ITO vs. Dinesh Madhavlal Patel (ITAT Ahmedabad)

ITO Vs Dinesh Madhavlal Patel (ITA No. 1398/Ahd/2004)
and 627 other appeals and COs
Page 1 of 7
IN THE INCOME TAX APPELLATE TRIBUNAL,
AHMEDABAD BENCH ‘A’, AHMEDABAD
[Coram: Justice P P Bhatt, President, and Pramod Kumar, Vice President]
ITA No. 1398/Ahd/2004
Assessment year: 1998-99
Income Tax Officer
Ward 3(2), Ahmedabad. ………………………..Appellant
Vs
Dinesh Madhavlal Patel ……………..………..Respondent
26, Shyam Dham Society
Behind Krishna Nagar, Siajpur Bogha
Ahmedabad 382 345 [Gujarat]
and 627 others- as per list attached
Appearances by
Aparna Agarwal, Commissioner (DR) alongwith Mudit Nagpal, Vinod Tanwani
and S K Dev for the appellant
J P Shah, S N Soparkar and Tushar P Hemani, Senior Advocates, Mukesh Patel,
Advocate, Samir N. Divetia, Advocate, Mehul K. Patel, Advocate, Manish J. Shah,
Advocate, Sanjay R. Shah, CA, Urvashi Shodhan, Advocate, Arti Shah, CA, Parin
Shah, CA Parimalsinh Parmar, Advocate, Hardik Vora, Advocate, Jaimin Shah, CA,
Divyakant Parikh, CA, S. K. Sadhwani, CA, Sakar Sharma, CA, S. V. Agarwal, CA,
Prakash D. Shah, CA, Hitesh P. Shah, CA, Nupur Shah, Advocate, Karan Shah, CA,
Kinjal V. Shah, CA, Mehul Talera, CA, Bhavesh P. Shah, CA, Sulabh Padshah, CA,
Shalibhadra Shah, CA, Gunjan Shah, CS, Hemant Suthar, CA, Tej Shah, Advocate, K.
C. Thaker, Advocate, Mehul Thakkar, CA, Afaq Saiyed, Advocate and Divya Agarwal,
CA for various respondents – as per list attached
Date of concluding the hearing : August 14, 2019
Date of pronouncement : August 14, 2019
O R D E R
1. These 628 appeals and COs pertain to the appeals are filed by various
Assessing Officers, all these appeals call into question correctness of the relief
granted to the taxpayers by the Commissioners of Income Tax (Appeals) and, most
importantly, the tax effect involved in all these appeals does not exceed Rs
ITO Vs Dinesh Madhavlal Patel (ITA No. 1398/Ahd/2004)
and 627 other appeals and COs
Page 2 of 7
50,00,000 in each of these appeals. The cross objections taken up for hearing are
only such cross objections as emanate from these appeals and are broadly in support
of the orders passed by the Commissioner (Appeals). In these cases, in the light of
the discussions with the Principal Chief Commissioner of Income Tax (Gujarat) and
representatives of the Ahmedabad ITAT Bar Association, individual notices are
dispensed with; notices of hearing are given only through the notice board.
2. It is in this backdrop that we are pleased to take note of a very pragmatic and
taxpayer friendly policy decision by the Government of India for reducing the
income tax litigation. Vide CBDT circular dated 8th August, 2019, the income tax
department has further liberalized its policy for not filing appeals against the
decisions of the appellate authorities in favour of the taxpayers, wherein tax
involved is below certain threshold limits, and announced its policy decision not to
file, or press, the appeals, before this Tribunal, against the appellate orders
favourable to the assessee in the cases in which overall tax effect, excluding interestexcept
when interest itself is in dispute, is Rs 50,00,000 or less. What it means, in
plain words, is that when a Commissioner (Appeals) gives the taxpayer tax relief of
upto Rs 50 lakhs in an appeal in an assessment year, the matter ends there and the
relief so granted by the Commissioner (Appeals) cannot be challenged before this
Tribunal, that when this Tribunal gives the taxpayer relief of upto Rs 1 crore in an
appeal in an assessment year, the matter ends there and the relief so granted by the
Tribunal cannot be challenged before the Hon’ble High Court, and that when
Hon’ble High Court gives relief of upto Rs 2 crore to the taxpayer in an appeal in an
assessment year, that relief cannot be challenged before Hon’ble Supreme Court.
These monetary threshold limits for filing of appeals by the income tax authorities
do not take into account interest and other corollaries of the tax demands being
confirmed such as penalties, except when a penalty itself is subject matter of
litigation, and prosecutions. The enhancement of these monetary limits is at an
unprecedented scale. The monetary limit for appeals before this Tribunal, which was
Rs 3,00,000 till 10th July 2014, has been in effect enhanced to almost 1,700% in the
last five years. This substantial relaxation is certainly a huge step which signifies
trust reposed by the Government of India in the decisions of the appellate forums,
and substantially cuts down time taken in the finality of the appellate process. It is
indeed heartening to note that in one stroke, the Government has not only prevented,
but has, in effect, set the stage for withdrawal of thousands of appeals before this
Tribunal and before Hon’ble Courts above. In an environment in which
retrospectivity was attached only to the taxation and not to tax reliefs or
concessions, such an approach is a pleasant departure from legacy practices.
