INCOME TAX OFFICER, WARD-1, NIZAMABAD V. A S R AGRO INDUSTRIES, NIZAMABAD

MA 62/HYD/2025

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The case involves the Income Tax Officer, Ward-1, Nizamabad, as the applicant, and ASR Agro Industries as the respondent. The Revenue's appeal was initially dismissed due to the low tax effect, as per the CBDT Circular No.9/2024. The Revenue sought to recall this order, arguing that the case fell under an exception in CBDT Circular No.5/2024 due to alleged fraudulent VAT/GST claims. However, the Tribunal found that the information from the Commercial Tax Officer did not meet the criteria for this exception, as it was not derived from law enforcement or intelligence agencies but from a departmental source. The Tribunal's decision was influenced by the precedent set in the Supreme Court case of CIT vs. Reliance Telecom Ltd., which clarified the limited scope of Section 254(2) of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790382 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 06-08-2025
• Other Referred Cases: CIT vs. Reliance Telecom Ltd.
• Laws Referred To: CBDT Circular No.9/2024, CBDT Circular No.5/2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACHIN KUMAR
• Assessee Lawyers: ASSESSEE
• Keywords: Set aside; Tax effect

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SMC’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER Miscellaneous Application.No.62/Hyd./2025 Arising out of आ.अपी.सं /ITA No.1074/Hyd./2024 िनधाŊरण वषŊ/Assessment Year 2012-2013 The Income Tax Officer, Ward-1, NIZAMABAD. PIN – 503 002. vs. ASR Agro Industries, NIZAMABAD – 503 246. PAN AATFA4163D (Applicant) (Respondent) राज̾ व Ȫारा/Revenue by : Dr. Sachin Kumar, Sr. AR िनधाŊįरती Ȫारा /Assessee by : Assessee सुनवाई की तारीख/Date of hearing: 14.11.2025 घोषणा की तारीख/Pronouncement: 26.11.2025 आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT : By way of this Miscellaneous Application the Revenue is seeking for recalling of the Order dated 21.02.2025 of this Tribunal whereby the appeal of the Revenue was dismissed being not maintainable due to low Printed from counselvise.com 2 MA.No.62/Hyd./2025 tax effect below monetary limit provided by CBDT Circular No.9/2024. 2. Learned DR has submitted that the case of the Revenue falls under the exceptions provided in Para-3.1(c) of the CBDT Circular No.5/2024 which allows the Revenue to pursue an appeal to be decided on merits even if the tax effect below the prescribed limit. Learned DR has submitted that the information received from the Commercial Tax Officer [in short “CTO”] and on going CID Investigation established that the case pertains to the fraudulent claim of VAT/GST payments. Thus, he has pleaded that the case of the Revenue falls under the exception and, therefore, the appeal of the Revenue ought to have been decided on merits instead of dismissing the same on the ground of low tax effect. 3. The learned Authorised Representative of the Assessee has submitted that the information received from the Sales Tax/Commercial Tax Department would not constitute an information received from external sources about nature of law enforcement agencies such as CBI/ED/ Printed from counselvise.com 3 MA.No.62/Hyd./2025 DRI/SFIO/DGGST (Intelligence) and, therefore, the case of the Revenue does not fall in the exception as provided under paragraph-3.1 of the Circular No.5/2024. 4. We have considered the submissions of the learned DR and carefully perused the contents of the Miscellaneous Application regarding the mistake in the order of the Tribunal dated 21.02.2025. The Revenue has alleged the mistake in the impugned order on the premise that the information received from the CTO falls in the exception in Para-3.1(c) of the Circular No.5/2024. The relevant part of M.A. is as under: “1. The information received from the CTO, Bodhan, and the ongoing CID investigation establish that the case pertains to fraudulent claims of VAT/CST payments, which have wider implications beyond the monetary tax effect threshold. Hence, the case of the assessee falls under exception 3.1(c) of CBDT Circular No.05/2024, which allows the revenue to pursue an appeal even if the tax effect is below the prescribed limit.” Printed from counselvise.com 4 MA.No.62/Hyd./2025 5. There is no dispute that the tax effect in the appeal of the Revenue was very less as the total dispute of the addition itself was Rs.2,08,666/-. The Tribunal has considered this aspect of the matter, whether the appeal of the Revenue falls in the exception provided in Para-3.1 of the CBDT Circular No.5/2024 while passing the impugned order in Paras-6 to 7 as under : “6. The Department has referred only sub-para (a) & (b) of Para 3.1, however, there is no issue involved in the case regarding the provisions of the Act or rules or notification as held to be constitutionally invalid or any order, instruction, or circular of the CBDT or the Govt. has been held to be illegal for ultra vires. Therefore, these 2 clauses i.e. a & b are not attracted in the present case. The Assessing Officer has referred in para 2 of the assessment order as under : Printed from counselvise.com 5 MA.No.62/Hyd./2025 7. Thus, the assessment was reopened by the Assessing Officer on the basis of the information received from the Commercial Tax Officer regarding the short payment of VAT/CST by certain parties including the assessees. Thus, the mere information received from the Commercial Tax Officer regarding short payment of VAT/CST would not constitute an information in respect of an offence allegedly to have been committed by the assessee under the law. The short payment of VAT/CST would not itself is an offence. The Assessing Officer himself has doubted about the genuineness of the payment. Hence, we are of the considered view that this case does not fall even in exception provided in sub-para (c) of the para 3.1 of the CBDT Circular No.5/2024 as reproduced above. Accordingly, when the tax effect in the appeal of the Revenue is below the monetary limit provided in Circular No.9/2024, then the appeal of the Revenue is not maintainable and liable to be dismissed. We order accordingly. 8. In the result, the appeal of the Revenue is dismissed.” 