CIT vs P.S. Jain And Co.

Chief Justice Hon''ble Mr. Justice Manmohan

This is a reference u/s 256(2) of the Income Tax Act, 1961. Heard Mr. Sanjeev Sabharwal, learned counsel for appellant and Mr. B.N. Goswami, learned counsel for respondent.

It is fairly stated by Mr. Sanjeev Sabharwal, learned counsel for appellant that the tax impact would be Rs. 1,80,000/-.

In (2009) 121 ITD 113 , a Division Bench of Madhya Pradesh has held as thus:-

Quite apart from the above, we may also note that this Court in the case of CWT v. Dr. Ajad Kumar Jain (HUF) Sagar W.P. No. 162/98, while taking note of the tax impact and placing reliance on the decision rendered in The Commissioner of Income Tax Vs. Pithwa Engg. Works, , has opined thus:

The factual scenario can be perceived from another aspect. Submission of Mr. A.K. Shrivastava, learned Counsel for the respondent is that the tax impact is Rs. 52,565/-and, therefore, as per the circular of the Central Board of Direct Taxes the reference need not be adverted to. A Division Bench of the High Court of Bombay in the case of The Commissioner of Income Tax Vs. Pithwa Engg. Works, , in paragraph 6 expressed the view as under (page 520):

This Court can very well take judicial notice of the fact that by passage of time money value has gone down, the cost of litigation expenses has gone up, the assesses on the file of the Departments have been increased consequently, the burden on the Department has also increased to a tremendous extent. The corridors of the superior courts are chocked with huge pendency of cases. In this view of the matte, the Board has rightly taken a decision not to file references if the tax effect less than Rs. 2 lakhs. The same policy for old matters need to be adopted by the Department. In our view, the Boards circular dated March 27, 2000 is very much applicable even to the old references which are still undecided. The Department is not justified in proceeding with the old references wherein the tax impact is minimal. Thus, there is no justification to proceed with decades old references having negligible tax effect.

Judged from both angles we would answer the reference in the negative in favour of the assessee and against the Revenue.

Keeping in view the aforesaid principle, we are not inclined to answer the present reference and accordingly the same is dismissed.