ITO (IT) 3(1) (1) , MUMBAI V. RAJ VASANT JADHAV, MUMBAI

ITA 2039/MUM/2021

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0288 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2017-2018
• Appeal Filed On: 01-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Tax effect; Penny stocks
• Section: 268A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “I” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 2039/MUM/2021 Assessment Year: 2017-18 Income Tax Officer (IT)-3(1)(1), Room No. 1630, 16 th floor, Air India Building, Nariman Point, Mumbai-400021. Vs. Raj Vasant Jadhav, 701, Hamptoon, 1 Hirandani Park, G.B. Road, Thane-400607. PAN No. BCGPJ 5865 D Appellant Respondent Revenue by : Mr. Somendu Kumar Dash, Sr. DR Assessee by : Mr. Jayant Bhatt/Sanjiv Brahme, AR Date of Hearing : 07/07/2022 Date of pronouncement : 05/08/2022 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 30.08.2021 passed by the Ld. Commissioner of Income-tax (Appeals)-57, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds: 1. Whether, on the fact and circumstances of the case and in law the Ld.CIT(A) was justified in deleting the addition of Rs.67,19,562/ the bank account without appreciating the fact that before transfer to assessee's bank account there were cash deposits in those bank accounts? 2. Whether, on the fact and circumstances of the case and in law the Ld.CIT(A) was Rs.53,05,000/ the assessee was out of the cash withdrawal 2. Briefly stated, facts of the case are that in the case of the assessee, the Assessing Officer 143(3) of the Income additions. Firstly, addition for cash deposits of account and second addition was made in respect of unexplained credit transfer in the bank account of 3. On further appeal, the Ld. CIT(A) has deleted both the additions. Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. Whether, on the fact and circumstances of the case and in law the Ld.CIT(A) was justified in deleting the addition of Rs.67,19,562/- on account of unexplained credit transfer in the bank account without appreciating the fact that before transfer to assessee's bank account there were cash deposits in those bank accounts? Whether, on the fact and circumstances of the case and in law the Ld.CIT(A) was justified in deleting the addition of Rs.53,05,000/- on account that the cash deposits made by the assessee was out of the cash withdrawal Briefly stated, facts of the case are that in the case of the assessee, the Assessing Officer vide order dated 30. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) additions. Firstly, addition for cash deposits of ₹53,05,000/ account and second addition was made in respect of unexplained credit transfer in the bank account of ₹67,19,562/-. On further appeal, the Ld. CIT(A) has deleted both the additions. Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. Raj Vasant Jadhav ITA No. 2039/M/2021 2 Whether, on the fact and circumstances of the case and in law the Ld.CIT(A) was justified in deleting the addition of unexplained credit transfer in the bank account without appreciating the fact that before transfer to assessee's bank account there were cash Whether, on the fact and circumstances of the case and in justified in deleting the addition of on account that the cash deposits made by Briefly stated, facts of the case are that in the case of the order dated 30.12.2019 u/s tax Act, 1961 (in short ‘the Act’) made two 53,05,000/- in bank account and second addition was made in respect of unexplained On further appeal, the Ld. CIT(A) has deleted both the additions. Aggrieved, the Revenue is in appeal before the Tribunal 4. We have heard rival submission of the parties on the issue dispute and perused relevant material on record. Ld. Counsel of the assessee submitted that tax effect involved in the appeal of the Revenue is prescribed the filing appeal before the Tribunal. He further submitted that the case is not falling under any of the exception for filing appeal before the Tribunal in case of low tax effect. 5. On contrary, the Ld. DR submitted that case of the assessee is falling under exception of the organized tax evasion activity. However, he could not substantiate any such organized tax evasion as specified in CBDT letter dated 06.09.2019. The relevant part of the said letter of the CBDT is reproduced as under: “Reference is invited to the Circulars issued from time to time by Central Board of Direct Taxes (the Board) under section 268A of the Income-tax Act,1961 (the Act), for laying down monetary limits and other conditions for filing of departmental appeals before Income Tax Appellate Tribunal (ITA T), High Courts and SLPs/appeals before Supreme Court. We have heard rival submission of the parties on the issue used relevant material on record. At the outset, the Ld. Counsel of the assessee submitted that tax effect involved in the appeal of the Revenue is below ₹50,00,000/-, i.e. the amount prescribed the filing appeal before the Tribunal. He further hat the case is not falling under any of the exception for filing appeal before the Tribunal in case of low tax effect. On contrary, the Ld. DR submitted that case of the assessee is falling under exception of the organized tax evasion activity. r, he could not substantiate any such organized tax evasion as specified in CBDT letter dated 06.09.2019. The relevant part of the said letter of the CBDT is reproduced as under: Reference is invited to the Circulars issued from time to time by ard of Direct Taxes (the Board) under section 268A of the tax Act,1961 (the Act), for laying down monetary limits and other conditions for filing of departmental appeals before Income Tax Appellate Tribunal (ITA T), High Courts and SLPs/appeals re Supreme Court. Raj Vasant Jadhav ITA No. 2039/M/2021 3 We have heard rival submission of the parties on the issue-in- At the outset, the Ld. Counsel of the assessee submitted that tax effect involved in the , i.e. the amount prescribed the filing appeal before the Tribunal. He further hat the case is not falling under