High Court Of Gauhati
CIT vs. Kironmoy Roy Choudhury
Section 147, 260A, 268A
Amitava Roy & A. Potsangbam, JJ.
IT Appeal No. 4 of 2009
6th August, 2010
Counsel Appeared :
U. Bhuyan, for the Appellant : R. Goenka, R.K. Agarwal, M. Talukdar & A. Goenka, for the Respondents
JUDGMENT
Amitava Roy, J. :
This appeal under s. 260A of the IT Act, 1961 (for short hereinafter referred to as the Act) has been filed against the order dt. 9th April, 2008, of the Income-tax Appellate Tribunal, Guwahati Bench, Guwahati (for short hereinafter referred to as the Tribunal) rendered in ITA No. 74/Gau/2007. By the order impugned, the appeal filed by the respondent-assessee was allowed.
2. While admitting the appeal, the following substantial question of law was framed :
Whether in a case of reassessment under s. 147 of the IT Act, 1961 where the foundation of the belief that any income chargeable to tax has escaped assessment is the charge-sheet filed against the assessee in a Criminal Court, the IT authorities should await the verdict of the Criminal Court or make the assessment independent of the outcome of the criminal trial ?
3. The pleaded facts, in short, are that the respondent-assessee is one of the persons named in the charge-sheet filed by the Central Bureau of Investigation (hereinafter referred to as “CBI”) for his alleged involvement in defalcation of public money in CBI Case No. RC 1/94 of AC U-II dt. 17th May, 1994. The assessment for his income by the aforementioned order was duly completed whereafter on the quantification of the total assessable income of Rs. 2,77,790, the tax liability was determined to be Rs. 1,34,184.
4. Being aggrieved, the respondent-assessee filed an appeal before the CIT(A-II), Guwahati and the appeal was disposed of on 18th Dec., 2006, rejecting the same and confirming the assessment made. The respondent- assessee thereafter, carried the issue to the learned Tribunal which passed the impugned order dt. 9th April, 2008 in ITA No. 74/Gau/2007. Thereby, the learned Tribunal remitted the matter to the file of the AO for reassessment in the light of decision of the Criminal Court after providing reasonable opportunity of hearing to the respondent-assessee. In effect, the appeal was thus allowed.
The Revenue is in appeal contending inter alia that income-tax proceeding being separate and distinct from the criminal proceeding, the assessment of tax liability can by no means be held up or deferred till the final decision is taken in the latter. The impugned order of the learned Tribunal, therefore, has been assailed to be in derogation of the scheme of the Act.
At the threshold, the maintainability of the instant appeal has been questioned by the respondent-assessee, on the basis of Instruction No. 5 of 2008, dt. 15th May, 2008 of the Central Board of Direct Taxes (for short “CBDT”). We have heard Mr. U. Bhuyan, learned counsel for the Revenue and Mr. R. Goenka, learned senior counsel for the respondent-assessee.
Mr. Goenka by relying on s. 268A of the Act as well as the CBDT instruction referred to hereinabove has submitted that as in the instant case, the tax effect is less than Rs. 4,00,000, fixed as the mandatory limit for preferring an appeal under s. 260A before this Court, the instant appeal is per se not maintainable in law and is liable to be dismissed in limine. Contending that the instruction issued by the CBDT under s. 268A is binding on the Revenue, as has been held in a catena of decisions of the apex Court on the issue, the instant appeal is misconceived. The learned counsel to reinforce this plea has drawn the attention of the Court to the memorandum explaining the objective behind the enactment of s. 268A contending that as the same is to regulate filing of appeal contemplated by the Revenue under the Act, its right to that effect as embodied in s. 260A is understandably circumscribed thereby. Mr. Goenka has urged that the scope and ambit of the appeal under s. 260A vis-a-vis the Revenue has thus been curtailed by s. 268A.
Mr. Goenka, has further urged that exception to the regulation imposed by Instruction No. 5 of 2008 as contained in para 8 having been provided being aware of the precondition of existence of substantial question of law as embodied in s. 260A of the Act, there is no repugnancy between the two provisions. According to him, therefore, as admittedly the tax liability of the respondentassessee is much below Rs. 4,00,000 prescribed for appeal under s. 260A of the Act before this Court, the instant appeal is incompetent and is liable to be dismissed. In support of his contentions, Mr. Goenka has placed reliance on the decisions of the apex Court in CIT vs. Anjum M.H. Ghaswala & Ors. (2001) 171 CTR (SC) 1 : (2001) 252 ITR 1 (SC) and UCO Bank vs. CIT (1999) 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC). As against this Mr. Bhuyan, learned counsel for the Revenue has argued that having regard to the underlying objective of s. 268A, the prescription thereof ought to be construed as directory. According to Mr. Bhuyan, s. 268A of the Act cannot be conceded a status either to over reach s. 260A or to regulate the same so as to render it otiose. Mr. Bhuyan has urged that in the absence of any express bar, s. 268A or any other provision of the Act cannot nullify or scuttle the scope and ambit of s. 260A. The enjoinment of s. 268A ought to be thus construed as procedural in nature to sub-serve the ends of justice. The learned counsel has insisted that in case the primacy to s. 268A as urged by the petitioner is granted, substantial question of law involved in a given fact situation would be a casualty. Reliance has been placed by Mr. Bhuyan on the decision of the apex Court in Kalish vs. Nanhku (2005) 4 SCC 480.
