Tax Case (Appeal) Nos.1011 And 1012 Of 2009 M.p v. Mrs.n.ambujam

In the High Court of Judicature at Madras Dated : 27.10.2009 Coram :- The Honourable Mr.Justice K.RAVIRAJA PANDIAN andThe Honourable Mr.Justice M.M.SUNDRESH Tax Case (Appeal) Nos.1011 and 1012 of 2009M.P.No.1 of 2009The Commissioner of Income-Tax,VIIChennai .. Appellant Vs. Mrs.N.Ambujam .. Respondent TAX CASE (APPEAL) under Section 260-A of the Income Tax Act,1961, against the order of theIncome Tax Appellate Tribunal Madras 'C' Bench dated 30.07.2008 in I.T.A.Nos.385 and 518/Mds/2008 for the assessment years 2000-01 and 2001-02.For Appellant : Mr.J.Naresh Kumar. JUDGMENT (Judgment of the Court was deliveredby K.RAVIRAJA PANDIAN,J.) The correctness of the order of the Tribunal dated 30.7.2008 made in I.T.A.Nos.385 and 518/Mds/2008 relating to the assessment years 2000-01 and 2001-02 is put in issue in this appeal by therevenue by formulating the following question of law:- "Whether on the facts and circumstances of the case, the Tribunal was right in law in dismissing theappeal filed by the revenue without considering the merits of the case and observing that the taxeffect is below monetary limit prescribed for filing the appeal before the Income Tax AppellateTribunal is valid ? 2. The Statement of facts culled out from the memorandum of grounds are as follows:- The assesseeis doing steel fabrication works for M/s.Bharat Heavy Electricals Limited. The raw materials areprovided by M/s.Bharat Heavy Electricals. After manufacturing the items, the assessee company isreturning the balance raw materials through M/s.Bharat Heavy Electricals Limited. Some time, theassessee is not returning the balance raw materials in good conditions, and M/s.Bharat HeavyElectricals is making recovery from the assessee on those items. The assessee is valuing those rawmaterials on the basis of recovery made by M/s.Bharat Heavy Electricals Limited and the assessee isselling those items in the open market and accordingly profit and loss is reflecting in the return.During the course of assessment proceedings, the assessee has furnished her explanation about thevaluation of stock. But the assessing officer has not accepted the explanation filed by the assessee.The entire scrap stock value which is not shown either in the opening stock or in the closing stock ofthe previous year is being added to the total income as unaccounted stock by the assessing officer.Accordingly disallownace of scrap recovery of Rs.2,15,000/- and 86,990/- were added for the assessment years 2000-01 and 2001-02 respectively. It is ascertained from the records , theAccountant General (Audit) has pointed out that the assessee has not shown the value scrap lyingwith it and the same was brought to tax. The assessments were reopened and revised accordinglyaccepting the audit objection raised by the Accountant General (Audit). Aggrieved by that order, theassessee preferred appeals before the Commissioner of Income Tax (Appeals, who deleted theadditiond made by the assessing officer by partly allowing the appeals. Aggrieved by the said order,the revenue filed appeals before the Income Tax Appellate Tribunal. The Tribunal without going intothe merits of the case dismissed the appeals on the premise that the tax effect in these cases wasless than Rs.2/- lakhs fixed for filing appeals before the Income Tax Appellate Tribunal. Thecorrectness of the same is put in issue before this Court. 3. The issue involved in this appeal has been considered by this court in several cases, one of whichis in the case of CWT v. S.Annamalai, (2002) 258 ITR 675, wherein it was held that in order toreduce the litigation for filing departmental appeals/references before the Income Tax appellateTribunal, High Courts and the Supreme Court, the Central Board of Direct Taxes, by Circular F.No.279/126/98-IT, dated March 27,2000, refixed the monetary limits, however, carving out certainexceptions. The exceptions stated are (i) where revenue audit objection in the case has beenaccepted by the department, (ii) where the Board's order, notification, instruction or circular is thesubject matter of an adverse order, (iii) where prosecution proceedings are contemplated againstthe assessee, and (iv) where the constitutional validity of the provisions of the Act are underchallenge. 4. The Revenue had not taken the point before the Tribunal that the issue falls within the exceptionsprovided in the circular, but simply accepted the order. However, the Revenue projected before thiscourt that the case falls within the exceptions stated in the CBDT circular, which is evident on theface of the order of the Tribunal. Inasmuch as the said point has not been agitated and arguedbefore the Tribunal, it is apparent that the question does not arise for consideration by this court. 5. It is also pertinent to note that the judgment in which one of us is a party, in the case of the Commissioner of Income-Tax Vs. Associated Electrical Agencies (2007) 295 ITR 496, in which, thisCourt also relied on the Supreme Court decision in CGT Vs. Executors and Trustees of the Estate oflate Sh.Ambalal Sarabhai reported in (1988) 170 ITR 144 under the Gift Tax Act, the MadhyaPradesh High Court judgment in CIT Vs. Digvijay Singh reported in (2007) 292 ITR 314, the BombayHigh Court judgments in the case of CIT Vs. Zoeb Y.Topiwala (2006) 284 ITR 379 and in the case ofCIT Vs. Camco Colour Company reported in (2002) 254 ITR 565 and held that the long line ofjudicial opinion is that if the tax effect is less than the one stated in the circular, the revenue neednot agitate the issue on appeal and the circular is binding on them.6. In view of the consistent view taken by this Court, the appeals are dismissed as the issue does notinvolve any question of law much less substantial question of law so as to entertain these appeals.Consequently, the connected M.P is closed. No costs. krr/ 1.The Assistant Registrar 2. The Secretary,Central Board of Direct Taxes,New Delhi. (Three copies) 3. The Income Tax OfficerWard -I(4)Vellore