IN THE HIGH COURT OF JHARKHAND AT R A N C H I ---- Tax Appeal No. 04 of 1999 ---- I.T.O., Ward NO.1, Ranchi. Appellant. Versus Shri Jay Poddar Respondent. ---- CORAM : HON BLE THE CHIEF JUSTICE HON BLE MR.JUSTICE D.K.SINHA --- For the Appellant :Mr.K.K.Jhunjhunwala. For the Respondent : M/s. Binod Poddar, Sr.Advocate & Ajay Poddar, Advocate. -- 12/20.11.2008 This Tax Appeal has been filed by the Income Tax Officer, Ward no.1, Ranchi against the order dated 22.10.1998 passed by the Income Tax Appellate Tribunal, Patna Bench by which the Tribunal had been pleased to set aside the order dated 20.1.1997 passed by the Commissioner of Income Tax(Appeal), Ranchi Bench confirming the penalty of Rs.30,000/- imposed under Section 271D of the Income Tax Act, 1961 which related to the assessment year 1994-95. The dispute arose on account of acceptance of a sum of Rs.30,000/- by way of loan which was paid to the respondentassessee through a bearer cheque and as the amount had been accepted through bearer cheque, it was treated as acceptance by way of cash which entails the consequence of penalty under Section 269SS of the Income Tax Act of 1961. Admittedly, Section 269SS envisages that no person shall, after the 30 th day of June, 1984 pay or accept from any other person any loan or deposit otherwise than by way of an account payee cheque or an account payee bank draft if, the amount of such loan or deposit or the aggregate amount of such loan and deposit
2 exceeded a sum of Rs.10,000/- which subsequently was increased to Rs.20,000/- in the year 2000. Since the respondent-assessee had accepted a sum of Rs.30,000/- by way of loan through a bearer cheque, it was treated as an acceptance by way of cash violating the the provisions of Section 269SS of the Act and hence 100 per cent penalty was imposed on the respondent-assessee involving forfeiture of the entire sum of Rs.30,000/-. The Tribunal, however, was pleased to set aside the order passed by the Commissioner of Income Tax(Appeal) and hence the department has preferred this appeal assailing the order passed by the Tribunal by which imposition of penalty of Rs.30,000/- had been set aside by the Tribunal. A preliminary objection at the threshold was raised by learned counsel for the respondent-assessee who invited the attention of this Court to the Instruction no.1979 dated 27.03.2000 by which it has been instructed that the appeal before the High Court against the order passed by the Tribunal should not be filed if the amount in question is less than a sum of Rs.2.00 lakhs. Prior to this instruction, an instruction of the Central Board of Direct Taxes bearing no.1903 dated 28 th October, 1992, when the instant appeal was filed, was already existing wherein there was a monetary limit of Rs.50,000/- only, in case the appeal was to be preferred before the High Court. In support of his submission, learned counsel for the respondent, cited two authorities of this High Court reported in 2005(2) JCR 262 delivered in the matter of Commissioner of Income Tax Vs. Ashim Kumar Agarwal wherein a Division Bench of this Court vide its judgment and order dated 07.02.2005 was pleased to hold that in view of the Instruction of the Central Board of Direct Taxes bearing NO.26/1998-ITJ dated 27 th March, 2000 the appeal which involves a sum of Rs.16,300/- or Rs.40,552/- ought not to have
3 been preferred by the department in view of Instruction of the Central Board of Direct Taxes. Learned counsel further explained that prior to this instruction, the instruction no.1903 dated 28 th October, 1992 and Instruction no.1777 dated 04.11.1987 were already in existence referred to hereinbefore, wherein the limit to file appeal was only Rs.50,000/- in the matters in which appeals were to be filed in the High Court and in view of this, it was submitted that the instant appeal which involves a sum of Rs.30,000/- only should not have been preferred and even if it has been preferred, the same should not be held maintainable. Learned counsel for the appellant-revenue instantly countered the submission of the counsel for the respondent-assessee and submitted that the Circular of the Government should not be allowed to over-ride the statutory provisions and in this context he invited the attention of this Court to Section 269SS wherein it has been categorically laid down that if any amount in cash beyond a sum of Rs.20,000/- is paid by way of loan or debt, the same has to be accepted only by way of demand draft or cross-cheque and the Board s instructions should not be allowed to over-ride the provisions of Section 269SS of the Act. He further submitted that even if the judgments are contrary to the provisions of the Act the same should not be allowed to prevail over the controversy raised in this appeal. Prima facie, the argument advanced by learned counsel for the appellant-revenue appeared to be weighty as there is no doubt that the departmental circular could not have been allowed to operate contrary to the statutory provisions of the Act. Section 269SS clearly envisages that any amount by way of cash exceeding Rs.20,000/- was not fit to be accepted in cash by way of loan but should be accepted only by way of a demand draft or crosscheque and hence, the circular of Central Board of Direct Taxes could not have been allowed to prevail over the express provision of the
