ITO WARD- 3(1), JAMSHEDPUR V. M/S. SUDHA CASTING PRIVATE LIMITED, JAMSHEDPUR

ITA 7/RAN/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7199 (ITAT-RANCHI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-01-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A. K. MISHRA
• Keywords: Tax effect; Tax effect
• Section: 133(6)

Judgement Text

1 ITA No. 07/Ran/2021 Sudha Casting Pvt. Ltd., AY 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, “VIRTUAL HEARING” AT KOLKATA (सम ) ी ए.ट .वक , या यक सद य) [Before Shri A. T. Varkey, JM] I.T.A. No. 07/RAN/2021 Assessment Year: 2011-12 Income Tax Officer, Ward-3(1), Jamshedpur Vs. Sudha Casting Pvt. Ltd. (PAN: AAJCS6442A) Appellant Respondent Date of Hearing 11.11.2021 Date of Pronouncement 30.11.2021 For the Appellant Shri Narsingh Kumar Kholkho, Sr. DR For the Respondent Shri A. K. Rastogi, Sr. Advocate & Shri A. K. Mishra, CA ORDER This appeal has been preferred by the assessee against the order of Ld. CIT(A), Jamshedpur dated 26.08.2020 for Assessment Year 2011-12. 2. At the outset, the Ld. Sr. Counsel for the assessee brought to our notice that the entire addition made by the AO is only to the tune of Rs.30 lacs and, therefore, is hit by the tax effect being less than Rs.50 lacs since the Ld. CIT(A) has given full relief to the assessee. 3. Per contra, the Ld. DR for the revenue opposes the same and cites the CBDT Circular No. 23 of 2019 dated 06.09.2019 and submits that the CBDT in its wisdom has made an exemption to this tax effect/limit prescribed by it for this type of cases. According to him, the exemption against the tax effect of Rs. 50 lacs fixed by the CBDT for appeals to be filed by the department in Tribunal is for ‘organized tax evasion scam cases’’ ;and according to him, this present case/appeal of this nature i.e. share subscription from paper companies falls in the exemption to the tax effect/limit prescribed earlier by the CBDT. 2 ITA No. 07/Ran/2021 Sudha Casting Pvt. Ltd., AY 2011-12 According to him, in the case in hand, share subscription was made by the assessee from two companies which would fall in the ken of the organized tax evasion scam. In his rejoinder, the Ld. Sr. Counsel for the assessee pointed out that this circular was intended for Long Term Capital Gain (LTCG) and Short Term Capital Loss (STCL) of penny stock companies which may involve multiple players like stock exchanges, buyers and sellers supposed to be not knowing to each other etc. where purported rigging is supposed to take place through dubious modus-operandi. So, according to him, this circular (supra) cannot be extended to normal share subscription by a Private Limited Company. It was pointed out by the Ld. Sr. Counsel that in para 4 of the assessment order itself the AO has acknowledged that the two companies have responded to the AO’s notice u/s. 133(6) of the Act by electronic mode. However, the AO, insisted the physical presence of the directors and their absence prompted him to draw adverse inference against those share subscribers/ assessee and has saddled the addition. However, the Ld. CIT(A) appreciating the evidence brought before him to prove the identity, creditworthiness and genuineness of the share subscription was pleased to allow the relief to the assessee. Therefore, according to the Ld. Sr. counsel, the contention of the Ld. DR that this revenue appeal is maintainable and not hit by Tax effect is incorrect due to wrong interpretation of circular No. 23 of 2019 and, therefore, since this appeal of revenue falls below the tax effect prescribed by the CBDT, department ought not to have filed the appeal or in any case now it should withdraw the appeal. 4. Heard the rival submissions and gone through the facts and circumstances of the case. It is noted that the CBDT Circular No. 23/2019 dated 06.09.2019 cannot be construed to say that the intention of the CBDT is carve out an exemption was in respect of share transactions/share subscribers. The CBDT ibid Circular when considered in its entirety shows that it is intended for transaction which results in LTCG/STCL wherein stock exchanges and other stake holders in different parts of the country and who are supposedly not knowing each other purportedly/allegedly rigs the price of scrips listed in the Electronic Exchanges through dubious modus-operandi. In such cases (artificial/alleged rigging where 3 ITA No. 07/Ran/2021 Sudha Casting Pvt. Ltd., AY 2011-12 multiple players are involved) the CBDT has carved out an exemption for filing of appeals by the revenue before the Tribunal/ High Court/Hon’ble Supreme Court. Therefore, I am of the view, the present appeal/case cannot be termed as “Organized Tax Evasion Scam” because the assessee a Private Limited company which has allotted its shares to two other Private Limited companies, which had responded to the AO’s notice u/s. 133(6) of the Act through electronic mode and the Ld. CIT(A) being satisfied with their identity, creditworthiness and genuineness of the share transaction has accepted it; and deleted Rs.30 lacs addition made by AO. Therefore, I am not inclined to accept the contention raised by the Ld. DR as discussed supra, and therefore, since the tax effect in this case is less than Rs. 50 lacs it is hit by the tax effect prescribed by the CBDT. Hence, revenue appeal is dismissed 5. In the result, the appeal of revenue is dismissed. Order is pronounced in the open court on 30 th November, 2021 Sd/- Dated:30.11.2021 (Aby. T. Varkey) Judicial Member JD(Sr.P.S.) Copy of the order forwarded to: 1. Appellant – ITO, Ward-3(1), Jamshedpur 2 Respondent – M/s. Sudha Casting Pvt. Ltd., 1-BC, Shanti Hari Abasan, 1, Inner Circle Road, Bistupur, Jamshedpur, Jharkhand-831001. 3. 4. 5. CIT(A), Jamshedpur CIT- DR, ITAT, Ranchi /True Copy, By order, Senior Pvt. Secy.