Earlier view of the same Court that Low Tax Effect Circular applies to pending appeals is against “public policy”. Suggestions given on how to increase tax base

CIT vs. Smt. B Sumangaladevi (Karnataka High Court)

The High Court had to consider (i) whether in the light of the judgement of the same Court in Ranka & Ranka (Kar), Instruction No. 3 of 2011 dated 9.2.2011 which states that the department cannot file appeals where the tax effect is less than Rs. 10 lakhs applies to pending appeals and (ii) whether u/s 132B, credit for the cash seized in the hands of another assessee could be given to the assessee. HELD by the High Court:

(i) Though in Ranka and Ranka it was held by the Court that Instruction No. 3 of 2011 issued by the
CBDT is applicable to the pending cases filed prior to 09.02.2011, this view is against public interest and public policy because clause 11 of the said Instruction specifically says that it will be applicable only to cases filed on or after 9.2.2011. The Revenue’s contention that Instruction No.3 dated 09.02.2011 has no retrospective effect is upheld;

(ii) It is suggested to the Union Government to reduce the tax burden/ rate of Income tax on the existing Income tax payers by bringing more persons under the Income tax net. If so, the existing tax payers would not evade tax and Income tax disputes also will come down. The following suggestions are made:

(a) that all Government servants, under the State/Centre (who are not assessees under the Income Tax), shall be made liable to pay Income Tax of at least Rs. 1,000 per annum;

(b) that all male graduates, who are mentally and physically sound, aged between 31 years to 60 years (who are not assessees under the Income Tax), shall be made liable to pay income-tax at least Rs. 1000 per annum and protect their interest on attaining age of 61 years by providing pension;

(c) that Election law may be amended prescribing a condition that every male person contesting election to the State assembly/ Parliament shall be an income tax assessee;