DCIT CIR. 6(3)(2), MUMBAI V. M/S K UTTAMLAL EXPORTS PVT LTD., MUMBAI

ITA 1046/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8291 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 10-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Keywords: Search and seizure; Accommodation entries; Tax effect
• Section: 143(3); 201; 13

Judgement Text

DY. CIT CIRCLE 6(3)( 2), MUMBAI VS. M/S K. UTTAMLAL EXPORTS PVT. LTD. ITA NO. 1046/MUM/2020 A.Y 2010 - 11 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI S. RIFAUR RAHMAN (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA NO. 1046 /MUM/2020 ASSESSMENT YEAR 201 0 - 1 1 DCIT CIRCLE 6(3)(2), AAYKAR BHAWAN, ROOM NO. 576, M.K ROAD, MUMBAI - 400 020. PAN : AAACK9486B M/S K. UTTAMLAL EXPORS PVT. LTD. 1 ST FLOOR, BHAGWAN BHUVAN, MASJID BUNDER, MUMBAI - 400 009. (REVENUE) (ASSESSEE) ASSESSEE BY : NONE REVENUE BY : SHRI. GURBINDER SINGH DATE OF HEARING : 05/08/2021 D ATE OF PRONOUNCEMENT : 05 /08/2021 ORDER PER RAVISH SOOD, J.M: THE CAPTIONED APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 1 2 , MUMBAI, DATED 04.12 .2019, WHICH IN TU RN ARISES FROM THE ORDER PASSED BY THE A . O U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961, (FOR SHORT ACT), DATED 25.02.2016 FOR A.Y 2010 - 11 . 2. AS THE PRESENT APPEAL FILED BY THE REVENUE INVOLVED A TAX EFFECT BELOW THAT CONTEMPLATED IN THE CBDT CIRCULAR NO. 17 OF 2019, DATED 08.08.2019, THEREFORE, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) WAS QUERIED ON THE ASPECT OF MAINTAINABILITY OF THE SAID APPEAL . IN REPLY, IT WAS SUBMITTED BY THE LD. D.R THAT THOUGH THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL WAS ADMITTEDLY BELOW THE MONETARY CEILING CONTEMPLATED IN THE CBDT CIRCULAR NO. 17 OF 2019, DATED 08.08.2019, HOWEVER, THE SAME WAS SAVED BY THE EXCEPTION CARVED OUT IN PARA (E) OF THE CBDT CIRCULAR NO . 3/2018, DATED 11.07.2018, AND THUS, MAINTAINABLE. IN ORDER TO BUTTRESS HIS AFORESAID CLAIM, IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ADDITION IN THE AFOREMENTIONED APPEAL WAS BASED ON THE INFORMATION THAT WAS RECEIVED BY THE A.O FROM THE DGIT(INV.), M UMBAI THAT THE ASSESSEE AS A BENEFICIARY HAD OBTAINED ACCOMMODATION ENTRIES FROM CERTAIN HAWALA OPERATORS, THEREFORE, THE SAME WOULD SAFELY FALL WITHIN THE REALM OF INFORMATION THAT WAS RECEIVED FROM AN EXTERNAL SOURCE AS PROVIDED IN THE EXCEPTION CONTEMPL ATED IN PARA (E) OF THE CBDT CIRCULAR NO. 3/2018, DATED 11.07.2018. IN ORDER TO DRIVE HOME DY. CIT CIRCLE 6(3)( 2), MUMBAI VS. M/S K. UTTAMLAL EXPORTS PVT. LTD. ITA NO. 1046/MUM/2020 A.Y 2010 - 11 2 HIS AFORESAID CLAIM, IT WAS SUBMITTED BY THE LD. D.R THAT THE AUTHORITIES LISTED IN THE EXCEPTION CARVED OUT IN PARA (E) OF CIRCULAR NO. 3/2018, DATED 11.07.2018 WER E NOT EXHAUSTIVE. 3 . WE HAVE HEARD THE LD. D.R AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. C ENTRAL BOARD OF DIRECT TAXES (CBDT) VIDE CIRCULAR NO. 17/2019 DATED 08.08.2019 HAS AMENDED CIRCULAR NO. 3/2018 DATED 11.07.2018 FOR FURTHER ENHANCEMENT OF M ONETARY LIMIT FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE THE ITAT, HIGH COURTS AND SLPS/APPEALS BEFORE SUPREME COURT AS MEASURES FOR REDUCING LITIGATION. 