We have extended our anxious consideration to the rival submissions made by the parties. Instruction No. 5 of 2008 dt. 15th May, 2008 [(2008) 217 CTR (St) 1], is not in dispute. Thereby the monetary limit of Rs. 4,00,000 has been prescribed vis-a-vis appeals under s. 260A before this Court. It stipulates that appeals of the category as mentioned in para 3 would be preferred only in cases where the tax effect exceeds monetary limits as provided therein. The “tax effect” has been defined as difference between the tax on the total income assessed and tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issue against which appeal is intended to be filed.
Having regard to the tax liability of the respondent-assessee, assessed originally, the instant appeal is within the coil of the monetary limits prescribed by the CBDT Circular. Sec. 268A was inserted in the Act w.e.f. 1st April, 1999, by the Finance Act, 2008. The memorandum explaining the provision of the Finance Bill, 2008 highlights the underlying objective of s. 268A to reduce litigation in small cases and regulate the right of Revenue to file or not to file appeal. Sec. 260A demonstrates the condition precedent of preferring an appeal before this Court to be the existence of a substantial question of law. Noticeably it does not contemplate any monetary limit in addition. As has been stipulated in the CBDT Instruction No. 5 of 2008 dt. 15th May, 2008, para 8 covers eventualities where under an appeal can be filed by the Revenue irrespective of the tax effect. These being where (a) the constitutional validity of the provisions of an Act or rule is under challenge, (b) the Board’s order, notification, instruction or circular has been held to be illegal or ultra vires, (c) a Revenue audit objection in the case has been accepted by the Department. Sec. 268A enjoys the same legislative status as s. 260A having been designed by Parliament. Evidently, s. 268A is later in point of time. In the absence of any overwhelming material to the contrary and in face of the underlying objective of inserting s. 268A, it is difficult to infer that Parliament in doing so had been unmindful of the intended ambit and spread of s. 260A vis-a-vis the appeal(s) preferable before this Court. The Memorandum Explaining the Provision of the Finance Bill, 2008 speaks out in clear terms the object and reason in inserting s. 268A to reduce litigation in small cases. That the Board is the authority to exercise such power under s. 268A is obvious therefrom. No plea of want of power of the Board has also been urged on behalf of the Revenue. Sec. 268A empowers the Board to issue order/instruction/direction to IT authorities and fix such monetary limits as may be deemed fit for the purpose of regulating the filing of appeal or application for reference by an IT authorities under the provisions of that Chapter. Recognizing such inability of the IT authorities, sub-s. (3) of s. 268A clarifies that the same cannot be pleaded to be its acquiescence vis-a-vis the issue which otherwise could have been taken in appeal or reference. That apart, the Board while issuing the instruction in hand had kept beyond its purview certain issues enumerated in para 8 thereof. This signifies its awareness of the scope and connotation of s. 260A. Three eventualities envisaged therein, in our view, unerringly involve questions of law contemplated in this legal provision. Though it is quite likely that questions of law may arise as well from variety of other eventualities, having regard to the inter play of ss. 260A and 268A as devised by Parliament, such a hypothesis in our estimate cannot be a decisive factor to hold against the efficacy of the latter provision. In any case, the plea of repugnancy between these two sections is presently not in issue. Parliament having consciously inserted s. 268A by way of an exception to s. 260A in the statute book being fully aware of all the implications thereof, the CBDT Circular issued in exercise of the power conferred, in our opinion, can neither be undermined nor rendered ineffective. That the orders, instructions, directions issued by the Board under the Act are binding on the Revenue is amply acknowledged and proclaimed by the apex Court in CIT vs. Anjum M.H. Ghaswala & Ors. (supra) and UCO Bank vs. CIT (supra). The decision of the apex Court in Kalish vs. Nanhku (supra), having regard to the nature of the CBDT instructions and statutory endorsement thereto as is derivable from s. 268A does not advance the case of the Revenue, in the facts and circumstance of the instant case.
In the above view of the matter, we are of the unhesitant opinion that having regard to the tax liability of the respondent-assessee as determined and the tax effect ascertainable on the basis thereof as comprehended in the CBDT instructions involved, the instant appeal is barred. It thus being incompetent has to fail. Ordered accordingly. No costs.
[Citation : 330 ITR 316]
