ACIT 19(2), MUMBAI V. NOCIL STEEL, MUMBAI

ITA 3483/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6967 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIKLD
• Assessee Lawyers: POOJAN MEHTALD
• Keywords: Tax effect; Penny stocks; Capital Gains
• Section: 13

Judgement Text

ITA NO.3483/MUM/2017 ASSESSMENT YEAR :2007-08 M/S. NOCIL STEEL 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.3483/MUM/2017 ( / ASSESSMENT YEAR : 20 07-08) ACIT - 19(2) ROOM NO.207 MATRU MANDIR MUMBAI 400 004 / VS. M /S. N OCIL STEEL 9, MULJI THAKERSHI BUILDING SINDI LANE MUMBAI- 400 04. )* ./ ./PAN/GIR NO. AACFN-9127-D ( *, /APPELLANT ) : ( -.*, / RESPONDENT ) ASSESSEE BY : SHRI POOJAN MEHTA LD. AR REVENUE BY : MS. KAVITA P. KAUSHIK LD. DR / DATE OF HEARING : 23/01/2020 / DATE OF PRONOUNCEMENT : 05/02/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2007-08 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME- TAX (APPEALS)-30, MUMBAI, [CIT(A)], APPEAL NO. CIT( A)-30/19(2)/242/15- 16 DATED 17/07/2017 QUA DELETION OF CERTAIN ADDITIONS AGGREGATING TO RS.102.36 LACS AS MADE BY LD. AO ON ACCOUNT OF ACCO MMODATION ENTRIES FOR UNSECURED LOANS AND INTEREST PAID THERE UPON. ITA NO.3483/MUM/2017 ASSESSMENT YEAR :2007-08 M/S. NOCIL STEEL 2 2. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE TAX EFFECT OF QUANTUM ADDITIONS UNDER DISPUTE IS LESS THAN MONETARY LIMIT OF RS.50 LACS AS PRESCRIBED BY CENTRAL BOARD OF DIRECT TAXES IN ITS RECENTLY ISSUED CIRCULAR NO.17/ 2019 DATED 08/08/2019 [F.NO.279/MISC.142/2007-TTJ(PT.) GOVERNMENT OF INDI A, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE] AND THEREFORE, THE APPEAL IS NOT MAINTAINABLE. RELIANCE HAS BEEN PLACED ON THE DECIS ION OF THIS TRIBUNAL IN ITO V/S LATE SHRI AMARCHAND P.SHAH (ITA NO.818-820/ MUM/2017 DATED 08/07/2019) FOR THE SUBMISSIONS THAT DIRECTORATE OF INCOME TAX (INVESTIGATION) IS A LAW ENFORCEMENT AGENCY UNDER T HE CONTROL OF MINISTRY OF FINANCE AND WOULD THUS CONSTITUTE INTERNAL AGENC Y / WING OF INCOME TAX DEPARTMENT WHICH WORKS UNDER THE AEGIS OF ITS C ONTROLLING AUTHORITY CBDT AND THEREFORE, THE SAME COULD NOT BE CONSIDERE D AS EXTERNAL SOURCE AS IS REFERRED TO IN PARA 10(E) OF CBDT CIR CULAR DATED 20/08/2018. WHEN CBDT IS REFERRING TO EXTERNAL SOUR CES, IT IS CERTAINLY REFERRING TO SOURCES WHICH ARE NOT INTERNAL SOURCES WITHIN THE INCOME TAX DEPARTMENT AND VARIOUS WINGS FUNCTIONING WITHIN ITS AEGIS. IT HAS FURTHER BEEN SUBMITTED THAT THE SUBSEQUENT CBDT CIRCULAR NO . 23 OF 2019 DATED 06/09/2019 READ WITH OFFICE MEMORANDUM DATED 16/09/ 2019 APPLIES ONLY TO CASES INVOLVING BOGUS LONG-TERM CAPITAL GAINS (L TCG) / SHORT TERM CAPITAL LOSS (STCL) ON PENNY STOCKS. 3. AU CONTRAIRE, LD. DR SUBMITTED THAT THE ADDITIONS WERE MADE ON ACCOUNT OF ACCOMMODATION UNSECURED LOANS PURSUANT T O SEARCH ACTION BEING CARRIED OUT BY DGIT (INVESTIGATION) IN THE CA SE OF SHRI BHANWAR LAL JAIN GROUP OF CASES AND THEREFORE, FACTUAL MATRIX WAS COVERED BY ITA NO.3483/MUM/2017 ASSESSMENT YEAR :2007-08 M/S. NOCIL STEEL 3 EXCEPTION PROVIDED IN CBDT CIRCULAR NO. 23 OF 2019 DATED 06/09/2019 READ WITH OFFICE MEMORANDUM DATED 16/09/2019. 