3. In view of the above factual background and the generous concession by this
benevolent CBDT circular, all these appeals must be dismissed as withdrawn and the
ITO Vs Dinesh Madhavlal Patel (ITA No. 1398/Ahd/2004)
and 627 other appeals and COs
Page 3 of 7
related cross objections must be dismissed as infructuous. There is, however, a small
issue that we must deal with.
4. Smt Aparna Agarwal, learned Departmental Representative, however, has a
point to make. She points out that the circular dated 8th August 2019 is not clearly
retrospective inasmuch as it specifically states in para 4 that “(t)he said
modifications shall come into effect from the date of issue of this Circular”. It is
thus pointed out that this sentence gives an impression that is only after the date of
the said circular that the departmental appeals will not be filed in the cases within
the specified tax effect limits. We are urged to bear in mind the impact of this
observation while giving effect to the circular dated 8th August, 2019. She, however,
hastens to add that she is yet to have any specific instructions on the issue and she
leaves it for the bench to take the appropriate call. Learned representatives appearing
for the taxpayers vehemently oppose the suggestion implicit in her submissions. All
of them are unanimous in their argument that the circular must be held to have
retrospective application and must equally apply to the pending appeals as well.
Shri J P Shah, Senior Advocate, points out that the circular dated 8th August 2019 is
not a standalone circular and it is required to be read with the old circular no. 3 of
2018 which is what it seeks to modify. This circular, according to the learned
counsel, only enhances the monetary limits and gives further relaxation. He urges us
not to read the circular in a manner so as to nullify the underlying approach and
object of reducing litigation. Shri Soparkar, learned Senior Advocate, submits that
all that the present circular does is to modify the monetary limits and nothing more,
and, therefore, it cannot be treated to follow any other approach other than the
approach followed in the old circular. The old circular, beyond any dispute or
controversy, categorically applied to the pending appeals as on the date of issuance
of circular. Shri Tushar Hemani, learned Senior Advocate, points out that the
circular dated 8th August 2019 only gives further relief not only in terms of the
monetary limits but also in terms of the manner in which the application of circular
to orders dealing with more than one year is to made. Shri S N Divetia, learned
counsel for the assessee, submits that unlike in the cases of earlier CBDT circulars,
which used to be in supersession of earlier circulars on the issues, the circular
dated 8th August 2019 only modifies the earlier circular which, inter alia, provided
for its retrospective application. Our attention is invited to some judicial precedents
in support of the contention that the benevolent circular, such as the one in question,
is to be given effect in respect of the pending appeals as well. Ms Urvashi Shodhan,
learned counsel for the assessee, points outs that its plainly contrary to the scheme
of the litigation policy of the Government of India to give this circular only
prospective effect. Shri S K Sadhwani, learned counsel for the assessee, invites our
attention to the letter dated 16th July 2018 issued by Member CBDT to the all the
Principal Chief Commissioners of Income Tax, in the context of circular dated 11th
ITO Vs Dinesh Madhavlal Patel (ITA No. 1398/Ahd/2004)
and 627 other appeals and COs
Page 4 of 7
July 2018 that the present circular seeks to modify, seeking report on withdrawal of
the appeals covered by the circular. He then points out that it is the old circular is
still alive today and the only change is with respect to the monetary limits. In all
fairness, therefore, the same approach regarding withdrawal of pending appeals must
be followed for this circular as well. On the same lines, arguments are advanced by
the learned representatives which, for the sake of brevity and to avoid repetition, we
are not referring to in more specific details. In brief rejoinder, learned Departmental
Representative graciously leaves the matter to us.
5. Having considered the rival submissions and having perused the material on
record, we do not have slightest of hesitation in holding that the concession extended
by the CBDT not only applies to the appeals to be filed in future but it is also
equally applicable to the appeals pending for disposal as on now. Our line of
reasoning is this. The circular dated 8th August 2019 is not a standalone circular. It
is to be read in conjunction with the CBDT circular no 3 of 2018 (and subsequent
amendment thereto), and all it does is to replace paragraph nos. 3 and 5 of the said
circular. This is evident from the following extracts from the circular dated 8th
August 2019:
2. As a step towards further management of litigation. it has been decided
by the Board that monetary limits for filing of appeals in income-tax cases be
enhanced further through amendment in Para 3 of the Circular mentioned
above and accordingly. the table for monetary limits specified in Para 3 of
the Circular shall read as follows:
S.No. Appeals/SLPs in Income-tax matters Monetary Limit (Rs.)