4 . CBDT VIDE CIRCULAR NO. 3/2018 DATED 11.07.2018 HAS SPECIFIED THAT APPEALS SHALL NOT BE FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL (ITAT) IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMIT OF RS.20,00,000/ - . FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED. FURTHER, TAX EFFECT SHALL BE TAXES INCLUDING APPLICABLE SURCHARGE AND CESS. HOWEVER, THE TAX WILL NOT INCLUDE A NY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOM E, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDER, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. AT PARA 13 OF THE ABOVE CIRCULAR, IT HAS BEEN MENTIONED THAT: 13. THIS CIRCULAR WILL APPLY TO SLPS/APPEALS/CROSS OBJECTION/REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNAL AND IT SHALL ALSO APPLY RETROSPECTIVELY TO PENDING SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PAR A 3 ABOVE MAY BE WITHDRAWN/NOT PRESSED. 5 . AS A STEP TOWARDS FURTHER MANAGEMENT OF LITIGATION, CBDT VIDE CIRCULAR NO. 17/2019 HAS FIXED THE MONETARY LIMIT FOR FILING OF APPEALS BEFORE ITAT AT RS.50,00,000/ - . 6 . IN THE PRESENT APPEAL FILED BY THE DEPARTMENT THE TAX EFFECT INVOLVED IS ADMITTEDLY BELOW THE MONETARY LIMIT OF RS.50,00,000/ - . AS REGARDS THE CLAIM OF THE LD. D.R THAT THOUGH THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS BELOW THE MONETARY CEILING PROVIDED FOR FILING OF AN APPEAL BE FORE THE TRIBUNAL AS PER CBDT CIRCULAR NO. 17 OF 2019, DATED 08.08.2019, HOWEVER, AS THE ADDITION IN THE CASE WAS MADE ON THE BASIS OF INFORMATION THAT WAS RECEIVED BY THE A.O FROM THE DGIT(INV.), MUMBAI I.E AN EXTERNAL SOURCE, THEREFORE, THE SAME WAS COV ERED BY THE EXCEPTION CARVED OUT IN PARA (E) OF CIRCULAR NO. 3/2018, DATED 11.07.2018, WE ARE AFRAID THAT THE SAME DOES NOT FIND FAVOR WITH US. ADMITTEDLY, THE DY. CIT CIRCLE 6(3)( 2), MUMBAI VS. M/S K. UTTAMLAL EXPORTS PVT. LTD. ITA NO. 1046/MUM/2020 A.Y 2010 - 11 3 CBDT VIDE ITS CIRCULAR NO. 3/2018, DATED 11.07.2018 HAD CARVED OUT CERTAIN EXCEPTIONS WHICH OVER RIDE THE NON - MAINTAINABILITY OF AN APPEAL FILED BY THE REVENUE INVOLVING TAX EFFECT BELOW THE PRESCRIBED MONETARY CEILING. HOWEVER, WE FIND THAT THE EXCEPTION CARVED OUT IN PARA 10(E) OF THE CBDT CIRCULAR NO. 3/2018, DATED 11.07.2018, AS HAD BEEN RELIED UPON BY THE LD. D.R WOULD NOT COME TO THE RESCUE OF THE REVENUE INSOFAR THE APPEAL IN QUESTION IS CONCERNED. EXCEPTION CARVED OUT IN PARA 10(E) ENVISAGES SUCH CASES WHERE ADDITION IS BASED ON INFORMATION RECEIVED FROM CERTAIN SPECIFIED EXTERNAL SOURCES, AN D THE SAME READS AS UNDER: 10(E). WHERE ADDITION IS BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES SUCH AS CBI/ED/DRI/SFIO/DIRECTORATE GENERAL OF GSC INTELLIGENCE (DGGI). HOWEVER, AS STATED BY THE LD. A.R, A ND RIGHTLY SO, AS THE ADDITION THAT FORMS THE SUBJECT MATTER OF THE CAPTIONED APPEAL IS BASED ON THE INFORMATION RECEIVED BY THE A.O FROM THE DGIT(INV.), MUMBAI, , THEREFORE, THE SAME WOULD NOT FALL WITHIN THE MEANING OF EXTERNAL SOURCES AS HAD BEEN SPECI FIED IN PARA 10(E) OF THE CBDT CIRCULAR NO. 3/2018, DATED 11.07.2018. ACCORDINGLY, NOT BEING PERSUADED TO ACCEPT THE AFORESAID CLAIM OF THE REVENUE THAT THE CAPTIONED APPEAL OF THE REVENUE IS COVERED BY THE EXCEPTION CARVED OUT IN PARA 10(E) OF THE CBDT CI RCULAR NO.3/2018, WE REJECT THE SAME. 7 . RESULTANTLY, IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS THE PRESENT APPEAL INVOLVING A TAX EFFECT OF LESS THAN RS.50 LAC IS DISMISSED. ORDER PRON OUNCED IN THE OPEN COURT ON 05 /08/2021. SD/ - SD/ - (S. RIFAUR RAHMAN) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 05 /08/2021 **PS: ROHIT COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY)