, 1961, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal. While taking such a view, we are fortified by the following decisions of Hon’ble Punjab & Haryana High Court :-

 1.  CIT v Oscar Laboratories (P.) Ltd [2010] 324 ITR 115

 2.  CIT v Abhinash Gupta [2010] 327 ITR 619 (Punj. & Har.)

 3.  CIT v Varindera Construction Co. [2011] 331 ITR 449

8. Similarly the Hon’ble Delhi High Court in the case of CIT v. Delhi Race Club Ltd. [ITA No.128/2008, order dated 03.03.2011] by following the earlier order dated 02.08.2010 in the case of CIT v. P.S. Jain & Co. [2012] 20 taxmann.com 582 (Delhi) held that such circular would also be applicable to pending cases.

9. From the ratio laid down by the Hon’ble Delhi High Court, it is clear that the instructions issued in the Circulars by CBDT are applicable for pending cases also. Therefore, by keeping in view the ratio laid down in the aforesaid referred to cases, we are of the considered view that Instruction No.3/11, dated 09.02.2011 issued by the CBDT are applicable for the pending cases also and in the said instructions, monetary tax limit for not filing the appeal before the ITAT is Rs. 3.00 lakhs.

10. In view of the above, without going into merits of the case, we dismiss the appeal filed by the Revenue.

11. As regards the cross objection filed by the assessee are concerned, the ld. counsel for the assessee stated at Bar that he has instructions not to press the Cross Objections and gave in writing “Cross objections not pressed”, therefore, both the Cross objections of the assessee are dismissed as not pressed.

12. In the result, the appeal of the Revenue as well as the cross objection of the assessee stand dismissed.