1 Before Appellate Tribunal 50,00,000
2 Before High Court 1,00,00,000
3 Before Supreme Court 2,00,00,000
3. Further, with a view to provide parity in filing of appeals in scenarios
where separate order is passed by higher appellate authorities for each
assessment year vis-a-vis where composite order for more than one
assessment years is passed. para 5 of the circular is substituted by the
following para:
“5. The Assessing Officer shall calculate the tax effect separately for
every assessment year in respect of the disputed issues in the case of
every assessee. If in the case of an assessee, the disputed issues arise
in more than one assessment year, appeal can be filed in respect of
such assessment year or years in which the tax effect in respect of the
disputed issues exceeds the monetary limit specified in para 3. No
ITO Vs Dinesh Madhavlal Patel (ITA No. 1398/Ahd/2004)
and 627 other appeals and COs
Page 5 of 7
appeal shall be filed in respect of an assessment year or years in
which the tax effect is less than the monetary limit specified in para
3. Further, even in the case of composite order of any High Court or
appellate authority which involves more than one assessment year
and common issues in more than one assessment year no appeal shall
be filed in respect of an assessment year or years in which the tax
effect is less than the monetary limit specified in para 3. In case
where a composite order/ judgement involves more than one assessee,
each assessee shall be dealt with separately”
4. The said modifications shall come into effect from the date of issue of this
Circular.
6. Clearly, all other portions of the circular no. 3 of 2018 (supra) have remained
intact. The portion which has remained intact includes paragraph 13 of the aforesaid
circular which is as follows:
13. This Circular will apply to SLPs/ appeals/ cross objections/
references to be filed henceforth in SC/HCs/Tribunal and it shall also apply
retrospectively to pending SLPs/ appeals/ cross objections/references.
Pending appeals below the specified tax limits in pare 3 above may be
withdrawn/ not pressed.
7. In view of the above discussions, we hereby hold that the relaxation in
monetary limits for departmental appeals, vide CBDT circular dated 8th August 2019
(supra) shall be applicable to the pending appeals in addition to the appeals to be
filed henceforth.
8. Learned Commissioner (DR) then submits liberty may kindly be given to
point out, upon necessary further verifications, and to seek recall the dismissal of
appeals and restoration of the appeals in the cases (i) in which it can be
demonstrated that the appeals are covered by the exceptions, and (ii) which are
inadvertently included in this bunch of appeals, wherein the tax effect, in terms of
the CBDT circular (supra), exceeds Rs 50,00,000. None opposes this prayer; we
accept the same. We make it clear that the appellants shall be at liberty to point out
the cases which are wrongly included in the appeals so summarily dismissed, either
owing to wrong computation of tax effect or owning to such cases being covered by
the permissible exceptions- or for any other reason, and we will take appropriate
remedial steps in this regard.
ITO Vs Dinesh Madhavlal Patel (ITA No. 1398/Ahd/2004)
and 627 other appeals and COs
Page 6 of 7
9. In the light of the above discussions, all the appeals stand dismissed as
withdrawn. As the appeals filed by the Revenue are found to be non-maintainable
and as all the related cross-objections of the assessee arise only as a result of those
appeals and merely support the order of the CIT(A), the cross objections filed by the
assessee are also dismissed as infructuous. Ordered, accordingly.
10. As we part with the matter, we must place on record our deep appreciation to
our own team which has painstakingly identified all these low tax effect appeals in
the long weekend and less than two working days, to the Principal Chief
Commissioner of Income Tax Gujarat, as also the learned Departmental
Representatives, for his immense help, cooperation and active involvement in
speedily disposing of these appeals, and, of course, to the ITAT Bar Association
Ahmedabad for their whole hearted cooperation in this special drive. The circular
was issued on Thursday the 8th August 2019, and within two working days and the
long weekend, today on 14th August 2019, all the appeals stand disposed of. It’s only
a team effort and whole hearted cooperation of all the stakeholders that can enable
us to so speedily implement taxpayer friendly initiatives of the Government of India.
The taxpayer relief involved in these appeals, including interest and the other
corollaries, is estimated to be well over Rs 350 crores. The lead case before us is an
appeal filed over fifteen years ago by the Income Tax Officer and it deals with an
assessment year which pertains to the period over twenty years ago. Yet, the matter
had not reached the finality and the revenue’s challenge to the relief granted by the
Commissioner (Appeals) had remained undecided. That is nothing but prolonged
agony of uncertainty to the taxpayers. It is indeed an appreciable goodwill gesture
by the Government, for so many taxpayers, on the eve of this Independence Day and
offering them freedom from the prolonged mental agony and uncertainty of
litigation.
11. In the results, all the appeals are dismissed as withdrawn and the cross
objections are dismissed as infructuous. Pronounced in the open court today on the
14th August, 2019.
Sd/- Sd/-
Pramod Kumar Justice P P Bhatt
(Vice President) (President)
Ahmedabad, dated the 14th day of August, 2019
ITO Vs Dinesh Madhavlal Patel (ITA No. 1398/Ahd/2004)
and 627 other appeals and COs
Page 7 of 7
Copies to: (1) The appellant (2) The respondent
(3) CIT (4) CIT(A)
(5) DR (6) Guard File
By order
Assistant Registrar
Income Tax Appellate Tribunal
Ahmedabad benches, Ahmedabad