ASST CIT 6 (3)(1), MUMBAI V. INDIA STEEL WORKS LTD., MUMBAI

ITA 7057/MUM/2019

AI Insights

The case involves the Income Tax Department appealing against the decision of the Commissioner of Income-tax (Appeals)-12, Mumbai, which had deleted the addition of Rs. 50,00,000 as unexplained cash credits under section 68 of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer, who alleged that the assessee failed to prove the identity, genuineness, and creditworthiness of the loan parties. The Revenue's appeal was primarily based on the exception to the low tax effect as per the CBDT Circular, which was contested by the assessee. The Tribunal found that the information used by the Assessing Officer for the addition did not qualify as being from external sources or law enforcement agencies, thus not meeting the criteria for the exception under the Circular.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 123268 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-12-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 17-11-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Tax effect; Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 7057/MUM/2019 Assessment Year: 2009-10 Asst. CIT-6(3)(1), 5 th floor, Room No. 506, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. India Steel Works Ltd., 1101, 11 th floor, India Bull Finance Cente, S.B. Marg, Elphistone (W), Mumbai-400013. PAN No. AAACI 1362 A Appellant Respondent Revenue by : Mr. Ujjwal Chavhan, DR Assessee by : Mr. P. Daniel, Adv. Date of Hearing : 13/12/2022 Date of pronouncement : 30/12/2022 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 27/08/2019 passed by the learned Commissioner of income- tax(Appeals)-12, Mumbai [in short, “the ld. CIT(A)”] for assessment year 2009-10, arising from the order passed by the Assessing Officer u/s. 143(3) r.w.s. 147 of the Act on 05/12/2016. The grounds raised by the revenue are reproduced as under: 1. "On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 50,00,000/ unsecured loan as unexplained cash credits." 2. "On the facts and circumstances of the the Ld.CIT(A) erred in deleting the addition of Rs. 50,00,000/ loan from two parties by not appreciating that the assessee has not able to prove the identity, genuineness and creditworthiness of the received as it failed to produce the parties for cross examination" 3. "Though the tax effect in this case is Rs. 15,45,000/, however this appeal has been filed because it is covered by exception mentioned in para10(e) of the CBDT C No. 3/2018 dt.11 Board letter dtd. 20/08/2018 vide no. 279/misc/142/2007 2. Firstly, we take the ground no. 3 of the appeal of the revenue as the same relates to the admissibility of appeal due to low ta effect. 3. The ld. Departmental Representative appearing for the revenue submitted that although the said appeal is filed by revenue where the tax effect is Rs. 15,45,000/ filed considering the exception granted in c Circular no. 3/2018 dt. 11/07/2018 as subsequently clarified by "On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 50,00,000/-made us 68 of the Act. 1961 treating the unsecured loan as unexplained cash credits." "On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 50,00,000/- made by A.0. on a/c of bogus unsecured loan from two parties by not appreciating that the assessee has not able to prove the identity, genuineness and creditworthiness of the persons from whom loan was received as it failed to produce the parties for cross examination" "Though the tax effect in this case is Rs. 15,45,000/, however this appeal has been filed because it is covered by exception mentioned in para10(e) of the CBDT C No. 3/2018 dt.11-7-2018 as subsequently clarified by Board letter dtd. 20/08/2018 vide no. 279/misc/142/2007-ITJ/Pt.) Firstly, we take the ground no. 3 of the appeal of the revenue as the same relates to the admissibility of appeal due to low ta The ld. Departmental Representative appearing for the revenue submitted that although the said appeal is filed by revenue where the tax effect is Rs. 15,45,000/- only, however, this appeal has been filed considering the exception granted in clause (e) of the CBDT Circular no. 3/2018 dt. 11/07/2018 as subsequently clarified by India Steel Works Ltd. ITA No. 7057/M/2019 2 "On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. made us 68 of the Act. 1961 treating the unsecured loan as unexplained cash credits." case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. made by A.0. on a/c of bogus unsecured loan from two parties by not appreciating that the assessee has not able to prove the identity, genuineness persons from whom loan was received as it failed to produce the parties for cross "Though the tax effect in this case is Rs. 15,45,000/, however this appeal has been filed because it is covered by exception mentioned in para10(e) of the CBDT Circular 2018 as subsequently clarified by Board letter dtd. 20/08/2018 vide no. Firstly, we take the ground no. 3 of the appeal of the revenue as the same relates to the admissibility of appeal due to low tax The ld. Departmental Representative appearing for the revenue submitted that although the said appeal is filed by revenue where only, however, this appeal has been lause (e) of the CBDT Circular no. 3/2018 dt. 11/07/2018 as subsequently clarified by the Board vide F.No.279/misc/142/2007 3. In rebuttal, the ld. Counsel of the assessee objected that the appeal filed by the revenue i the references made by the ld. Departmental Representative does not assist the revenue in any manner. 