Jharkhand High Court
The Commissioner Of Income Tax vs Ms Gulab Wire Products Pvt Ltd on 6 December, 2013
Equivalent citations: 2014 (2) AJR 655
Bench: Chief Justice, Aparesh Kumar Singh
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Tax Appeal No. 8 of 2013
The Commissioner of Income Tax .... Appellant
Versus
M/s Gulab Wire Products Pvt. Ltd.
Jamshedpur .....Respondent
CORAM : HON'BLE THE CHIEF JUSTICE
HON'BLE MR.JUSTICE APARESH KUMAR SINGH
....
For the Appellant: M/s Deepak Roshan, Sr.S.C.(IT) & Rupa Kumari,Adv.
For the Respondent: M/s B.Poddar, Sr.Adv., M.Choudhary,Amrita
Sinha, Darshal Poddar Mishra & Piyush
Poddar,Advs.
th
Dated 6 December , 2013
By Court This Tax Appeal is preferred against the order of Income
Tax Appellate Tribunal, Circuit Bench, Ranchi dated 08.10.2012
passed in I.T.A. No. 20/Ran/12 deleting the entire addition of
Rs.36,78,410/ made by the Assessment Officer for the Assessment
Year 200809 raising the following questions of law:
(I) Whether on the facts and in the circumstances of
the Case the learned ITAT has not erred in ignoring the
facts and circumstances available before it as emerged
from the finding of the decision of the CIT(A)?
(II) Whether on the facts and in the circumstances of
the Case the learned ITAT is justified accepting the
fictitious debtors of Rs.36,78,410/ from 7 parties for
which no details were furnished and the same were
held as nonexistence by the AO & CIT(A)?
2. The Assessee filed its Return of Income for the Assessment Year
200809 on 29.03.2008 declaring loss of income of Rs.9,00,374/.
The return was processed under Section 143(1) of the Income Tax
Act, 1961.
(i) The outstanding liability of VAT Rs.1,00,716/ was
disallowed and added back to the total income;
(ii)Depreciation of Plant & Machineries are disallowed and the
actual cost of Plant & Machineries was treated as NIL
2.
and depreciation claimed by the Assessee amounting to
Rs.69,347/ was disallowed and added back to the total
income;
(iii)The claim of payment to sundry creditors of Rs.36,78,410/
was disallowed and the Assessing Officer opined that it is
taxable in the hands of the Assessee Company and the same was
added back to the total income.
3. Being aggrieved by the order of the Assessing Officer, the Assessee
preferred appeal before the Commissioner of Income Tax (Appeals).
Before the CIT(Appeals), the Assessee did not press the outstanding
liability of VAT of Rs.1,00,716/. However, Ground No.(ii) i.e.,
disallowance of depreciation on Plant & Machinery amounting to
Rs.69,347/ and Ground No.(iii) & (iv) against the addition of
Rs.36,78,410/ in respect of payment to M/s. Sandeep Industries,
Sundry Creditors of the Assessee Company were pressed. The CIT
(Appeals) confirmed the order of the Assessing Officer holding that the
amount of Rs.36,78,410/ is treated as undisclosed income of the
Assessee Company and the action of the Assessing Officer in taxing the
said amount was confirmed.
4. Being aggrieved by the order of the CIT(Appeals), the Assessee preferred
appeal before the ITAT. The ITAT allowed the appeal deleting the addition
of Rs.36,78,410/. ITAT held as under:
"On careful analysis of the impugned orders passed by both
the lower authorities, we find that both the lower
authorities have not disputed the entries made by the
assessee in the respective ledger accounts of sundry creditors
as well as sundry debtors, to whom the amounts were paid
for supply of machinery. Both the amounts are equal. Apart
from that it is undisputed that the sundry creditors as well as
sundry debtors both are regular parties dealing with assessee.
It is a running account with the assess. The assessee is
purchasing the materials from the said M/s. Sandeep
3.
