2002 (9) TMI 287 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 1,55,000 made by the AO on account of unexplained investment in construction of a building.
2. Applicability of CBDT Instruction No. 1979 dated 27th March 2000 regarding monetary limits for filing appeals.

Issue 1: Deletion of Addition of Rs. 1,55,000

The Revenue's appeal challenges the order of the learned CIT(A)-I, Raipur, dated 28th July 2000, which deleted the addition of Rs. 1,55,000 made by the AO on account of unexplained investment in the construction of a building. The solitary ground raised by the Revenue reads: "On the facts and in the circumstances of the case, the learned CIT was not justified in deleting the addition of Rs. 1,55,000 made by the AO on account of unexplained investment in construction of building."

Issue 2: Applicability of CBDT Instruction No. 1979 dated 27th March 2000

The preliminary issue raised was whether the appeal by the Revenue, filed on 13th Sept. 2000, with a tax effect of less than Rs. 1,00,000, was in contravention of the Board's instruction. The learned Departmental Representative argued that the "cumulative revenue effect," including tax and interest, should be considered, which would exceed Rs. 1,00,000. The learned counsel for the assessee contended that only the "tax effect" should be considered, excluding interest.

The learned Departmental Representative referred to the decision in ITO vs. Dharmvir (2002) 253 ITR 1 (Chd)(AT) to explain the object behind the CBDT instructions, stating that they aim to avoid unnecessary litigation in small cases. He argued that the total revenue, including tax and interest, should be considered for ascertaining the revenue effect. The learned counsel for the assessee countered by pointing out that the expression "tax effect" has been consistently used by the Board in various instructions, and the definition of "tax" in s. 2(43) of the IT Act, 1961, does not include interest.

The Tribunal noted that the Board's instructions have consistently used the term "tax effect" and not "revenue effect." The Tribunal also referred to the latest Instruction No. 1979, dated 27th March 2000, which specifically uses the term "tax effect" and supersedes earlier instructions. The Tribunal observed that the Board was conscious of the distinction between tax and interest, as evidenced by earlier circulars and judicial decisions.

The Tribunal concluded that for working out the monetary limit of appeals filed by the Revenue after 1st April 2000, only the "tax effect" should be considered, excluding interest. Since the tax effect in the present case was less than Rs. 1,00,000, the appeal was filed in contravention of the CBDT's binding instruction. The Tribunal dismissed the Revenue's appeal, citing the decision in CIT vs. Camco Colour Co. (2002) 173 CTR (Bom) 255, where the Hon'ble Bombay High Court held that appeals contrary to CBDT instructions would not be considered by the Courts.

The cross-objection filed by the assessee was dismissed as not pressed.

Conclusion:

In the result, the appeal of the Revenue as well as the cross-objection of the assessee are dismissed.