4. UPON PERUSAL OF CASE RECORDS, PRIMA FACIE, IT EMERGES THAT THE TAX EFFECT BEING CONTESTED BY THE REVENUE IS LESS THAN PRESCRIBED LIMIT OF RS.50 LACS AND THE SAME IS COVERED BY RECENTLY ISSU ED LOW TAX EFFECT CIRCULAR NO.17/2019 DATED 08/08/2019 ISSUED BY CENTRAL BOARD OF DIRECT TAXES [CBDT]. THIS RECENT CIRCULAR FURTHER ENHANCES THE MONETARY LIMIT FIXED IN EARLIER CIRCULAR NO.3 OF 2018 DATED 11/07/ 2018 ISSUED BY CBDT AS AMENDED ON 20/08/2018. UNDISPUTEDLY, THE FACTUAL MATRIX IS NOT COVERED BY ANY OF THE EXCEPTIONS AS PROVIDED IN PAR A-10 OF CIRCULAR NO. 3 OF 2018 DATED 11/07/2018. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ITO V/S LATE SHRI AMARCHAND P.SHAH (ITA NO.818-820/MUM/ 2017 DATED 08/07/2019) HAS ALREADY HELD THAT DIRECTORATE OF INCOME TAX (INVESTIGATION) IS A LAW ENFORCEMENT AGENCY UNDER T HE CONTROL OF MINISTRY OF FINANCE AND WOULD THUS CONSTITUTE INTERNAL AGENC Y / WING OF INCOME TAX DEPARTMENT WHICH WORKS UNDER THE AEGIS OF ITS C ONTROLLING AUTHORITY CBDT AND THEREFORE, THE SAME COULD NOT BE CONSIDERE D AS EXTERNAL SOURCE AS IS REFERRED TO IN PARA 10(E) OF CBDT CIR CULAR DATED 20/08/2018. NO CONTRARY DECISION IS ON RECORD. 5. SO FAR AS THE EXCEPTIONS AS PROVIDED IN SUBSEQUE NT CBDT CIRCULAR NO. 23 OF 2019 DATED 06/09/2019 READ WITH OFFICE ME MORANDUM DATED 16/09/2019 IS CONCERNED, UPON PERUSAL OF THE SAME, WE FIND THAT THE SAME APPLIES ONLY TO CASES INVOLVING BOGUS LONG TER M CAPITAL GAINS (LTCG) / SHORT TERM CAPITAL LOSS (STCL) THROUGH PEN NY STOCKS AND DO NOT APPLY TO THE CASES OF ACCOMMODATION UNSECURED L OANS. ITA NO.3483/MUM/2017 ASSESSMENT YEAR :2007-08 M/S. NOCIL STEEL 4 6. WE HAVE GONE THROUGH THE CIRCULARS AND FIND THAT THE TAX EFFECT IN DISPUTE IS BELOW PRESCRIBED LIMIT OF RS.50 LACS AND THE ASSESSEE STOOD BENEFITTED BY THE ABOVE CIRCULAR ISSUED BY CBDT WHE REIN THE MINIMUM MONETARY LIMIT FOR FILING THE APPEALS BEFORE VARIOU S APPELLATE AUTHORITIES HAVE BEEN FIXED AS UNDER: - S. NO. APPEALS/ SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (RS.) 1 BEFORE APPELLATE TRIBUNAL 50.00,000 2 BEFORE HIGH COURT 1,00.00,000 3 BEFORE SUPREME COURT 2,00.00,000 THE AFORESAID LIMITS, AS PER PARA 13 OF THE CIRCULAR NO. 3 OF 2018 DATED 11/07/2018, APPLIES TO PENDING APPEALS ALSO. IN VIE W OF THE SAME, WE DISMISS THE REVENUES APPEAL. 7. AT THE SAME TIME, A LIBERTY IS GIVEN TO REVENUE TO SEEK RECALL OF THE APPEAL, IF AT A LATER STAGE, IT IS FOUND THAT THE M ATTER IS COVERED BY ANY EXCEPTIONS PROVIDED IN ANY OF THE CIRCULAR OR IN CA SE THE TAX EFFECT AS AGITATED BY REVENUE EXCEEDS THE PRESCRIBED MONETARY LIMIT. 8. IN THE RESULT, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2020. SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 05/02/2020 SR.PS, JAISY VARGHESE ITA NO.3483/MUM/2017 ASSESSMENT YEAR :2007-08 M/S. NOCIL STEEL 5 !'! / COPY OF THE ORDER FORWARDED TO : 1. *, / THE APPELLANT 2. -.*, / THE RESPONDENT 3. 5 ( ) / THE CIT(A) 4. 5 / CIT CONCERNED 5. 67-08 , 8 , / DR, ITAT, MUMBAI 6. 79: / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.