Industries, sundry creditors and it is also undertaking the
order from M/s. Sandeep Industries. The sale proceeds out of
this order is entered in the account of M/s. Sandeep
Industries and the same fact is also found that the assessee
has made advances for supplying of machineries to various
concerns during the period under consideration and the
aggregate of such advances are of equal amount that were
paid to M/s. Sandeep Industries towards the account.
Therefore, in the light of not finding fault of this account by
the departmental authorities the contention of the assessee
that amount being equal and that were not disclosed in the
balance sheet separately is to be accepted. In the remand
report submitted by the AO no where it was mentioned that
the advances given by the assessee to the suppliers for
machinery is not correct. In this view of the matter, the
contention of the assessee is to be accepted. Hence, we are of
the conclusion that the reasons given by the departmental
authorities are not sustainable for legal scrutiny. Hence, the
same is hereby set aside by allowing the appeal of the
assessee".
5. The learned counsel for the appellant submitted that ITAT was not
justified in deleting the entire addition of Rs.36,78,410/ made by
the Assessing Officer inspite of the fact that the Assessee has failed
to discharge the onus regarding the creditors. It was submitted that
the ITAT was not justified in accepting the fictitious debtors of
Rs.36,78,410/ from 7 (seven) parties for which no details were
furnished and the same was held as nonexistent and prayed for
allowing of the appeal.
6. The learned Senior Counsel for the Assessee raised preliminary
objection relating to the maintainability of the appeal and
submitted that Instruction No.3 of 2011 dated 09.02.2011 specifies
the mandatory limit of Rs.10,00,000/ (Rupees Ten Lakh) for
maintainability of appeal before the High Court. CBDT directed the
4.
Revenue not to raise substantial question of law where the tax
effect is less than the amount prescribed in the instructions issued
by it. The tax effect in revenue appeals is less than Rs.10,00,000/
(Rupees Ten Lakh), which was filed even prior.
7. Learned counsel for the respondentassessee has drawn our
attention to the Instruction No.3/2011 dated 9.2.2011 and
submitted that the tax effect involved in this Tax Appeal is less than
Rs.10.00 lacs and, therefore, the instant Tax Appeal is not
maintainable.
8. We have heard Mr.Deepak Roshan, learned counsel, appearing for
the Revenue, who fairly submitted that the tax effect involved in
respect of addition of Rs.36,78,410 regarding the payment made to
the creditor would be less than Rs.10.00 lacs and, therefore would
be governed under Instruction No.3 of 2011.
9. The Instruction No.3/2011 [F. No. 279/ Misc.142 /2007 / ITJ]
dated 9.2.2011 reads as follows :
Instruction No.3/2011[F.No.279/Misc.142/2007/ITJ]Dated 9.2.2011.
"Reference is invited to Board's instruction No.5/2008 dated
1552008 wherein monetary limits and other conditions for filing
departmental appeals(In Incometax matters) before Appellate
Tribunal, High Courts and Supreme Court were specified.
2. In supersession of the above instruction, it has been decided by
the Board that departmental appeals may be filed on merits before
Appellate Tribunal, High Courts and Supreme Court keeping in view
the monetary limits and conditions specified below.
3. Henceforth appeals shall not be filed in cases where the tax
effect does not exceed the monetary limits given hereunder:
S.No. Appeals in Income Tax matters Monetary Limit (in Rs.)
1. Appeal before Appellate Tribunal 3,00,000
2. Appeal u/s 260A before High Court 10,00,000
3. Appeal before Supreme Court 25,00,000
5.
It is clarified that an appeal should not be filed merely because the
tax effect in a case exceeds the monetary limits prescribed above.
Filing of appeal in such cases is to be decided on merits of the case."
10. Since the tax effect involved in the present appeal is less
than Rs.10.00 lacs, in view of Instruction No. 3/2011 dated
9.2.2011, the Tax Appeal filed by the Revenue is not maintainable and the same is dismissed.
( R.Banumathi, C.J. ) ( Aparesh Kumar Singh, J.) G.Jha/Aditya