Pr. Commissioner Of Income-Tax-2, Chandigarn v. M/S Modern Diaries Ltd

IN THE HIGH COURT OF PUNJAB & HARYANA ATCHANDIGARH ITA No.434 of 2017Date of decision: 14.8.2018 Pr. Commissioner of Income-Tax-2, Chandigarn ..... Appellant VERSUS| M/s Modern Diaries Ltd. .... Respondent ITA No.454 of 2017 Pr. Commissioner of Income-Tax-2, Chandigarn| ..... Appellant VERSUS| M/s Modern Diaries Ltd. wa... ReSpondent ITA No.456 of 2017. Pr. Commissioner of Income-Tax-2, Chandigarn| ..... Appellant VERSUS M/s Modern Diaries Ltd. ..... ReSPONdent ITA No.502 of 2017. Pr. Commissioner of Income-Tax-2, Chandigarn ..... Appellant VERSUS| M/s Modern Diaries Ltd. ..... ReSPONdent ITA No.434 of 2017. =2= ITA No.532 of 2017 Pr. Commissioner of Income-Tax-2, ChandigarnVERSUS|M/s Modern Diaries Ltd. ..... Appellant wa... ReSpondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE AVNEESH JHINGAN Present: Ms.Urvasni Dnugga, Senior Standing Counsel for.the appellant(s)Mr.Divya Suri, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This order shall dispose of a bunch of five appeals,|namely, ITA Nos.434, 454, 456, 502 and 532 of 2017 as.common question of law and facts are involved in these|appeals. For brevity, the facts are being taken from ITA No.434|of 2017. 2.To adjudicate the issue regarding jurisdiction revolvesaround the maintainability of appeal before this Court on the|cut-off monetary limits prescribed in Circular No.3/18 issued on|11.7.2018 by the Central Board of Direct Taxes. The relevant|extract of the aforesaid Circular is reproduced as under: CSubject: Revision of monetary limits for filing of appeals by the Department before IncomeTax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court-measuresfor reducing Iitigation-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 AppellateTribunal, Hign Courts and SLPs/ appeals Defore|Supreme Court were specified. 2 |In supersession of the above Circular, it nas—been decided by the Board that departmental appeals|may be filed on merits before Income Tax Appellate|Tridunal and High Courts and SLPs/ appeals Defore|Supreme Court keeping in view the monetary limits|and conditions specified below. — 3.Henceforth, appeals/ SLPs shall not be filed incases where the tax effect does not exceed the! monetary limits given hereunder: — ITA No.434 of 2017 -4-_ It is clarified that an appeal should not be filed merelybecause the tax effect in a case exceeds the monetarylimits prescribed above. Filing of appeal in sucn casesis to be decided on merits of the case.xXxXxXKXXXKXKXXXKXXxXXxX 3.The tax effect’ for the assessment years involved in. the present appeals is given below: 4Learned counsel! for the revenue submitted that videthe composite impugned order dated 23.8.2016 passed by the -Income Tax Appellate Tribunal, Chandigarh, though the ‘tax|effect’ involved is nots~50 lacs, however, the appeals filed bythe revenue(s) are maintainable before this Court In view of the.clause 5 of aforesaid Circular wnicn Is in the following terms: “The Assessing Officer snall calculate the tax effectseparately for every assessment year In respect ofthe disputed issues In the case of every assessee. If, 3.The tax effect’ for the assessment years involved in. the present appeals is given below: 4Learned counsel! for the revenue submitted that videthe composite impugned order dated 23.8.2016 passed by the -Income Tax Appellate Tribunal, Chandigarh, though the ‘tax|effect’ involved is nots~50 lacs, however, the appeals filed bythe revenue(s) are maintainable before this Court In view of the.clause 5 of aforesaid Circular wnicn Is in the following terms: “The Assessing Officer snall calculate the tax effectseparately for every assessment year In respect ofthe disputed issues In the case of every assessee. If, In the case of an assessee, the disputed issues arisein more than one assessment year, appeal can befiled in respect of such assessment year or years Inwhich the tax effect in respect of the disputed Issuesexceeds the monetary limit specified In para 3. Noappeal shall be filed In respect of an assessment yearor years In which the tax effect Is less than themonetary