Very often we ignore some small but pertinent legal issues where remedy is available under the statute. However, the assessee ultimately suffers. Such a case is discussed hereunder for appreciation of the facts. Although the matter is very small but it will certainly throw light on the facts that how Income Tax Department is collecting revenue by misinterpreting the provisions of law.
The facts of the case runs like this:
The Income Tax Officer of Bhubaneswar, Odisha assessed the assessee-firm M/s, Oberoi Enterprises on a total income of
Rs. 16,72,300/- for the Assessment Year-1998-99. The firm preferred first appeal against the aforesaid order and got substantial relief i.e. the total income was reduced by a sum of
Rs. 14,23,133/-. Hence ultimately the total income of the assessee was determined at
Rs. 2,49,170/-. Being aggrieved with the said order passed by the learned CIT(A), the assessee-firm filed Second Appeal before the Income Tax Appellate Tribunal, Cuttack Bench, Cuttack vide ITA No.338/CTK/2001 having deposited a sum of
Rs. 2,492/- towards appeal filing fee as per provisions of Section 253 of I.T. Act, 1961. The appellant here calculated appeal fee @1% of the modified assessed income i.e.
Rs. 2,49,170/-. But the Registry of Hon’ble ITAT demanded fee of Rs. 10,000/- on the original assessed income of
Rs. 16,72,300/- as per provisions of Section-253(6)(c) of the said Act. A notice was issued to rectify the defect otherwise the appeal would be rejected.
The assessee-firm filed a Writ Application before the Hon’ble High Court of Orissa bearing OJC No. 4902 of 2002 challenging the legality of the notice of the ITAT.
The matter was finally heard and disposed of on 29-10-2015 with the following observation of the Hon’ble Court:
“The issue in the present case needs for determining only to refer Section 253(6) (a)(b)(c) of the Income-tax Act, 1961 which is as follows:
S.253. Appeals to the Appellate Tribunal
(6) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, in the case of an appeal of the assessment proceedings relating thereto, be accompanied by a fee of –
(a) Where the total income of the assessee as computed by the Assessing Officer, in the case to which the appeal relates, is one hundred thousand rupees or less, five hundred rupees.
(b) Where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than one hundred thousand rupees but not more than two hundred thousand rupees, one thousand five hundred rupees,
(c) Where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than two hundred thousand rupees, one per cent of the assessed income, subject to a maximum of ten thousand rupees,
(d) xx xx xx”.
It is clear from the aforesaid provision of the Income-tax Act, 1961 that this provision applies to the appeal through the Appellate Tribunal which obviously means that the assessee has by then exhausted the First Appellate remedy before approaching the Appellate Tribunal. Consequently, the total income of the assessee as mentioned under Section 253(6)(c) of the Act has already been determined in the First Appeal. As the basis for computing the amount of fee payable for approaching, the Appellate Tribunal determined in the First Appeal in the present case as
Rs. 2,49,170/- and the petitioner have deposited the fee amounting to
Rs. 2,492/- i.e. 1% of the determined income amount which satisfies the requirement of deposit of fees. Consequently, we find no jurisdiction in the demand raised under Annexure-4 series dated 6th September, 2001.
Accordingly, while quashing the order dated 6th September, 2001 under Annexure-4 series, we further direct the Registry to place the matter before the Tribunal for consideration of the Second Appeal on its own merits. Further, we find that the matter has been substantially delayed pending before this Court and accordingly, this Court hopes and trusts that the Tribunal would condone the delay suitably and dispose of the matter on its own merit expeditiously.
The writ application is allowed in terms of the above directions”.
Similarly CBDT Circular No. 14(XI-35) of 1955 dated: 11-4-1955 says:-
“Officers of the department must not take advantage of the ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for, it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessees on whom it is imposed by law, officers should-
(a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other;
(b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs.”
Here not only in the above cited case but also in each and every case, Registry of ITAT is compelling the appellants to deposit appeal filing fee @1% of the original assessed income or
Rs. 10,000/- whichever is less as per the provisions of Section-253(6)(c) where the assessed income has exceeded
Rs. 2,00,000/-. No one has interpreted the matter in this regard. However, M/s. Oberoi Enterprisers of Bhubaneswar took the matter to the notice of the Hon’ble High Court of Orissa for proper interpretation of the Statute and ultimately the appellant succeeded.
Everyone must be aware of the fact that recently CBDT has come up with a new idea to simplify the provisions of Income-ax Act, 1961 and Rules and formed a Committee as per Press release dated 27-10-2015 which is reproduced hereunder:
“Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
PRESS RELEASE
New Delhi, 27th October, 2015
Subject: SETTING UP OF COMMITTEE WITH A VIEW TO SIMPLIFY THE PROVISIONS OF THE INCOME TAX ACT, 1961
With a view to simplify the provisions of the Income-tax Act, 1961, a Committee has been constituted with the following composition:
(i) Justice R. V. Easwar, (Retd.), former Judge, Delhi High Court and former President, ITAT – Chairman
(ii) Shri V. K. Bhasin, former Law Secretary – Member
(iii) Shri Vinod Jain, Chartered Accountant – Member
(iv) Shri Rajiv Memani, Consultant – Member
(v) Shri Ravi Gupta, Sr. Advocate – Member
(vi) Shri Mukesh Patel, Chartered Accountant – Member
(vii) Shri Ajay Bahl, Consultant – Member
(viii) Shri Pradip P. Shah, Investment Advisor – Member
(ix) Shri Arvind Modi, IRS (IT:81009) – Member
(x) Dr. Vinay Kumar Singh, IRS (IT:95006) – Member
2. The Terms of Reference (ToR) of the Committee shall be as follows:
i) To study and identify the provisions/phrases in the Act which are leading to litigation due to different interpretations;
ii) To study and identify the provisions which are impacting the ease of doing business;
iii) To study and identify the areas and provisions of the Act for simplification in the light of the existing jurisprudence;
iv) To suggest alternatives and modifications to the existing provisions and areas so identified to bring about predictability and certainty in tax laws without substantial impact on the tax base and revenue collection and;
3. The Committee shall set its own procedures for regulating its work. The Committee can also work in Sub-Groups and the draft prepared by the Sub-Groups can then be approved by the whole Committee. The Committee will put its draft recommendations in the public domain. After stakeholder consultations, the Committee will formalise its recommendations. The Committee can give its recommendations in batches. The first batch containing as many recommendations as possible shall be submitted by 31st January, 2016.
4. The Term of the Committee shall be for a period of one year from the date of its constitution.
(Shefali Shah)
Pr. Commissioner of Income Tax (OSD)
Official Spokesperson, CBDT”
Thus it is suggested that AIFTP should take the initiative in bringing those anomalies in the Income-tax Act & Rules to the notice of the above committee for suitable amendment, which the assessees or their representatives are facing in their day-to-day practice.
Natabar Panda
Advocate