Commissioner of Income Tax vs Basantilal Mundra

N.P. Gupta, J.—This appeal is filed by the revenue against the judgment dated 4-11-2004 upholding the order of the learned Commissioner (Appeals).

The appeal was admitted on 10-5-2006 by framing the following substantial question of law:

(i) Whether in the facts and circumstances of the case, the Tribunal was justified in dismissing the appeal only on the ground that as per the circular of Central Board of Direct Taxes department may not file any appeal if the tax effect in the appeal is less than Rs. 1 lakh ?

Arguing the appeal, learned Counsel for the appellant revenue relied upon judgment of this Court in case of Commissioner of Income Tax Vs. Rajasthan Patrika Ltd., which in turn has considered the earlier judgment of Hon"ble the Supreme Court in the case of Commissioner of Income Tax (CNTL), Ludhiana Vs. Hero Cycles Pvt. Ltd., Ludhiana, , and had also considered still other judgment of Hon''ble the Supreme Court in UCO Bank, Calcutta Vs. Commissioner of Income Tax, West Bengal,

By relying on the aforesaid two judgments in Rqjasthan Patrika Ltd.''s case (supra) and Hero Cycles (P) Ltd.''s case (supra), it is sought to be contended that the circulars are mere administrative instructions, and where in spite of these administrative instructions, if the department prefers to file an appeal, or make a reference to the High Court, the appeal or the reference should not be dismissed, while according to learned Counsel, learned Tribunal has dismissed the appeal substantially on that count, though purportedly has written one sentence about having examined the issue on merits also. Then it is contended that the impugned order is liable to be set aside.

We have gone through the two judgments in Hero Cycles (P) Ltd.''s case (supra) and Rajasthan Patrika Ltd.''s case (supra). There is no dispute about the legal proposition propounded therein. In that view of the matter, it is clear that notwithstanding the fact of this circular, if the appeal is filed, the circular doesn''t bind the Tribunal or the High Court, so as to require the appeal to be dismissed.

However, in view of the small amount involved, and in view of the fact, that only one line has been observed by the learned Tribunal, about having examined the merits, instead of prolonging the litigation by remanding it back to the learned Tribunal for such a small amount, we thought it more appropriate to examine the case of the revenue on merits ourselves.

From that standpoint, learned Counsel for the revenue took us through the order of the assessing officer as well as the order of the learned Commissioner (Appeal).

By reading of the order of the learned Commissioner (Appeals), it was contended that the learned Commissioner (Appeals) has set off the amounts of Rs. 17,001, Rs. 45,000 and Rs. 30,800 against the residual disclosure/surrender made by the assessee in the amount of Rs. 5,47,343 while there is no provision for setting off against such disclosure/surrender.

We have considered the submission, and find that the additions made by the assessing officer with respect to some of the amounts have been upheld by the learned Commissioner (Appeals), while with respect to Rs. 17,001 it has been set aside. So far as setting off is concerned, in our view, the user of the expression "set off, is, in the circumstances of the case, a total misnomer on the part of the learned Commissioner (Appeals), inasmuch as, as appears from the order of the learned Commissioner (Appeals) that apart from surrendering a sum of Rs. 76.14 lakhs by the assessee, representing possible assets from expenditure of the entire family, consisting of three sons, his wife, investment in the property in the name of his wife, in the stock of Basant Textiles, the marriage expenses etc., in addition to it a sum of Rs. 5,47,343 was surrendered under unspecified head to cover, and make available for the department to be taken into account for any other additions, which were sustained by the department in hands of the assessee by using the expression "on account of unspecified assets/investments/expenses to be identified later on. Thus, as a matter of fact, it was not a matter of set off, but was a matter of later identification of the said unspecified assets/investments/ expenses, as has been found by the department to be liable to be added, and as the things have come up, even after this subsequent identification, a substantial amount of Rs. 4,79,178 still remains pending residual amount voluntarily surrendered. In that view of the matter, it cannot be said that the learned Commissioner (Appeals) was in error in treating these amounts, which represented the additions upheld by him, as representing unspecified assets/investments/expenses, identified later on by using an erroneous expression of setting off.

Thus, having examined the matter on merits, in our view, the order of the learned Commissioner (Appeals)) does not suffer from any error, requiring interference.

Resultantly, answering the question as framed in negative, and in favour of the revenue, it is held that the Tribunal was not justified in dismissing the appeal only on the ground that as per circular of the Central Board of Direct Taxes, the department may not file appeal if the tax effect in the appeal is less than specified amount, but then after examining the matter on merits, the order of the learned Commissioner (Appeals) is upheld. Consequently, though for different reasons, the appeal is dismissed.