6. Thus, it is clear that the Tribunal after reproducing the relevant part of the Circular No.5/2024 has considered the claim of the Assessing Officer regarding the case falling in the exception and then, taken a view that the information received from the CTO regarding short-payment of VAT/GST by certain parties including the assessee does not constitute an information in respect of the offence allegedly to have been committed by the assessee under the law. Even otherwise, the information received from the CTO does not fall in the category of information in respect of the Printed from counselvise.com 6 MA.No.62/Hyd./2025 offence allegedly to have been committed under any law and the said information was received from the law enforcement or intelligence agencies such as CBI/ED/DRI/SFIO/NIA/ NCB/DGGST-(Intelligence)/State law enforcement such as Police/Vigilance bureau/Anti-Corruption. Therefore, the condition for bringing the case in the exception provided in Para-3.1(c) is that the assessment is based on the information in respect of any evidence received from any law enforcement or intelligence agency. A simple information received from the CTO would not constitute an information in respect of the offence and that too from any law enforcement or intelligence agencies. Accordingly, we do not find any merit or substance in the Miscellaneous Application filed by the Revenue. It is pertinent to note that the Tribunal while passing the impugned order has already taken a view on this point whether the case of the Department falls in the exception provided in Circular No.5/2024 and, therefore, the case does not fall in the category of an apparent mistake from record requires to be rectified u/sec.254(2) of the Act. The jurisdiction Printed from counselvise.com 7 MA.No.62/Hyd./2025 u/sec.254(2) is very limited and circumscribed to rectify a mistake apparent from record and not to review the order passed u/sec.254(1) of the Act. The Hon’ble Supreme Court in the case of CIT vs., Reliance Telecom Ltd., [2021] 133 taxmann.com 41 (SC) have considered an identical issue in Paras-3.1 to 8 as under : “3.1. We have considered the order dated 18.11.2016 passed by the ITAT allowing the miscellaneous application in exercise of powers under Section 254(2) of the Act and recalling its earlier order dated 06.09.2013 as well as the original order passed by the ITAT dated 06.09.2013. 3.2. Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 is beyond the scope and ambit of the powers under Section 254(2) of the Act. While allowing the application under Section 254(2) of the Act and recalling its earlier order dated 06.09.2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under Section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of Section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under Section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under Section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under Section Printed from counselvise.com 8 MA.No.62/Hyd./2025 254(2) of the Act are only to rectify/correct any mistake apparent from the record. 4. In the present case, a detailed order was passed by the ITAT when it passed an order on 06.09.2013, by which the ITAT held in favour of the Revenue. Therefore, the said order could not have been recalled by the Appellate Tribunal in exercise of powers under Section 254(2) of the Act. If the Assessee was of the opinion that the order passed by the ITAT was erroneous, either on facts or in law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court, which as such was already filed by the Assessee before the High Court, which the Assessee withdrew after the order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 06.09.2013 which has been passed in exercise of powers under Section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under Section 254 (2) of the Act. Therefore, the order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 is unsustainable, which ought to have been set aside by the High Court. 5. From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by Section 254(2) of the Act; and (iii) Printed from counselvise.com 9 MA.No.62/Hyd./2025 that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT. 6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under Section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that. Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case. 7. In view of the above and for the reasons stated above, the impugned common judgment and order passed by the High Court as well as the common order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 deserve to be quashed and set aside and are accordingly quashed and set aside. The original orders passed by the ITAT dated 06.09.2013 passed in the respective appeals preferred by the Revenue are hereby restored. Printed from counselvise.com 10 MA.No.62/Hyd./2025 8. Considering the fact that the Assessee had earlier preferred appeal/s before the High Court challenging the original order passed by the ITAT dated 06.09.2013, which the Assessee withdrew in view of the subsequent order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013, we observe that if the Assessee/s prefers/prefer appeal/s before the High Court against the original order dated 06.09.2013 within a period of six weeks from today, the same may be decided and disposed of in accordance with law and on its/their own merits and without raising any objection with respect to limitation.” 7. Thus, if an order passed by the Tribunal is erroneous on merits, the remedy available to the parties is to prefer an appeal before the Hon’ble High Court and not u/sec.254(2) of the Act. In view of the above discussion, the Miscellaneous Application of the Revenue is devoid of any merits or substance and liable to be dismissed. We order accordingly. 8. In the result, Miscellaneous Application of the Revenue is dismissed. Order pronounced in the open Court on 26.11.2025. Sd/- Sd/- [MANJUNATHA G.] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 26th November, 2025 VBP Printed from counselvise.com 11 MA.No.62/Hyd./2025 Copy to : 1. The Income Tax Officer, Ward-1, Aayakar Bhavan, Subhas Nagar, NIZAMABAD – 503 002. Telangana. 2. ASR Agro Industries, Sy.No.417A & 418, Akula Kondur Village, NIZAMABAD – 503 246. 3. The Pr. CIT, Hyderabad 4. DR, ITAT “SMC” Bench, Hyderabad. 5. Guard file. BY ORDER, //True copy// Printed from counselvise.com "