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TMI Blog2020 (9) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessee-respondents) as withdrawn/not pressed. The appeals relate to assessment years (AYs.) 2008-09 & 2009-10, even as in the context of the case; the law remaining unchanged, the same is of no particular significance. The cases of both the sides being largely the same, the petitions were heard together, and are being disposed of per a common, consolidated order for the sake of convenience. For the purpose of writing this order though the lead case is taken as MA No. 3/Jab/2020, with reference to which the petitions were argued. The specific facts of each case, to the extent relevant, are noted and discussed separately. 2.1 The claim of the Revenue per its' instant Miscellaneous Applications ('MAs' for short) is that its' captioned appeals have been wrongly dismissed as withdrawn/ not pressed per the impugned order inasmuch as, though the tax effect thereof is admittedly below the threshold monetary limit for filing of appeals by the Revenue before the Tribunal, per the extant Circular, being No. 17/2019, dated 08/08/2019, i.e., Rs. 50 lacs, it is covered by the exception listed at para 10(c) of its earlier Circular 3/2018, dated 11/07/2018, in conjunction with which the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative (DR) would, in rejoinder, state that the very fact that the notice u/s.148(1) in the case of Anurag Shrivastava was finally issued by the AO, recording the reasons for his belief as to the escapement of income, only implies that the audit objection was finally accepted by him. He, on being specifically asked, while confirming the absence of any audit objection in the cases covered by MA Nos. 6 & 7/Jab/2020, would though submit that the reassessment proceedings initiated in these cases was only on the basis of the information provided by the assessees in other, related cases, i.e., MA Nos. 5 & 4/Jab/2020 respectively, wherein the impugned assessments were pursuant to an audit objection. That is to say, he would argue, but for the said audit objection/s, there would be no reassessment in these two cases, so that the same must necessarily be regarded as made pursuant to a surviving audit objection. 2.4 The hearing was closed at this stage, and the order reserved. 3. We have heard the parties; perused the material on record, and given our careful consideration to the matter. 3.1 At the outset, we note that the instant proceedings being u/s. 254(2), bar debatable issues. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posting, conveying the lists on being finalized on 20/8/2020, & on 22/8/2020, i.e., the revised lists. A fair hearing itself demands adequate notice, and by convention four weeks time is given by the Tribunal. Why, the order dated 14/8/2019 in ITO v. Dinesh Madhavlal Patel & Ors. by the Ahmedabad Bench of the Tribunal, a common order dismissing, like-wise, 628 appeals, reproduced at para 5 (pages 9 to 15) of the impugned order, itself, vide para 1 thereof, notes that individual notices to the parties were dispensed with in light of the discussions with the Principal Chief Commissioner of Income Tax (Gujarat) and the representatives of the ITAT Bar Association. The arguments raised before the Tribunal in the said appeals, as a reading of the same would clarify, were on the legal aspects of the matter, viz. the applicability of the circular to pending appeals, etc., not touching the specific facts of any particular case. It is primarily for the said arguments, equally applicable in the instant case, that an extensive reference, reproducing it in toto, was made by the Tribunal thereto in the impugned order. In the present case, speaking for all the 96 appeals/COs, no counsels, other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal would be accompanied by the recall of the assessee's corresponding CO, if any, dismissed along with. Needless to add, the Tribunal shall, while doing so, which shall be per a speaking order, grant an opportunity of hearing to the other side.' (emphasis, ours) Similar liberty, it may be noted, was also provided by the Tribunal in Dinesh Madhavlal Patel (supra) vide para 8 thereof while summarily dismissing 628 appeals, making it clear that either owing to wrong computation of tax effect or owing to such cases being covered by the permissible exceptions, or for any other reason, the Tribunal shall take remedial steps in this regard. Where, then, one may ask, is the scope for raising any objection by the Revenue, which forms the basis of the assessee's case, or at least the preliminary objection to the instant MAs? Where, again, then, is the scope for taking a plea by the assessee that the Revenue having not raised an objection at the time of hearing of its appeal, is now precluded to seek its restoration? Why, even the Hon'ble Courts do this, making a saving for any error/omission, i.e., while summarily dismissing an appeal/reference u/s. 268A thus. It may be noted that the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal or application for reference by any income-tax authority under the provisions of this Chapter. (2) Where, in pursuance of the orders, instructions or directions issued under subsection (1), an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of- (a) the same assessee for any other assessment year; or (b) any other assessee for the same or any other assessment year. (3) Notwithstanding that no appeal or application for reference has been filed by an income-tax authority pursuant to the orders or instructions or directions issued under sub-section (1), it shall not be lawful for an assessee, being a party in any appeal or reference, to contend that the income-tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case. (4) The Appellate Tribunal or Court, heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there was no question of either any objection being raised by the Revenue, or calling for any substantiation therefrom by the Tribunal. In fact, an examination of the authorization memos u/s. 253(2), which accompany Form 36 and, thus, form part of the Tribunal's record, by it's Registry while fixing the appeals where the tax-effect was lower than the monetary limit specified, would itself have precluded the listing of such appeals in the first instance as these were, at least prima facie, excepted by the Board circular. No regard to the terms of the Board circular, apart from the tax-effect involved, was made by the Tribunal while listing the appeals, as the same would require perusing the record, or otherwise hearing the parties on the applicability or otherwise of the circular. It was for this reason as well that its' order bore a caveat, saving appeals (COs) which may not be actually covered u/s. 268A for any reason, though may stand dismissed in limine. Not only the appeals, the corresponding COs by the assessees, being generally supportive in nature, were also protected inasmuch as they may contain an independent ground, i.e., independent of the grounds on merits assumed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral justice, by the decision in Concord Pharmaceuticals Ltd. (supra). Of course, the onus in such a case, given the prima facie