Pr. Commissioner Of Income Tax , Jaipur-Ii, Jaipur v. Order

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 150/2018 Pr. Commissioner Of Income Tax , Jaipur-Ii, Jaipur ----Appellant Versus M/s. Vedansh Jewels Pvt. Ltd. , A-20, Bhagat Singh Marg, Jaipur----Respondent For Appellant(s) : Mr. Prabhansh Sharma on behalf ofMr. R. B. Mathur For Respondent(s): HON'BLE MR. JUSTICE KALPESH SATYENDRA JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS 19/07/2018 Order Instant appeal is directed against order of the Income TaxAppellate Tribunal and indisputably the tax effect as brought toour notice, is less than Rs.50 lac. A Circular No.3/2018 has been issued by the Central Board ofDirect Taxes dated 11.07.2018 in exercise of its power u/sec.268A of the Income-tax Act, 1961 which reads as under:- Circular No.3/2018 “F No 279/Misc. 142/2007-ITJ (Pt)Government of IndiaMinistry of Finance Department of Revenue Central Board Direct Taxes New Delhi the 11[th] July, 2018 Subject: Revision of monetary limits for filing ofappeals by theDepartment before Income TaxAppellate Tribunal, High Courts and SLPs/appeals before Supreme Court-measures for reducing litigation-Reg. 1.Reference is invited to Board's Circular No. 21 of2015 dated 10.12.2015 wherein monetary limits andother conditions for filing departmental appeals (inIncome-tax matters) before Income Tax AppellateTribunal, High Courts and SLPs/ appeals beforeSupreme Court were specified. 2. In supersession of the above Circular, it has beendecided by the Board that departmental appeals may befiled on merits before Income Tax AppellateTribunal andHigh Courts and SLPs/ appeals before Supreme Courtkeeping in view the monetary limits and conditionsspecified below. 3 . Henceforth, appeals/ SLPs shall not be filed in caseswhere the tax effect does not exceed the monetarylimits given hereunder: 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 such cases isto 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 thetax that would have been chargeable had such totalincome been reduced by the amount of income inrespect of the issues against which appeal is intended tobe filed (‘hereinafter referred to as 'disputed issues’)Further, 'tax effect' shall be tax includingapplicable surcharge and cess. However, the tax willnot include any interest thereon, except wherechargeability of interest itself is in dispute. In case thechargeability of interest is the issue under dispute, theamount of interest shall be the tax effect. In caseswhere returned loss is reduced or assessed as income,the tax effect would include notional tax on disputedadditions. In case of penalty orders, the tax effect willmean quantum of penalty deleted or reduced in theorder to be appealed against. 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of thedisputed issues in the case of every assessee. If, in thecase of an assessee, the disputed issues arise in morethan one assessment year, appeal can be filed in respectof such assessment year or years in which the tax effectin respect of the disputed issues exceeds the monetarylimit specified in para 3. No appeal shall be filed inrespect of an assessment year or years in which the tax 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of thedisputed issues in the case of every assessee. If, in thecase of an assessee, the disputed issues arise in morethan one assessment year, appeal can be filed in respectof such assessment year or years in which the tax effectin respect of the disputed issues exceeds the monetarylimit specified in para 3. No appeal shall be filed inrespect 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 onlywith reference to the tax effect in the relevantassessment year. However, in case of a composite orderof any High Court or appellate authority, which involvesmore than one assessment year and common issues inmore than one assessment year, appeals shall be filed inrespect of all such assessment years even if the taxeffect is less than the prescribed monetary limits in anyof the year(s), if it is decided to file appeal in respect ofthe year(s) in which tax effect exceeds the monetarylimit prescribed. In case where a composite order /judgement involves more than one assessee, eachassessee shall be dealt with separately. 6. Further, where income is computed under theprovisions of section 115JB or section 115JC, for thepurposes of determination of 'tax effect', tax on thetotal income assessed shall be computed as per thefollowing formula -(A-B) + (C-D)where, A = the total income assessed as per the provisionsother than the provisions contained in section 115JB orsection 115JC (herein called general provisions); B = the total income that would have been chargeable had the total income assessed as per the generalprovisions been reduced by the amount of the disputedissues under general provisions; C = the total income assessed as per the provisionscontained in section 115JB or section 115JC; D = the total income that would have been chargeablehad the total Income assessed as per the provisionscontained in section 115JB or section 1I5JCwas reducedby the amount of disputed issues under the saidprovisions: However, where the amount of disputed issues isconsidered both under the provisions contained insection 115JB or section 115JC and under generalprovisions, such amount shall not be reduced from totalincome assessed while determining the amount underitem D. 7. In a case where appeal before a Tribunal or a Court is not filed only on account of the tax effectbeing less than the monetary limit specifiedabove, the Pro Commissioner of Income-tax/Commissioner of Income Tax shall specificallyrecord that "even though the decision is notacceptable, appeal is not being filed only on theconsideration that the tax effect is less than themonetary limit specified in this Circular". Further,in such cases, there will be no presumption thatthe Income-tax Department has acquiesced in thedecision on · the disputed issues. The Income-taxDepartment shall not be precluded from filing an appealagainst the disputed issues in the case of the same assessee for any other assessment year, or in the caseof any other assessee for the same or any otherassessment year, if the tax effect exceeds the specifiedmonetary limits. assessee for any other assessment year, or in the caseof any other assessee for the same or any otherassessment year, if the tax effect exceeds the specifiedmonetary limits. 8. In the past, a number of instances have come to thenotice of the Board, whereby an assessee has claimedrelief from the Tribunal or the Court only on the groundthat the Department has implicitly accepted the decisionof the Tribunal or Court in the case of the assessee forany other assessment year or in the case of any otherassessee for the same or any other assessment year, bynot filing an appeal on the same disputed issues. TheDepartmental representatives/ counsels must makeevery effort to bring to the notice of the Tribunal or theCourt that the appeal in such cases was not filed or notadmitted only for the reason of the tax effect being lessthan the specified monetary limit and, therefore, noinference should be drawn that the decisions renderedtherein were acceptable to the Department. Accordingly,they should impress upon the Tribunal or the Court thatsuch cases do not have any precedent value and alsobring to the notice of the Tribunal/ Court the provisionsof sub section (4) of section 268A of the Income-taxAct, 1961 which read as under : "(4) The Appellate Tribunal or Court, hearingsuch appeal or reference, shall have regard tothe orders, instructions or directions issuedunder sub-section (1) and the circumstancesunder which such appeal or application forreference was filed or not filed in respect of anycase." 9. As the evidence of not filing appeal due to thisCircular may have to be produced in courts, the judicialfolders in the office of Pr.CsIT / CsIT must bemaintained in a systemic manner for easy retrieval. 10. Adverse judgments relating to the following issuesshould be contested on merits notwithstanding thatthe tax effect entailed is less than the monetary limitsspecified in para 3 above or there is no tax effect: (a) Where the Constitutional validity of theprovisions of an Act or Rule is under challenge, or(b) Where Board's order, Notification, Instructionor Circular has been held to be illegal or ultravires, or (c) Where Revenue Audit objection m the casehas been accepted by the Department, or (d) Where the addition relates to undisclosedforeign assets/ bank accounts. 11. The monetary limits specified in para 3 aboveshall not a pply to writ matters and Direct tax mattersother than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed byrelevant provisions of statute and rules. Further, incases where the tax effect is not quantifiable or notinvolved, such as the case of registration of trusts orinstitutions under section 12A/ 12AA of the IT Act,1961 etc., filing of appeal shall not be governed bythe limits specified in para 3 above and decision to fileappeals in such cases may be taken on merits of aparticular case. 12. It is clarified that the monetary limit of Rs. 20lakhs for filing appeals before the ITAT would applyequally to cross objections under section 253(4) ofthe Act. Cross objections below this monetary limit,already filed , should be pursued for dismissal aswithdrawn/ not pressed. Filing of cross objectionsbelow the monetary limit may not be consideredhenceforth. Similarly, references to High Courts andSLPs/ appeals before Supreme Court below themonetary limit of Rs. 50 lakhs and Rs. 1 Crorerespectively should be pursued for dismissal aswithdrawn/ not pressed. References before High Courtand SLPs/ appeals below these limits may not beconsidered henceforth. 13. This Circular will apply to SLPs/appeals/ crossobjections/ references to be filed henceforth inSC/HCs/Tribunal and it shall also apply retrospectivelyto pending SLPs/ appeals/cross objections/references. Pending appeals below the specifiedtax limits in para 3 above may be withdrawn/not pressed. 14. The above may be brought to the notice of allconcerned. 13. This Circular will apply to SLPs/appeals/ crossobjections/ references to be filed henceforth inSC/HCs/Tribunal and it shall also apply retrospectivelyto pending SLPs/ appeals/cross objections/references. Pending appeals below the specifiedtax limits in para 3 above may be withdrawn/not pressed. 14. The above may be brought to the notice of allconcerned. 15. This issues under Section 268A of the Income-taxAct, 1961.” Accordingly, in the light of the CBDT Circular dated 11[th] July,2018 the appeal stands dismissed as not pressed. However, appellant will be at liberty to revive the appeal incase of difficulty. (VIJAY KUMAR VYAS),J (K. S. JHAVERI),J B.M.G/Gourav/30