ACIT CIRCLE 1, TRICHY V. VINCENT ADAIKALARAJ, TRICHY

MA 127/CHNY/2020

AI Insights

The case involves the Deputy Commissioner of Income Tax (DCIT), Circle 1(1), Trichy, as the appellant, and Shri Vincent Adaikalaraj as the respondent. The Revenue sought to recall a Tribunal order that had dismissed its appeal due to low tax effect, arguing that the case was reopened following a revenue audit objection, which should fall under an exception clause in the CBDT Circular No. 03/2018-19. However, the respondent countered by referencing the latest CBDT Circular No. 05/2024, which supersedes earlier circulars and does not include exceptions for audit objections concerning monetary limits for appeals. The Tribunal agreed with the respondent, leading to the dismissal of the Revenue's application.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46051 (ITAT-CHENNAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Other Referred Cases: ITO vs. M.P. Police Sakh Sahakari Sanstha Maryadit (164 Taxmnn.com 412)
• Laws Referred To: CBDT Circular No.03/2018-19, CBDT Circular No.05/2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITHA LD.
• Assessee Lawyers: G. VARDHINI KARTHICK LD
• Keywords: Tax effect; TDS; Accommodation entries; Audit objection; Penny stocks; Bogus

Judgement Text

"1 आयकर अपीलीय अिधकरण ‘ए’ \u0010ा यपीठ चे\u0015ई म\u0018। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI मा ननीय +ी एबी टी. वक0, \u0010ा ियक सद3 एवं माननीय +ी मनोज क ुमार अ8वाल ,लेखा सद3 क े सम:। BEFORE HON’BLE SHRI ABY T. VARKEY, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM M.A. No.127/Chny/2020 [In ITA No.2885/Chny/2018] (िनधा;रण वष; / Assessment Year: 2012-13 ) DCIT Circle 1(1), Trichy. बनाम/ Vs. Shri Vincent Adaikalaraj No.5, Jeny Plaza, Bharathiyar Salai, Cantonment, Trichy – 620 021 \u0002थायीलेखासं./जीआइआरसं./PAN/GIR No. AACPV-2457-Q (अपीलाथ\u001c/Appellant) : (\u001f थ\u001c / Respondent) अपीलाथ\u001c कीओरसे/ Appellant by : Ms. Anitha (Addl. CIT)- Ld. Sr. DR \u001f थ\u001cकीओरसे/Respondent by : Smt. G. Vardhini Karthick (Advocate)- Ld.AR सुनवाई की तारीख/Date of Hearing : 31-01-2025 घोषणा की तारीख /Date of Pronouncement : 31-01-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. By way of this application, the Revenue seeks recall of Tribunal order passed in captioned appeal which has dismissed the appeal of the revenue on low tax effect vide common order dated 22-08-2019. 2. In the petition, it has been stated that the case was reopened pursuant to revenue audit objection which was accepted by the revenue. Therefore, the same would fall under exception clause (c) of para-10 of CBDT Circular No.03/2018-19 dated 11-07-2018 and its amendment on 2 20-08-2018. The Ld. AR, on the other hand, drew attention to latest Circular No.05/2024 dated 15-03-2024 superseding all the earlier circulars. The Ld. AR submitted that audit objection cease to fall under exception clause. Reference has been made to the decision of Indore Tribunal in the case of ITO vs. M.P. Police Sakh Sahakari Sanstha Maryadit (164 Taxmnn.com 412 dated 12-07-2024) to support the same. 3. Apparently, the case of the assessee was reopened pursuant to the revenue audit objection which was accepted by the revenue. The same would fall under exception clause of earlier circular as stated by the revenue. However, the latest Circular No.5/2024 dated 15-03-2024 has superseded all the earlier Circulars viz. Circular No.02/2018 dated 11-07-2018, Circular No.17/2019 dated 08-08-2019 and Board’s Letter F.No.279/Misc.142/2007-ITJ (Pt) dated 20-08-2018 which is evident from para 2 & 3 of latest circular which read as under: - 2. In supersession of the above referred communications issued by CBDT, the following may be noted in respect of departmental appeals to be filed before ITATs and HCs and SLPs/ appeals before SC: 3.1 Monetary limits given in paragraph 4 with regard to filing appeal/ SLP shall be applicable to all cases including those relating to TDS/ TCS under the Act with the following exceptions where the decision to appeal/file SLP shall be taken on merits, without regard to the tax effect and the monetary limits: a. Where any provision of the Act or the Rules or notification issued thereunder has been held to be constitutionally