applicability of the circular, to satisfy the court/tribunal as to the non-applicability of the circular, and thus of s. 268A, would be on the Revenue. In fact, in the context of the argument advanced, i.e., of the objection having not been raised in the GoA, so that it becomes only a mode of bringing the basis for filing an appeal to the notice of the Tribunal, it becomes irrelevant whether the same is through GoA or AM, and thus, of no consequence. Rather, it would be incorrect to term it as an 'objection', the same being excluded under the circular itself, terms of which have to be complied with, so that the Revenue, on its' appeal being listed, is obliged to state the reasons for having filed the appeal in the facts and circumstances of the cases, without obtaining clarity on which, it would not be possible for the appellate forum to decide on the maintainability or otherwise of the Revenue's appeal. It is, in fact, even otherwise, not open for any appellate authority to consider the Board circular/s in part. When it is said that an appeal is covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, acted with circumspection, providing liberty to the parties in case of any error or omission in dismissing an appeal/CO thus, balancing thus the need for retaining only maintainable tax litigation on its records, with the paramount concern for not causing any prejudice. In fact, the arguments emanating from both the sides in the instant cases, with the assessee bringing on record material, also relying on case law in the support of its case, itself emphasizes, if any was required, the need for hearing the parties before issuing any opinion, even as the same does not exclude mistake or omission, removal of which, therefore, the law provides. No Court or Tribunal can, by its action or non-action, cause prejudice to any party before it, is a settled legal proposition, i.e., acutus curiae neminem gravabit, reiterated time and again by the Apex Court, as in Honda Siel Power Products Ltd. vs. CIT [2007] 295 ITR 466 (SC). In our clear view, dismissal of the Revenue's appeals by the Tribunal, in view of the authorization memo dated 30.10.2018 on record, clearly stating of the appeal being filed, despite its low tax effect, is, in view of cl.10(c) of the Board circular 3/2018 dated 11.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re at liberty to raise objections or advance arguments as they may do in a regular appeal. It is for this reason that reference to LAR (duly attested by Sri A.P. Srivastava, Advocate, the ld. counsel for the assessee), as well as to the decision in Larsen & Toubro Ltd. (supra), was not objected to by the Bench during hearing; rather, it indicating that due regard to the said decision shall have to be given. True, the reliance on case law, inasmuch and to the extent it declares the law as it always was, is in any case not barred by s.254(2), but the same shall be relevant, or assume relevance, only when the relevant facts are proved, which may require bringing material on record, precluded by s. 254(2). Coming back to the facts of the case, clause 10(c) (supra) reads as under: '10. Adverse judgment relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above, or there is no tax effect: (a) ................................, or (b) ................................, or (c) where a Revenue Audit objection in the case has been accepted by the Department, or (d)........... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was only due to the non-acceptance of his reply by the audit party, i.e., at its insistence. It would be a different matter, we may add, if and where the audit party had, per its report, pointed out the mistake/error in the AO's reply/working, in which the case it could not be said as a fact that the audit objection did not obtain, and that the assessment proceedings were initiated despite the non-acceptance of the audit objection by the Department. In such a case, it is the audit objection, as finally obtains, i.e., after having regard and giving effect to the AO's reply, that shall form part of the AO's reason to believe escapement of income - to that extent, which is not so in the present case, and for which we have also perused the reasons recorded for the issue of notice u/s. 148(1), reproduced at para 2 (page 1) of the assessment order, forming part of the Tribunal's record. Why, a discrepancy in the assessee's accounts would result in a corresponding difference in its' account with the party issuing the TDS certificate/s? We, accordingly, have, in the facts and circumstances of the case, little doubt that the assessment proceedings, though initiated by reason of a revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the relevant clause of the Board's circular issued u/s. 268A(1) r/w s. 268A(5) of the Act. Reference here is drawn to cl.10(c) (at para 4.1). 6.3 At the outset, we note that the arguments advanced emphasize, once again, the primary need for proper hearing. Two, the issue involving an interpretative exercise, would under normal circumstances be precluded u/s. 254(2), resulting in a possible injustice inasmuch as the parties were in the first instance not provided proper opportunity of hearing. It is only on account of this, duly taken cognizance of by the Tribunal while passing the impugned order, per para 7 thereof, that the interest of the parties is saved. The question before us is as to how cl.10(c) is to be construed. Tax statutes are to be strictly construed. The circular under reference is a delegated legislation under a tax statute and, therefore, is to be construed in a like manner, i.e., strictly. Admittedly, the revenue audit objection is in the case of a member of the HUF, who has explained the source of the sum for the admitted investment as the HUF. This has resulted in reassessment in the case of the HUFs, which are in appeal before us, since dismissed as wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly construed, i.e., purposively, if the general exception category is to be strictly identified. Now, the purpose of the exception being, clearly, to exclude (from the general exception category) cases covered by the audit objection, the instant appeals would also stand to be so excepted. This is as the reassessment proceedings in these cases arise only on account of the audit objection, but for which there would not have been any such assessment. After all, where was the need to issue a separate audit objection in the case of the HUFs? The argument, though apparently impressive, is flawed. This is as the circular cannot be regarded as an exemption notification - to be strictly construed (CC(I) v. Dilip Kumar & Co., in CA No. 3327 of 2007, dated 30/7/2018), so as to then say that cl. 10 thereof is an exception to an exception, and is to be broadly construed so as to in effect construe the excepted category strictly. Section 268A is a declaration of intent of the Union of India not to pursue its right of appeal under the Act under certain conditions, i.e., where the tax-effect of an appeal before an appellate authority does not exceed a specified monetary limit. That is, is, in effe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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