any of the exception for filing appeal before the Tribunal in case of low tax effect. On contrary, the Ld. DR submitted that case of the assessee is falling under exception of the organized tax evasion activity. r, he could not substantiate any such organized tax evasion as specified in CBDT letter dated 06.09.2019. The relevant part of Reference is invited to the Circulars issued from time to time by ard of Direct Taxes (the Board) under section 268A of the tax Act,1961 (the Act), for laying down monetary limits and other conditions for filing of departmental appeals before Income Tax Appellate Tribunal (ITA T), High Courts and SLPs/appeals 2. Several references have been received by the Board that in large number of cases where organised tax through bogus Long Loss (STCL) on penny stocks and department is cases in higher judicial fora on account of enhanced monetary limits. It has been reported that in large number of cases, ITA Ts and High Court have recognized the unique modus operandi involved in such scam and have passed judgements revenue. However, in cases where some appellate fora have not given due consideration to position of law or facts investigated by the department, there is no remedy available with the department for filing further appeal in view of the pre 3. In this context, Board has decided that notwithstanding anything contained in any circular issued U/S 268A specifying monetary limits for filing of departmental appeals before Income Tax Appellate Tribunal (IT AT), High Courts Supreme Court, appeals may be filed on merits as an exception to said circular, where Board, by way of special order direct filing of appeal on merit in cases involved in organised tax evasion activity. 5.1 According to above lette the CBDT directs filing of the appeal exclusion from the Circular of low tax effect. In the case before us, only issue of cash deposits in bank account demonetization period and 2. Several references have been received by the Board that in large number of cases where organised tax-evasion scam is noticed through bogus Long-Term Capital Gain (LTCG)/Short Term Capital Loss (STCL) on penny stocks and department is unable to pursue the cases in higher judicial fora on account of enhanced monetary limits. It has been reported that in large number of cases, ITA Ts and High Court have recognized the unique modus operandi involved in such scam and have passed judgements in favour of the revenue. However, in cases where some appellate fora have not given due consideration to position of law or facts investigated by the department, there is no remedy available with the department for filing further appeal in view of the prescribed monetary limits. 3. In this context, Board has decided that notwithstanding anything contained in any circular issued U/S 268A specifying monetary limits for filing of departmental appeals before Income Tax Appellate Tribunal (IT AT), High Courts and SLPs/appeals before Supreme Court, appeals may be filed on merits as an exception to said circular, where Board, by way of special order direct filing of appeal on merit in cases involved in organised tax evasion activity. According to above letter, wherever by way of filing of the appeal, those cases are only eligible for exclusion from the Circular of low tax effect. In the case before us, only issue of cash deposits in bank account was observed during demonetization period and neither case of organized tax evasion has Raj Vasant Jadhav ITA No. 2039/M/2021 4 2. Several references have been received by the Board that in large evasion scam is noticed Term Capital Gain (LTCG)/Short Term Capital unable to pursue the cases in higher judicial fora on account of enhanced monetary limits. It has been reported that in large number of cases, ITA Ts and High Court have recognized the unique modus operandi in favour of the revenue. However, in cases where some appellate fora have not given due consideration to position of law or facts investigated by the department, there is no remedy available with the department scribed monetary limits. 3. In this context, Board has decided that notwithstanding anything contained in any circular issued U/S 268A specifying monetary limits for filing of departmental appeals before Income Tax and SLPs/appeals before Supreme Court, appeals may be filed on merits as an exception to said circular, where Board, by way of special order direct filing of appeal on merit in cases involved in organised tax evasion activity.” r, wherever by way of special order those cases are only eligible for exclusion from the Circular of low tax effect. In the case before us, observed during case of organized tax evasion has been brought out by the Ld. Assessing Officer of CBDT for exclusion of the case from Circular of low tax effect has been produced before us the Ld. DR and dismiss threshold limit of tax effect for filing appeal before the Tribunal as per CBDT Circular No. 3/2018 dated 11.07.2018. 6. In the result, the appeal filed by th Order pronounced in the Court on Sd/- (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 05/08/2022 Rahul Sharma, Sr. P.S. 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. //True Copy// by the Ld. Assessing Officer nor any special order of CBDT for exclusion of the case from Circular of low tax effect has been produced before us. Accordingly, we reject the conten the Ld. DR and dismiss the appeal of the Revenue being threshold limit of tax effect for filing appeal before the Tribunal as CBDT Circular No. 3/2018 dated 11.07.2018. he appeal filed by the Revenue is dismissed. ounced in the Court on 05/08/2022. Sd/- RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary ITAT, Mumbai Raj Vasant Jadhav ITA No. 2039/M/2021 5 nor any special order of CBDT for exclusion of the case from Circular of low tax effect has ly, we reject the contention of being below the threshold limit of tax effect for filing appeal before the Tribunal as e Revenue is dismissed. - OM PRAKASH KANT) MEMBER Sr. Private Secretary) ITAT, Mumbai