invalid, or b. Where any order, notification, instruction or circular of the Board or the Government has been held to be illegal or ultra vires the Act or otherwise constitutionally invalid, or c. Where the assessment is based on information in respect of any offence alleged to have been committed under any other law received from any of the law enforcement or intelligence agencies such as CBI, ED, DRI, SFIO, NIA, NCB, DGGI, state law enforcement agencies such as State Police, State Vigilance Bureau, State Anti-Corruption Bureau, State Excise Department, State Sales/ Commercial Taxes or GST Department, or d. Where the case is one in which prosecution has been filed by the Department in the relevant case and the trial is pending in any Court or conviction order has been passed and the same has not been compounded, or e. Where strictures/ adverse comments have been passed and/or cost has been levied against the Department of Revenue, CBDT or their officers, or 3 f. Where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under sections 10(23C), 12A/ 12AA/ 12AB of the Act, order passed u/s 263 of the Act etc. The reference to cases involving sections referred here, where it is not possible to quantify tax effect or tax effect is not involved, is for the purpose of illustration only. g. Where addition relates to undisclosed foreign income/undisclosed foreign assets (including financial assets)/ undisclosed foreign bank account, or h. Cases involving organized tax evasion including cases of bogus capital gain/loss through penny stocks and cases of accommodation entries, or i. Where mandated by a Court's directions, or j. Writ matters, or k. Matters related to wealth tax, fringe benefit tax, equalization levy and any matter other than, the Income Tax Act, or l. In respect of litigation arising out of disputes related to TDS/ TCS matters in both domestic and International taxation charges: i. Where dispute relates to the determination of the nature of transaction such that the liability to deduct TDS/TCS thereon, or otherwise is under question, or ii. Appeals of International taxation charges where the dispute relates to the applicability of the provisions of a Double Taxation Avoidance Agreement or otherwise m. Any other case or class of cases where in the opinion of the Board it is necessary to contest in the interest of justice or revenue and specified so by a circular issued by Board in this regard. 3.2 Attention is drawn to Circular No. 8/2023 issued vide F.No. 279/Misc./M-93/2018- ITJ(Pt.) dated 31.05.2023 in respect of deferral of appeals u/s 158AB of the Act. Exceptions in such cases operate as follows: a. When judicial finality is achieved in favour of Revenue in the 'other case', appeal in the 'relevant case' is contested on merits subsequent to the decision in the 'other case' irrespective of the extant monetary limits. b. If the judicial outcome in the 'other case' is not in favour of Revenue and is not accepted by the Department, appeal against the same may be contested on merits in the 'other case' irrespective of the extant monetary limits, to arrive at judicial finality\". From the above, it is quite evident that in the latest circular, there is no exception to the monetary limit regarding any audit objection. It is settled position that the CBDT circulars prescribing monetary limits for filing the appeals by the Department before the Tribunal / Hon'ble High Court / Hon'ble Supreme Court are also applicable for the pending appeals on the date of circular. Therefore, even if the present appeal is restored as per the pleadings of revenue, the re-adjudication of the appeal would still be governed by latest circular which provide no such exception of audit objection to the revenue. Therefore, the appeal would have to be 4 considered as low tax effect appeal only. Accordingly, we reject the prayer of revenue. 4. The application stand dismissed. Order pronounced on 31st January, 2025. Sd/- (ABY T. VARKEY) \u0010ा ियक सद3 / JUDICIAL MEMBER Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद3 / ACCOUNTANT MEMBER चे3ई Chennai; िदनांक Dated : 31-01-2025 आदेश की Vितिलिप अ8ेिषत / Copy of the Order forwarded to : 1. अपीलाथ\u001c/Appellant 2. \u001f थ\u001c/Respondent 3. आयकरआयु