ITO-28(2)(1), VASHI V. PANKAJ SABHARWAL, SANPADA

MA 75/MUM/2025

AI Insights

The case involves the Income Tax Department (revenue) filing Miscellaneous Applications (MAs) against a Tribunal order that dismissed their appeals concerning tax demands below Rs. 50 lakhs for the assessment years 2010-11 and 2011-12. The revenue argued that the cases involved organized tax evasion, which is an exception to the monetary limit for filing appeals as per CBDT Circulars. The Tribunal agreed with the revenue's position, citing a related High Court decision and the specific provisions of the CBDT Circulars, leading to the recall of the dismissal order and restoration of the appeals for a substantive hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398093 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-06-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Other Referred Cases: PCIT vs. Pankaj Sabharwal
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHOK KUMAR
• Assessee Lawyers: R I TI KA AGAR WA L
• Keywords: Bogus purchase; Tax effect; Bogus
• Section: 271(1)(c)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER & SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMER M. A. No. 74/Mum/2025 Arising out of ITA No. 3869/Mum/2024 (Assessment Year: 2010-11) & M. A. No. 75/Mum/2025 Arising out of ITA No. 3868/Mum/2024 (Assessment Year: 2011-12) ITO Ward – 28(2)(1) R. No. 326, 3rd Floor, Tower No. 6, Vashi Railway Station Complex, Vashi, Navi Mumbai-400 703 बनाम/ Vs. Pankaj Sabharwal, 101, Sea Queen Heritage, Palm Beach Road, Sector-18, Plot No. 6, Sanpada, Navi Mumbai-400705 स्थायीलेखासं./जीआइआरसं./PAN No. AOPPS3284R (अपीलाथी/Appellant) : (प्रत्यथी / Respondent) अपीलाथीकीओरसे/ Appellant by : Shri Ashok Kumar Ambastha, Ld DR प्रत्यथीकीओरसे/Respondent by : Ms. Ritika Agarwal, Ld. AR सुनवाईकीतारीख/ Date of Hearing : 02.05.2025 घोषणाकीतारीख / Date of Pronouncement : 04.06.2025 2 MA No. 74 & 75/Mum/2025 Pankaj Sabharwal आदेश / O R D E R Per Raj Kumar Chauhan, Judicial Member: The aforesaid Misc. Applications (MA) have been filed by the revenue in relation to the common order passed by the Tribunal in ITA No. 3869 & 3868/Mum/2024 dated 25.09.2024, wherein the revenue’s appeal was dismissed as not maintainable, because the disputed issue as raised in the appeal was below the prescribed monetary limit of Rs. 50 lakhs in view of the Circular No. 3/2018 dated 11.07.2018 read with Circular No. 17/2019 dated 08.08.2019 for filing of appeal before Tribunal. Admittedly, in these cases, the disputed tax demand is below the prescribed monetary limit. 2. Ld. AR on behalf of the assessee who has joined online and at the very outset has taken objection to the Miscellaneous Applications and argued that the addition was made on estimation basis, hence penalty could not have been imposed and the appeal on the merit are not maintainable and liable to be dismissed. It was further argued that even the appeal has not been filed with the special order of the Board, in case, though not admitted, the same is covered by the exception category enumerated in circular no. 23 3 MA No. 74 & 75/Mum/2025 Pankaj Sabharwal of 2019 dated 06.09.2019. Hence, it was submitted that both the MAs are liable to be dismissed. 3. The Ld. DR appearing on behalf of the revenue submitted that the tax effect in both the appeals are below the monetary limit, however the addition was made on account of bogus purchases for both the years and penalty was levied u/s 271(1)(c) of the Act. Ld. DR further submitted that as the case involves organized tax evasion activity and falls under exception enumerated in amended para 10(e) F. No. 279/Misc 142/2007-ITJ (pt.) dated 20.08.2018 of the Circular no. 3 of 2018 dated 11.07.2018 (as amended vide CBDT Circular No. 23/2019 dated 06.09.2019. Ld. DR further submitted that the CBDT vide Circular No. 23/2019 dated 06.09.19 provided further exceptions in the case which involves organized tax evasion activity. The relevant portion of the misc. applications is reproduced below:- “Decision of Hon'ble ITAT Vide ITA No. 3868 & 3869/Mum/2024, the Hon'ble ITAT has dismissed the appeal for A.Y. 2011-12 & 2010-11 by a common order stating that the total tax effect in both the appeals is below the monetary limits given in the CBDT circulated No. 03/2018 dated 11.07.2018 r/w CBDT Circular No.17/2019 dated 08.08.2019. 