|CORAM:||Pramod Kumar (AM), S. S. Godara (JM)|
|CATCH WORDS:||low tax effect circular|
|COUNSEL:||G. C. Pipara|
|DATE:||December 15, 2015 (Date of pronouncement)|
|DATE:||December 16, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 268A: In view of CBDT's Circular no. 21/ 2015 dated 10.12.2015 appeals of the department where the monetary limit does not exceed Rs. 10 lakh have to be dismissed as a legal nullity. CBDT's decision termed as "paradigm shift", "unprecedented" and "possibly a game changing initiative heralding a new era in thoughtful litigation management"|
The ITAT has complimented the CBDT for issuing Circular No. 21/ 2015 dated 10th December 2015 and stating therein that all pending appeals of the department with a monetary limit not exceeding Rs. 10,00,000 shall be withdrawn/ not pressed.
The ITAT has acted with remarkable alacrity to give effect to the said Circular of the CBDT. Over the weekend and past few days, the Hon’ble Members, Registrar and Bench Clerks have been involved in sorting through thousands of appeals and identifying the ones that qualify for dismissal pursuant to the said Circular.
The Ahmedabad and Rajkot Benches (through video-conferencing) will collectively dispose off around 1,500 low-tax effect appeals of the department in this week.
A similar exercise is underway in the other Benches of the ITAT. The Hon’ble President of the ITAT has also requested members of the Bar to furnish a list of such appeals.
The salient parts of the order passed by the Ahmedabad Bench in DCIT vs. Soma Textiles & Industries Ltd (by which 251 appeals were dismissed) read as follows:
“.. we need to take note of a very pragmatic initiative, taken by the Central Board of Direct Taxes last week, for reducing litigation in direct taxes. Vide circular no. 21/ 2015 dated 10th December 2015, the Central Board of Direct Taxes has, inter alia, announced that, subject to certain exceptions- which are not relevant in the present context, henceforth, no departmental appeals will be filed against relief given by the CIT(A), before this Tribunal, unless the tax effect, excluding interest, exceeds Rs 10,00,000. What is even more important is that not only that such a taxpayer friendly measure will be implemented in all future tax litigation, even the pending appeals, wherever the tax involved in the appeals does not exceed Rs 10,00,000, shall not be pressed or withdrawn. In effect thus, irrespective of the year to which the departmental appeal before the Tribunal pertains, as long as such an appeal is pending before the Tribunal, this will be a legal nullity.
It is in this backdrop that we proposed to fix all these appeals for hearing and put the learned Departmental Representative to notice as to why all these appeals not be dismissed as non maintainable in the light of the circular no. 21/2015 dated 10th December, 2015. However, in all fairness to the revenue authorities, this proposal was subject to following conditions to safeguard their legitimate interests:
(a) In terms of paragraph 6 and 7 of the said circular, this dismissal will be without any prejudice to the rights of the revenue authorities to raise the same issue, in the case of the relevant assessee or any other assessee, as and when the tax effect involved in such litigation crosses the threshold limit for that assessment year.
(b) The revenue authorities will have the liberty to approach this Tribunal, upon necessary verifications, to recall the dismissal of appeals and seek restoration of the same in the cases in which it can be demonstrated that the appeals are covered by the exceptions set out in paragraph 8 of the said circular
5. Shri Pipara, learned counsel for the assessee, took us through the CBDT circular to demonstrate as to how, in the light of this CBDT circular, the appeal should be dismissed as withdrawn. Learned Departmental Representative very fairly did not oppose the action proposed by this Tribunal, in principle, but has requested that the legitimate interests of the revenue authorities be suitably protected so as the appeals which are ultimately found to be not covered by the provisions of the aforesaid circular are reinstated and decided on merits. He also submits that it humanly impossible to verify tax effect in all these cases, and seeks time so as to call for a report from the Assessing Officer concerned. He also submits that in the cases of composite orders involving more than one assessment year in the case of a single assessee, even if tax effect is less than Rs 10,00,000 is certain assessment years, the appeals are to be filed for all the years nevertheless. In addition to the materially similar arguments in support of all these cases being covered by the CBDT circular, having been made by a large number of learned counsel, a few other points were also made. Shri Devatia submits that the expression ‘composite order’ is not defined in the circular and in any case it is not relevant for dismissal of appeals, as it is restricted only to filing of appeals. Shri Tushar Hemani submits that while there are no issues with respect to the cross objections, which only support the conclusions arrived at by the CIT(A), the dismissal of the cross objections could damage interests of the assessee in the cases involving substantive grounds. Shri Sanjay Shah submitted that in some of the cases, even appeal documents are not served on the respondent assessees and, as such, the assessee’s rights to file the CO are adversely affected by dismissal of appeals. Ms Urvashi Shodhan points out that in one of the cases, listed at item no. 93, the assessee has also filed a cross objection but the same is not listed before us. It is pointed out that the CO has an independent ground which requires adjudication on merits. We, however, see no need to deal with this aspect of the matter at this stage as the CO is not listed before us. Similarly, other issues raised before us, as set out above, are somewhat hypothetical at this stage. As for the apprehensions raised by the learned Departmental Representative, suffice to say in the event any specific cases having been wrongly included in this bunch of appeals, the same will be recalled in accordance with the law. Learned Departmental Representative is at liberty to point out the specific cases, if any, for appropriate remedial action.