limit specified in para 3. In other words,nenceforth, appeals can be filed only with referenceto the tax effect In the relevant assessment year.However, in case of a composite order of any HighCourt or appellate authority, which tnvoives more.than one assessment year and common Issues In.more than one assessment year, appeals shall befiled in respect of all such assessment years even Ifthe tax effect Is less than the prescribed monetarylimits tn any of the year(s), If It is decided to fileappeal in respect of the year(s) In which tax effect.exceeds the monetary limit prescribed. In case wherea composite order/judgement involves more than oneassessee, eachassesseeShall.pe.dealt with.Separately.” 5.On the other hand, learned counsel! for theassessee(s) submitted that in case the entire ‘tax effect’ ITA No.434 of 2017 Involved in the present appeals Is calculated,even tnen|It WouId be less than the cut-oft|monetary limit prescribed i.e.750 lakhs.Moreover, the aforesaid Circular specifically provides that thecut-off limit prescribed for filing the appeal before the High Court:by the revenue Is of 50 lakns. Thus, the appeals would not bemaintainable. 6.After hearing learned counsel for the parties, we findforce in the submissions of learned counsel! for the assessee(s).].Tne aforesaid Circular clearly provides that thedepartmental appeals may be filed on merits before the IncomeTax Appellate Tribunal and the High Courts and SLPs/appealsbefore the Supreme Court keeping In view the monetary limits.and conaitions prescribed therein. To facilitate the‘jurisdiction’for filing the appeal(s) before the Tribunals/Courts, the cut-off|monetary limits are prescribed. According to the Circular, the|revenue may approach this Court where the tax effect’ is morethan monetary limit i.e. 250,00, 000/-. 8.On a plain reading of clause 5 of the aforesaidCircular on which revenue has placed rellance, we do not findthat any portion supports her contention. According to clause 5,the Assessing Officer Is required to calculate the tax effect.separately for every assessment year relating to disputed issues.in the case of every assessee. The tax effect involved in each.year Is to be seen while deciding | about filing of an appeal. However, where a composite orderNas been passed Involving more than one assessment year andcommon issues, appeals snall be filed In respect of all suchassessment years even where tax effect Is less than theprescribed limit in any of the assessment year(s) where decisionnas been taken to file an appeal relating to a year or yearswhere the tax effect is more than the monetary limit prescribed.Tne case of each assessee Is to be dealt with separately in caseof any composite order concerning more than one assessee. QO.It may be noticed that circular No.3/18 dated11.7.2018 issued by the)Central Board of Direct Taxes, NewDeini prescribes that a monetary limit for filing an appeal before the High Court is)750 lakhs, whereas cumulative tax effectInvolved in all these appeals Is 15,20,171/- which is mucnbelow the said |imit.. QO.It may be noticed that circular No.3/18 dated11.7.2018 issued by the)Central Board of Direct Taxes, NewDeini prescribes that a monetary limit for filing an appeal before the High Court is)750 lakhs, whereas cumulative tax effectInvolved in all these appeals Is 15,20,171/- which is mucnbelow the said |imit.. 10.In view of the above and also keeping In view theorder of the Apex Court In.Commissioner of Income Tax VvDnanalekshmi Bank Ltd.,12015] 373 ITR 526 (SC) where the|Supreme Court had dismissed the appeal without going into themerits of the appeal due to low tax effect leaving the question oflaw open, the present appeals are dismissed. It is, Nowever,Clarified that dismissal of the appeals shall not be taken to be.affirmation of order of the Tribunal on merits. Further, the legal | Issue aS claimed by the revenue Is being left open to beadjudicated in an appropriate case. (AJAY KUMAR MITTAL)JUDGE| August 14, 2013.(AVNEESH JHINGAN)-KD/gbsJUDGE.Whether speaking / reasoned Yes/ No.Whether ReportableYes / No. Whether speaking / reasoned Yes/ No.Whether ReportableYes / No.