4 Act. This was instantly explained by the counsel for the Assessee and attention of this Court was invited to Section 119 of the Act of 1961 which clearly lays down as follows:- The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board. On a perusal of Section 119 of the Act the submission advanced by the counsel for the respondent-assessee is difficult to be brushed aside as Section 119 clearly mandates that the Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board. It was in view of this provision of the Act that Instruction no.1777 dated 28 th October, 1992 and Instruction no.1979 dated 27 th March, 2000 were issued. This submission advanced by learned counsel for the respondentassessee to the effect that the instructions and circulars which have been issued are not merely departmental circulars but those are invested with statutory mandates in view of Section 119 of 1961 Act, clearly has a binding effect on the department. In order to controvert the aforesaid submission, learned counsel for the appellant-revenue again endeavoured hard to impress upon this Court that the instruction no.1979 dated 27.03.2000 and instruction no.1777 dated 28 th October, 1992 lays down the limit where there is no requirement to file an appeal before the Income Tax Appellate Tribunal, before the High Court and the Supreme Court. He has drawn our attention to Clause 3 of the
5 Circular dated 27.03.2000 wherein it has been laid down that appeals may be filed irrespective of the revenue effect and the situations are four in number which are as follows:- (i) Where Revenue audit objection in the case has been accepted by the Department; (ii) Where Board s order, notification, instruction or circular is the subject matter of an adverse order; (iii) Where prosecution proceedings are contemplated against the assessee. (iv) Where the constitutional validity of the provisions of the Act are under challenge. But the Counsel for the appellant revenue sought to draw the attention of this Court to Sub-clause(ii) of Clause 3 of the Instruction dated 27.03.2000 which lays down as follows:- (ii) Where Board s order, notification, instruction or circular is the subject matter of an adverse order. Learned counsel for the appellant-revenue submitted that even if the counsel for the respondent assessee relied upon an instruction to the effect that the appeal was not fit to be filed if the revenue of the department involved less than an amount of Rs.2.00 lakhs and Rs.50,000/- as per Circular of 1992, the appeal was fit to be filed by the department, in view of the instruction no.1979 dated 27 th March, 2000 which indicates that the appeal may be filed in certain situation irrespective of the revenue effect. However, the counsel for the appellant/department is missing the relevant point that Sub-Clause (ii) of Clause 3 is clearly not applicable in the instant case as the situation in the instant appeal is different and as the instant appeal has been filed adverse to the interest of the Revenue since the impugned order passed by the Tribunal is fully in favour of the appellant/department and in favour of the Revenue. Besides this, in the instant matter it is no
6 body s case that the instruction of the CBDT is contrary to the provisions of the Act and hence not binding. On the contrary it is the respondent-assessee who had initially challenged the imposition of penalty only on the ground that acceptance of a sum of Rs.30,000/- by way of loan in the form of a bearer cheque does not amount to acceptance of cash so as to entail the consequence of penalty and forfeiture of this amount. The appellant-revenue nowhere had challenged instruction dated 27 th March, 2000 or instruction dated 28 th October, 1992 which had been issued in view of the authority assigned in the CBDT under Section 119 of the Act of 1961 and therefore, the submission that irrespective of the revenue effect, the appeal was fit to be filed, does not carry any weight or conviction. Hence we do not feel persuaded to accept the submission of the counsel for the appellant-department since the impugned order is neither affecting the revenue interest of the appellant nor is prejudicial in any other manner. In effect, the only controversy that is left to be addressed in this appeal is whether an appeal could be entertained where the Tribunal had upheld forfeiture of Rs.30,000/- imposed by way of penalty and had been pleased to set aside the order of the Commissioner of I.T. who had held against the order imposing penalty. Thus, the department is clearly aggrieved against the order of the Tribunal which was in favour of the Revenue and yet it thought it appropriate to appeal against an order passed by the Tribunal which is beyond the comprehension of this Court and clearly implies that the appellant/department is practically taking up the cause of the assessee/respondent and urging that the order of the Tribunal upholding the imposition of penalty should be set aside even
7 though no question of law is involved and the order monetarily is also not prejudicial to the interest of the appellant/revenue. However, since the appeal is clearly not maintainable on the ground that it involves imposition of penalty of a sum of Rs.30,000/- only which has been upheld by the Tribunal in pursuance of instruction no 1979 dated 27 th March, 2000 and instruction no. 1903 dated 28 th October, 1992 issued by the Central Board of Direct Taxes as also in view of the provisions of Section 119 of the Act of 1961, we are of the view that this appeal at the instance of the appellant /department (Revenue) against its own interest and to favour the assessee is fit to be dismissed as not maintainable. The view taken by this Court further stands fortified by the Division Bench Judgment of this Court referred to hereinbefore. The appeal is accordingly dismissed but, in the circumstances, without any order as to costs. (Gyan Sudha Misra,C.J.) ( D.K.Sinha, J ) Biswas