CIT vs. Smt. B Sumangaladevi (Karnataka High Court)

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DATE: (Date of pronouncement)
DATE: October 11, 2012 (Date of publication)
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Click here to download the judgement (sumangaladevi_low_tax_effect_circular.pdf)


Earlier view of the same Court that Low Tax Effect Circular applies to pending appeals is against “public policy”. Suggestions given on how to increase tax base

The High Court had to consider (i) whether in the light of the judgement of the same Court in Ranka & Ranka (Kar), Instruction No. 3 of 2011 dated 9.2.2011 which states that the department cannot file appeals where the tax effect is less than Rs. 10 lakhs applies to pending appeals and (ii) whether u/s 132B, credit for the cash seized in the hands of another assessee could be given to the assessee. HELD by the High Court:

(i) Though in Ranka and Ranka it was held by the Court that Instruction No. 3 of 2011 issued by the CBDT is applicable to the pending cases filed prior to 09.02.2011, this view is against public interest and public policy because clause 11 of the said Instruction specifically says that it will be applicable only to cases filed on or after 9.2.2011. The Revenue’s contention that Instruction No.3 dated 09.02.2011 has no retrospective effect is upheld;

(ii) It is suggested to the Union Government to reduce the tax burden/ rate of Income tax on the existing Income tax payers by bringing more persons under the Income tax net. If so, the existing tax payers would not evade tax and Income tax disputes also will come down. The following suggestions are made:

(a) that all Government servants, under the State/Centre (who are not assessees under the Income Tax), shall be made liable to pay Income Tax of at least Rs. 1,000 per annum;

(b) that all male graduates, who are mentally and physically sound, aged between 31 years to 60 years (who are not assessees under the Income Tax), shall be made liable to pay income-tax at least Rs. 1000 per annum and protect their interest on attaining age of 61 years by providing pension;

(c) that Election law may be amended prescribing a condition that every male person contesting election to the State assembly/ Parliament shall be an income tax assessee;

The Q whether the low tax effect circular applies to pending appeals has been referred to a Full Bench in Shambhubhai Mahadev Ahir (Guj)

4 comments on “CIT vs. Smt. B Sumangaladevi (Karnataka High Court)
  1. gopal nathani says:

    appeals are a continuation of assessments so if during their pendency there is any change in policy/amendment it should have effect on such pending appeals. after all the only purpose of such instructions is to limit litigation to meaningful appeals. I hope the Hon’ble SC sort this out for once as Courts are interpreaing differently on the subject.

  2. Kamalesh Sanghani says:

    Very good suggestions by the High Court for increasing the tax base. Very revolutionary and path breaking suggestion to ask every graduate to pay Rs.1000/- per year. There can be various slabs for various categories of citizens.
    In fact, every Aadhar Card holder should be allotted a PAN and a token Rs.100/- can be collected yearly from every one. For economically backward citizens, this amount can be reduced to Rs.10/-.

  3. Thirumalesh, Advocate says:

    On Low tax effect circulars Hon’ble SC has been directing Revenue to file Review Petitions in some cases before the respective High Courts. Rather the Revenue should endeavour to convince Hon’ble Supreme Court to hear this matter and give its opinion on the issue at the earliest. This would bring uniformity at the earliest on this issue across various High Courts and would help many small assessees.

  4. jagdish says:

    “(c) that Election law may be amended prescribing a condition that every male person contesting election to the State assembly/ Parliament shall be an income tax assessee;”

    This clause should should applies to both the male and female even though they purely agriculturists,

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