DCIT, CIRCLE, PARWANOO V. M/S SURGE INDUSTRIES, KALA AMB

MA 30/CHANDI/2025

AI Insights

The case involves the Income Tax Department (revenue) seeking to revive an appeal against M/s Surge Industries, which was initially dismissed due to low tax effect as per CBDT Circular No.17/2019. The revenue argued that the assessment was based on revenue audit objections, which should fall under an exception in the amended circular dated 20-08-2018. However, the Tribunal referenced the latest CBDT Circular No.5/2024, which does not include exceptions for revenue audit objections in cases of low tax effect. Consequently, the Tribunal dismissed the application to revive the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786515 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 10 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 03-01-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD KUMAR CHAUDHARY LD.
• Keywords: Tax effect; TDS; Accommodation entries; Audit objection; Revision of order; Penny stocks; Bogus
• Section: 263

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, CHANDIGARH PHYSICAL HEARING BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM M.A. No.30/Chd/2025 [In ITA No.1223/Chd/2019] (िनधाŊरण वषŊ / Assessment Year: 2011-12) ITO Ward Parwanoo Himachal Pradesh बनाम/ Vs. M/s Surge Industries 777/619/428, Village Ogli Kala Amb, Distt. Sirmour (HP) ˕ायीलेखासं./जीआइआरसं./PAN/GIR No. ABRFS-3311-E (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) Assessee by : None Revenue by : Shri Vinod Kumar Chaudhary (Addl. CIT) - Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 14-11-2025 घोषणाकीतारीख /Date of Pronouncement : 17-11-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. By way of this application u/s 254(2), the revenue seeks my indulgence in Tribunal order passed in captioned appeal on 28-05- 2020. The bench, in its order, dismissed the appeal of the revenue on low tax effect in terms of CBDT Circular No.17/2019 dated 08- 08-2019. 2. In the application, it has been stated that the assessment was framed pursuant to revenue audit objections which fall under exception clause para 10(c) of amended circular dated 20-08-2018. The revenue thus seeks revival of the appeal. Printed from counselvise.com 2 3. I find that latest Circular No.5/2024 as issued by CBDT supersedes all the earlier communications issued by CBDT on low tax effect. The exception as carved out in this circular in paras 3.1 & 3.2 read as under: - 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, DR!, 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 COUli 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 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/ 12AAl12AB 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 A voidance 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: Printed from counselvise.com 3 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. It could thus be seen that the exception of revenue audit objection now do not find a place in the latest low tax effect circular as issued by CBDT. Therefore, even if the appeal is recalled as pleaded by the revenue, the case would still be covered by above circular and the appeal would have to be dismissed on low tax effect only. Therefore, I see no reason to interfere in the Tribunal order in any manner. 4. The application stand dismissed. Order pronounced on 17th November, 2025. Sd/- (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER Dated: 17-11-2025 आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH Printed from counselvise.com "