4 MA No. 74 & 75/Mum/2025 Pankaj Sabharwal PRAYER The appellant prays that the tax effect in the case is below the monetary limit. However, in the case the addition was made on account of bogus purchases for both the years and penalty was levied u/s.271(1)(c) of the Act. As the case involves organized tax evasion activity and falls under exception enumerated in amended Para 10(e) F. No. 279/ Misc 142/2007- ITJ (pt.) dated 20.08.2018 of the circular No. 3 of 2018 dated 11.07.2018 (as amended vide CBDT Circular No.23/2019 dated 06-09-2019). The appellant further prays that the Hon'ble Tribunal may kindly adjudicate the above contention and may be pleased to modify their decision dated 25.09.2024 in ITA No.3869/Mum/2024 and pass such order as may be deemed to be appropriate in this case.” 4. Before us, Ld. DR submitted that now in the light of the CBDT Circular No. 23/2019 dated 06.09.2019 and office memorandum of CBDT dated 16.09.2019, the order of the Tribunal should be recalled because the matter falls in the exception category to the monetary limit for filing the appeals where the cases involves organized tax evasion activity. It is further submitted that these cases clearly falls under exception as the cases involved organized tax evasion activity and thus, the conditions provided in the aforesaid circular is clearly applicable. 5. In support of submission by the Ld. DR, he has referred an order of Hon’ble Jurisdictional High Court in ITA No.1225 of 2020 5 MA No. 74 & 75/Mum/2025 Pankaj Sabharwal in PCIT vs. Pankaj Sabharwal dated 24.10.2024 wherein it was held as under:- “The matter would not stand covered under the Circular dated 17.09.2024 issued by the Central Board of Direct Taxes involving the tax effect and would fall under the exception of the cases pertaining to bogus transaction. Accordingly removed from the board. 2. To be listed for admission as per its turn.” 6. We have considered the submissions of the parties and examined the order of the Mumbai Tribunal in ITA no. 1761 & 1762/Mum/2018 order dated 16.05.2019 against which the above ITA was filed before the Jurisdictional High Court. In the said case, the disallowance was made on account of bogus purchases and the addition was restricted to 12.5% of the alleged bogus purchases of Rs. 5,92,042/-. The said restriction of the addition was challenged by the revenue in the Hon’ble High Court. 7. Thus we find force in the argument of Ld. DR that the present case involving bogus purchases wherein penalty was imposed on account of addition made on estimate basis of the profit embedded in the alleged bogus purchases. Both the appeals filed by revenue in which the present MA has been filed were disposed by the Ld. 6 MA No. 74 & 75/Mum/2025 Pankaj Sabharwal Coordinate Bench vide order dated 25.09.2024 and extracted as under:- “3. At the very outset, we notice that the total tax effect in both the appeals is shown to be of Rs. 4,25,700/- and Rs. 2,40,110/- respectively, CBDT circulated No. 03/2018 dated 11.07.2018 r/w CBDT circular No. 17/2019 dated 08.08.2019 directs that no appeal shall be filed before the Tribunal where the tax effect is 50,00,000/- CBDT has further directed that the circular letter shall apply retrospectively. The tax effect under instant appeal is far below the monetary limits given in these circulars. In such circumstances, both the appeals stand dismissed as infructuous.” 8. Thus it is evident from the observation of the Ld. Coordinate Bench that the matter has been dismissed in limini on the ground of tax effect holding that the appeals were not maintainable. Admittedly, the appeals involved addition made on account of bogus purchases which in view of the above discussion would fall in the exception category and is covered by Circular No. 23 of 2019 dated 06.09.2019 (supra). For these reasons, the order of the Ld. Coordinate Bench as extracted above suffers from apparent mistake on the face of the record which can be rectified by the Tribunal u/s 254(2) of the Act. In these facts and circumstances, we are of the considered opinion that the matter is covered within the provision of section 254(2) of the Act and the order of the Ld. Coordinate 7 MA No. 74 & 75/Mum/2025 Pankaj Sabharwal Bench dismissing the appeal on account of tax effect is accordingly recalled. Both the appeals are restored to the original number and position to be decided by the regular bench on merit. Registry is directed to list the matter for hearing before the regular bench and both the parties be intimated of the date of hearing in advance. The contention of the assessee with respect to the filing of the appeals without special order of the Board may be considered by the regular bench at the time of hearing of the appeals as directed above. 9. In the result, both the Misc. Applications filed by the revenue stands allowed in above terms. Order pronounced by way of display of result on notice under Rule 34 & 34A of ITAT Rules, 1963 on 04.06.2025. Sd/- Sd/- (Narendra Kumar Billaiya) (Raj Kumar Chauhan) Accountant Member Judicial Member मुंबई Mumbai;ददनांक Dated : 04/06/2025 Sr.PS. Dhananjay आदेशकीप्रतितितिअग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त(अपील) / The CIT(A) 4. आयकरआयुक्त/ CIT- concerned 8 MA No. 74 & 75/Mum/2025 Pankaj Sabharwal 5. दवभागीयप्रदतदनदध, आयकरअपीलीयअदधकरण, मुंबई/ DR, ITAT, Mumbai 6. गार्डफाईल / Guard File आदेशानुसार/ BY ORDER, .उि/सहायकिंजीकार (Dy./Asstt.Registrar) आयकरअिीिीयअतिकरण, मुंबई/ ITAT, Mumbai "