4. We have heard the rival contentions of the parties and gone through the relevant CBDT circulars and subsequ the Board on this issue. The relevant extract of the amended CBDT Circular no. 3/2018 dt. 20/08/2018 is reproduced below: “..Kindly refer to the above. 2. The monetary limits for filing of appeals by the Department before Income Tax Ap Courts and SLPs/appeals before Supreme Court have been revised by Board's Circular No.3 of 2018 dated 11.07.2018. 3. Para 10 of the said Circular provides that adverse judgments relating to the issues enumerated in the said para should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 thereof or there is no tax effect. Para 10 of the Circular No.3 of 2018 dated 11.07.2018 is hereby amended as under: a 10. Adverse following issues should be contested on merits notwithstanding that the tax effect entailed is less than the vide letter dt. 20/08/2018 F.No.279/misc/142/2007-ITJ(Pt.). In rebuttal, the ld. Counsel of the assessee objected that the appeal filed by the revenue is not admissible in light of the fact that the references made by the ld. Departmental Representative does not assist the revenue in any manner. We have heard the rival contentions of the parties and gone through the relevant CBDT circulars and subsequent clarification of the Board on this issue. The relevant extract of the amended CBDT Circular no. 3/2018 dt. 20/08/2018 is reproduced below: “..Kindly refer to the above. 2. The monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court have been revised by Board's Circular No.3 of 2018 dated 11.07.2018. 3. Para 10 of the said Circular provides that adverse judgments relating to the issues enumerated in the said uld be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 thereof or there is no tax effect. Para 10 of the Circular No.3 of 2018 dated 11.07.2018 is hereby amended as under: a 10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the India Steel Works Ltd. ITA No. 7057/M/2019 3 letter dt. 20/08/2018 vide In rebuttal, the ld. Counsel of the assessee objected that the s not admissible in light of the fact that the references made by the ld. Departmental Representative does We have heard the rival contentions of the parties and gone ent clarification of the Board on this issue. The relevant extract of the amended CBDT Circular no. 3/2018 dt. 20/08/2018 is reproduced below: 2. The monetary limits for filing of appeals by the pellate Tribunal, High Courts and SLPs/appeals before Supreme Court have been revised by Board's Circular No.3 of 2018 dated 11.07.2018. 3. Para 10 of the said Circular provides that adverse judgments relating to the issues enumerated in the said uld be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 thereof or there is no tax effect. Para 10 of the Circular No.3 of 2018 dated 11.07.2018 is hereby judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: (a) Where the Constitutional validity of the provis Act or Rule is under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where addition relates to undisclosed foreign income/ undisclosed foreign assets (including financial assets)/ undisclosed foreign bank account. e) Where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ ED/ DR/ SFIO/ Directorate General of GST Intelligence (DGGI). (f) Cases where prosecution has been filed by the Department and is pending in the Court. ......” 4.1 On perusal of the clause (e) of the above CBDT Circular on which the ld. Departmental Representative of the revenue has placed reliance, it is noted that the same refers to any addition being made based on some information received from external sources in the nature of law enforcement agencies such as CBI/ monetary limits specified in para 3 above or there is no tax (a) Where the Constitutional validity of the provis Act or Rule is under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or ddition relates to undisclosed foreign income/ undisclosed foreign assets (including financial assets)/ undisclosed foreign bank account. e) Where addition is based on information received from external sources in the nature of law enforcement agencies h as CBI/ ED/ DR/ SFIO/ Directorate General of GST Intelligence (DGGI). (f) Cases where prosecution has been filed by the Department and is pending in the Court. On perusal of the clause (e) of the above CBDT Circular on Departmental Representative of the revenue has placed reliance, it is noted that the same refers to any addition being made based on some information received from external sources in the nature of law enforcement agencies such as CBI/ India Steel Works Ltd. ITA No. 7057/M/2019 4 monetary limits specified in para 3 above or there is no tax (a) Where the Constitutional validity of the provisions of an (b) Where Board's