2015 (11) TMI 1000 - HC - Income Tax

Exemption under Section 54 - tribunal has allowed relief by following its own decision in the case of J.K. Madan Vs. Income Tax Officer 2012 (5) TMI 316 - ITAT MUMBAI i.e. the same building and identical agreement as the respondent-asseessee with the builder - Held that - Revenue informs us that no appeal has been filed in the case of J.K. Madan(supra) in view of the low tax effect. However on reading of the order passed in the case of J.K. Madan (supra), it appears that the amount in dispute therein was a capital gain computed at ₹ 55.91 lakhs after deducting the indexed cost of acquisition from the sale consideration. Merely stating that the tax effect was low in an earlier order resulting in not filing of an appeal across the bar, without the same being specifically put in affidavit or in the appeal memo cannot be accepted. This manner of filing of appeals enables the revenue to pick and choose orders from which appeals are preferred and from which the appeals are not preferred rendering to a naught equal application of law on all. Thus unless in the appeal memo or in an affidavit filed before/at the hearing of the appeal for admission, the officer of Revenue should set out the reasons why the ratio of earlier orders is inapplicable in the present facts, the appeal itself will not be entertained. At this, Mr. Ahuja seeks four weeks time to take instructions and file an appropriate affidavit.

Summary

Issues:
Challenge to order allowing exemption under Section 54 of the Income Tax Act, 1961 based on a previous tribunal decision.

Analysis:
The High Court judgment involves a challenge by the Revenue against an order passed by the Income Tax Appellate Tribunal (the 'Tribunal') allowing the claim of the respondent-asseessee for exemption under Section 54 of the Income Tax Act, 1961. The impugned order granted relief to the respondent for the exchange of an old flat for a newly constructed building, citing a previous decision in the case of J.K. Madan Vs. Income Tax Officer. The Revenue, through Mr. Ahuja, argued that no appeal was filed in the J.K. Madan case due to a low tax effect. However, the court noted that the mere assertion of low tax effect without proper documentation or explanation is insufficient to justify not filing an appeal. The court emphasized the importance of providing specific reasons in the appeal memo or an affidavit to support the decision not to appeal, to ensure fair and consistent application of the law. Mr. Ahuja was granted time to submit an appropriate affidavit explaining the Revenue's position.

In summary, the judgment addresses the issue of challenging a tribunal decision allowing exemption under Section 54 of the Income Tax Act, 1961 based on a previous case. It highlights the requirement for the Revenue to provide specific reasons in the appeal memo or an affidavit when choosing not to appeal a decision, to prevent selective application of the law. The judgment emphasizes the importance of transparency and consistency in decision-making processes to uphold the principles of justice and equality before the law.