6. While we have checked and rechecked each case individually and we are satisfied that in none of these cases tax effect involved is not more than Rs 10,00,000, we accept that human errors are possible and no such error should be allowed to prejudice legitimate interests of the revenue. The liberty is, therefore, specifically granted to the Assessing Officers to approach this Tribunal in case there are any cases, inadvertently included in this bunch of appeals, wherein the tax effect, in terms of the CBDT circular (supra), exceeds Rs 10,00,000, so that the related appeals can be recalled for adjudication on merits.
7. In view of the above discussions, as also bearing in mind entirety of the case, we deem it fit and proper to dismiss all these appeals as non maintainable. Without any prejudice to the generalities of the legal rights of both the parties, this dismissal is specifically subject to the liberty granted to the revenue authorities in terms of the assurances in the paragraphs 4 and 6 above.
8. We have also noted that in seven of the cases, as a result of the appeals having been filed by the revenue, the assessees have also filed the cross objections.
However, the right to file a cross objection arises only when the appeal filed by the other party is admitted, and, in a situation in which the appeal itself is held to non maintainable, the very foundation for the cross objection ceases to hold good in law.
As the appeals are found to be non maintainable and as the cross objections arise only as a result of these appeals, these cross objections also dismissed. In any case, all these cross objections merely support the conclusions arrived at by the CIT(A), do not raise any grievance requiring adjudication by us and are, therefore, required to be dismissed as infructuous. All the cross objections are, therefore, dismissed.
9. As we part with these appeals, we would like to place on record our appreciation for the information regarding the issuance of the CBDT circular having been quickly circulated by www.itatonline.org. Within a day of the CBDT circular having been issued, www.itatonline.org was able to put this information in public domain and also send the intimation emails to everyone who has opted to be in their database. It is really amazing as to how some public spirited people, like ITAT Bar Association Mumbai, can do such of selfless service without any monetary consideration and for such a noble cause. We must also place on record our deep appreciation for the registry and the office staff members who virtually worked entire weekend to segregate all these appeals and ensure that all the necessary ground work was done quickly. We also place on record our deep appreciation for the cooperation and active involvement of Shri Chandra, Principal Chief Commissioner of Income Tax (Gujarat), in this special drive to clear the cases covered by the new CBDT initiative, and, to Shri Tushar Hemani President and his colleague Members of the ITAT Bar Association, Ahmedabad, for their active cooperation and involvement in the whole process. It is because of the able leadership of, and the quick initiative taken by, the Hon’ble Vice President Shri Agarwal and Hon’ble President Justice Sud, and their active support and guidance, that it has been possible for our benches to identify and take up all these appeals so as to bring a sigh of relief to thousands of taxpayers that the relief granted to them by the first appellate authority has reached finality.
10. It is indeed heartening to note that in one stroke, the Government has not only prevented, but withdrawn, thousands of appeals before this Tribunal and before Hon’ble High Courts. In Ahmedabad benches and E-Court alone, as a result of this laudable initiative, almost 1,500 such appeals are listed for hearing this week, and will hopefully go off ITAT pendency dockets. We are sure this will allow everyone to concentrate on really important work and contribute to speedier resolution of serious and more important tax litigation. In an environment in which retrospectivity was attached only to the taxation and not to tax reliefs or concessions, such a paradigm shift in approach is unprecedented and possibly a game changing initiative heralding a new era in thoughtful litigation management.”