order, Notification, Instruction or Circular (c) Where Revenue Audit objection in the case has been ddition relates to undisclosed foreign income/ undisclosed foreign assets (including financial assets)/ e) Where addition is based on information received from external sources in the nature of law enforcement agencies h as CBI/ ED/ DR/ SFIO/ Directorate General of GST (f) Cases where prosecution has been filed by the On perusal of the clause (e) of the above CBDT Circular on Departmental Representative of the revenue has placed reliance, it is noted that the same refers to any addition being made based on some information received from external sources in the nature of law enforcement agencies such as CBI/ED/ DR/ SFIO/ Directo Accordingly, what is required to be seen is whether the information based on which the addition is made by the Assessing Officer is received firstly, from external sources and secondly, from any law enforcement agencies or not. In the present case, the Assessing Officer has reopened the case of the assessee and made the addition of unsecured loan u/s. 68 of the Act on the basis of information received from the office of DGIT (Inv.), Mumbai vide letter No. DDIT(Inv)/Unit-2(1)/GS this information received from the investigation wing of the income tax department, it cannot be said that the Assessing Officer has received any information from external sources and that too from any law enforcement agencies like CBI/ED/SFIO etc. 4.2 In view of the above discussion, we do not agree with the ld. Departmental Representative that the said appeal filed by revenue under low tax effect is covered by exception clause (e) referred to in CBDT Circular no. 3/2018 dt. 20/08/2018. Accordingly, we dismiss this ground no. 3 of the appeal of the 4.3 Since the appeal itself is not admissible on the ground of low tax effect based on the CBDT circular (supra), the other grounds of appeal raised by the revenue needs no adjudication and hence, treated to be infructuous and dismissed. DR/ SFIO/ Directorate General of GST Intelligence (DGGI). Accordingly, what is required to be seen is whether the information based on which the addition is made by the Assessing Officer is received firstly, from external sources and secondly, from any law cies or not. In the present case, the Assessing Officer has reopened the case of the assessee and made the addition of unsecured loan u/s. 68 of the Act on the basis of information received from the office of DGIT (Inv.), Mumbai vide letter No. 2(1)/GS-Inf/2015-16 dtd. 18.03.2016. In light of this information received from the investigation wing of the income tax department, it cannot be said that the Assessing Officer has received any information from external sources and that too from aw enforcement agencies like CBI/ED/SFIO etc. In view of the above discussion, we do not agree with the ld. Departmental Representative that the said appeal filed by revenue under low tax effect is covered by exception clause (e) referred to in ircular no. 3/2018 dt. 20/08/2018. Accordingly, we dismiss this ground no. 3 of the appeal of the Revenue Since the appeal itself is not admissible on the ground of low tax effect based on the CBDT circular (supra), the other grounds of by the revenue needs no adjudication and hence, treated to be infructuous and dismissed. India Steel Works Ltd. ITA No. 7057/M/2019 5 rate General of GST Intelligence (DGGI). Accordingly, what is required to be seen is whether the information based on which the addition is made by the Assessing Officer is received firstly, from external sources and secondly, from any law cies or not. In the present case, the Assessing Officer has reopened the case of the assessee and made the addition of unsecured loan u/s. 68 of the Act on the basis of information received from the office of DGIT (Inv.), Mumbai vide letter No. 16 dtd. 18.03.2016. In light of this information received from the investigation wing of the income tax department, it cannot be said that the Assessing Officer has received any information from external sources and that too from aw enforcement agencies like CBI/ED/SFIO etc. In view of the above discussion, we do not agree with the ld. Departmental Representative that the said appeal filed by revenue under low tax effect is covered by exception clause (e) referred to in ircular no. 3/2018 dt. 20/08/2018. Accordingly, we Revenue. Since the appeal itself is not admissible on the ground of low tax effect based on the CBDT circular (supra), the other grounds of by the revenue needs no adjudication and hence, 5. In the result, the appeal of the Order pronounced under Rule 34(4) of the ITAT Rules, 1963 on 30/12/2022. Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 30/12/2022 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// In the result, the appeal of the Revenue is dismissed. Order pronounced under Rule 34(4) of the ITAT Rules, 12/2022. sd/ SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai India Steel Works Ltd. ITA No. 7057/M/2019 6 is dismissed. Order pronounced under Rule 34(4) of the ITAT Rules, sd/- PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Sr. Private Secretary) ITAT, Mumbai