ACIT, Central Circle-13, New Delhi V. Deepak Agarwal, Delhi

ITA 8794/DEL/2019

AI Insights

The case involves three appeals by the Revenue against the order of the Commissioner of Income Tax (Appeals)-23, New Delhi, concerning the Assessment Years 2010-11, 2011-12, and 2012-13. The Revenue contended that the appeals were maintainable despite the low tax effect due to exceptions in CBDT Circular No. 23 of 2019. However, the assessee's counsel argued that these exceptions did not apply as the case did not involve bogus capital gains through penny stocks. The court agreed with the assessee, dismissing the appeals based on the low tax effect and the inapplicability of the cited exceptions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302654 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-03-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 10-11-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect; Tax effect; Penny stocks; Capital Gains
• Section: 268A

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA Nos. 8794, 8795, 8796/Del/2019 Asstt. Years: 2010-11, 2011-12 & 2012-13 O R D E R PER ASTHA CHANDRA, JM These appeals are filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-23, New Delhi dated 31.08.2019 pertaining to Assessment Years (“AYs”) 2010-11, 2011-12 and 2012-13. 2. At the outset of the hearing, the Ld. Counsel for the assessee submitted that the tax effect involved in all the three captioned appeals is below the prescribed limit of Rs. 50 lakhs as per CBDT Circular No. 17/2019 dated 08.08.2019 vide which the Revenue has been directed not to prefer any appeal in case the tax effect is less than Rs. 50,00,000/- and ACIT, Central Circle-13, New Delhi. Vs. Shri Deepak Agarwal, 55-Meena Apartment, I.P. Extension, Delhi – 110 092 PAN ADKPA0795K (Appellant) (Respondent) Assessee by: Shri Kapil Goel, Adv. Shri Sandeep Goel, Adv. Department by : Shri T. James Singson. CIT- DR Date of Hearing 14.03.2023 Date of pronouncement 17.03.2023 ITA Nos. 8794, 8795, 8796/Del/2019 2 pleaded that the three appeals filed by the Revenue be dismissed on account of low tax effect. 3. The Ld. CIT-DR fairly conceded that the subject matter of the appeals in all the relevant AYs have low tax effect. He, however, claimed that the assessee’s case falls within the exception carved out by the CBDT in Circular No. 23 of 2019 dated 06.09.2019 thereby enabling the Revenue to file the appeal in spite of there being low tax effect. In support therefor, he placed on record a copy of the letter wherein instructions regarding the applicability of the said Circular No. 23 of 2019 to all the three captioned appeals were sought from the concerned Assessing Officer and the reply received from him. 4. In rebuttal, the Ld. AR pointed out that the said Circular relied upon by the Ld. CIT-DR is not applicable to assessee’s case as it does not involve any bogus capital gains through penny stocks but pertains to commission income of the assessee and the concerned Assessing Officer in his reply has taken a categorical note of the same. The Ld. CIT-DR had nothing to say in this regard. 5. We have heard both the parties and perused the material on record. Perusal of the aforesaid appeals filed by the Revenue apparently show that the same are having low tax effect as per CBDT Circular No. 17/2019 dated 08.08.2019 and this factual position has been fairly conceded by the Ld. CIT-DR. We have also pursued the CBDT Circular No. 23 of 2019 dated 06.09.2019 which states that notwithstanding anything contained in any circular issued under section 268A specifying mandatory limits for filing of departmental appeals before ITAT, etc. appeals may be filed on merits as an exception to the said circular, where Board, by way of special order direct filing of appeal on merits in cases involved in organized tax evasion activity. Exception by way of the special order issued by the CBDT is in respect of assessee’s claiming bogus LTCG/ STCL through penny stocks. It is an admitted fact that the subject matter of the assessee’s appeal in all the ITA Nos. 8794, 8795, 8796/Del/2019 3 relevant AYs involved do not pertain to bogus capital gains through penny stocks and hence in our view Revenue’s reliance on the said Circular No. 23 of 2019 dated 06.09.2019 is misplaced. We, therefore reject the Revenue’s objection on maintainability of these appeals inspite of there being low tax effect. 6. As per the CBDT Circular No. 17/2019 dated 08.08.2019, the monetary limit for filing of appeal by the Department before the Income Tax Appellate Tribunal has been enhanced from Rs. 20 lakhs to Rs. 50 lakhs. The said Circular also makes reference to the earlier Circular No. 3/2018 dated 11.7.2018 and specially states that as a step towards further management of litigation, the Board has decided to enhance the monetary limit for filing of the appeals. This circular is not in supersession of the earlier circular but only amends the monetary limits as well as gives clarification with regard to paragraph 5 of the earlier circular. This inter alia means that all the other conditions mentioned in the earlier Circular No. 3 of 2018 dated 11.7.2018 will apply mutatis mutandis including that is, it will apply to all the pending appeals. For the sake of ready reference, the latest circular is reproduced hereunder: “F. No.279/Misc. 142/2007-ITJ(Pt.) Government of India Ministry of Finance Department of Revenue Central Board Direct Taxes Judicial Section New Delhi. 8th August 2019 Subject: - Further Enhancement of Monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court - Amendment to Circular 3 of 2018 - Measures for reducing litigation.- Reference is invited to the Circular No.3 of2018 dated 11.07.2018 (the Circular) of Central Board of Direct Taxes (the Board) and its amendment dated 20th August. 2018 vide which monetary limits for filing of income tax appeals by the Department before Income Tax Appellate Tribunal. High Courts and SLPs/appeals before Supreme Court have been specified. Representation has also been received that an anomaly in the said circular at para 5 may be removed. ITA Nos. 8794, 8795, 8796/Del/2019 4 “2. As a step towards further management of litigation. it has been decided by the Board that monetary limits for filing of appeals in income-tax cases be enhanced further through amendment in Para 3 of the Circular mentioned above and accordingly, the table for monetary limits specified in Para 3 of the Circular shall read as follows: 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/- 3. Further, with a view to provide parity in filing of appeals in scenarios where separate order is passed by higher appellate authorities for each assessment year vis-a-vis where composite order for more than one assessment years is passed. para 5 of the circular is substituted by the following para: "5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. Further, even in the case of composite order of any High Court or appellate authority which involves more than one assessment year and common issues in more than one assessment year, no appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In case where a composite order/ judgement involves more than one assessee each assessee shall be dealt with separately. 4. The said modifications shall come into effect from the date of issue of this Circular. 5. The same may be brought to the notice of all concerned. 6. This issues under section 268A of the Income-tax Act, 1961.” 7. Further, the CBDT has issued a directive dated 20.08.2019 (F.No.279/19-93/2018-ITJ) in which it has clarified that the enhanced monetary limits stipulated in Circular No. 17/2019 dated 08.08.2019 is applicable to all pending SLPs/ appeals/ cross objections/references. ITA Nos. 8794, 8795, 8796/Del/2019 5 8. Thus, in view of the aforesaid circular, the appeal of the Revenue is dismissed as not maintainable because tax effect is below Rs. 50 lakhs. However, in case, the present appeals are found to be maintainable at any stage for any technical reasons, the Revenue shall be at liberty to seek recall of this order under relevant provisions of law. 9. In the result, all the three appeals of the Revenue in ITA Nos. 8794, 8795, 8796/Del/2019 are dismissed. Order pronounced in the open court on 17 th March, 2023. sd/- sd/- (SHAMIM YAHYA) (ASTHA CHANDRA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 17/03/2023 Veena Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order