ITO., WARD-2(2)(4), FIROZABAD V. SH. SHAILESH KUMAR , FIROZABAD

MA 23/AGR/2020

AI Insights

The case revolves around a Miscellaneous Application filed by the Revenue against the order of the CIT(A) which had deleted additions made by the Assessing Officer (AO) following an audit objection. The AO had initially added Rs. 41,56,781 to the assessee's income, citing disallowed salary expenses and under-assessment of income. The CIT(A) removed these additions, leading the Revenue to appeal to the Tribunal. However, the Tribunal dismissed the Revenue's appeal due to the low tax effect, despite the Revenue's argument that the case fell under an exception in the CBDT Circular No. 03/2018. The Tribunal's decision was based on the superseding Circulars No. 5/2024 and 9/2024, which did not include the exception for audit objections.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779299 (ITAT-AGRA)
• Duration Of Justice: 5 year(s) 7 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 26-02-2020
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR
• Assessee Lawyers: PANKAJ GARGH
• Keywords: Tax effect; Audit objection
• Section: 154

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, DB: AGRA (Through Physical / Virtual Hearing) BEFORE SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER M.A. No.- 23/Agr/2020 Arising Out of ITA No.- 207/Agr/2019 [Assessment Years: 2014-15] Income Tax Officer, Ward-2(2)(4), Civil Lines, Dabrai, NH-2, Firozabad-283 205. VS Shri Shailesh Kumar, 3/159, Suhag Nagar, Firozabad- 283203. PAN- AYWPK0187E Revenue Assessee Assessee by Shri Pankaj Gargh, Adv. Revenue by Shri Anil Kumar, Sr. DR Date of Hearing 18.07.2025 Date of Pronouncement 13.10.2025 ORDER PER BRAJESH KUMAR SINGH, AM, This Miscellaneous Application (hereinafter referred to as the ‘MA’) has been filed by the Revenue against the order dated 19.08.2019 in ITA No.207/Agr/2019. The assessee is a civil contractor and had filed his return of income declaring a total income Printed from counselvise.com MA No.- 23/Agr/2020 Shailesh Kumar 2 of Rs. 41,44,110/-, on 18.12.2014. The assessment was completed on 24.12.2016 at a total income of Rs. 61,21,690/-. Thereafter, as submitted by the Department in the Miscellaneous Application, an audit objection was raised on account of the fact that the AO, had allowed expenses of Rs. 35,20,000/- as salary to a partner but the assessee was an individual and this salary was not allowable. Further, the Audit pointed out of under assessment of income of Rs. 6,36,781/-. 2.1 Accordingly, an order u/s 154 dated 03.07.12018 was passed by the AO, wherein an addition of Rs. 41,56,781/- (Rs. 35,20,000/- + Rs. 6,36,781/-) was made by the AO. 3. Aggrieved by the said order u/s 154 of the Act, the assessee filed an appeal before the Ld. CIT(A), who vide order dated 22.04.2019 deleted both the said additions. 4. Aggrieved by the order of the Ld. CIT(A), the Revenue filed an appeal before the Tribunal, which dismissed the appeal of the Revenue on the ground that the tax effect was less than Rs. 50 lakhs. 5. In the Miscellaneous application (hereinafter referred to as the ‘M.A’) it was submitted that even though the tax effect was less than Printed from counselvise.com MA No.- 23/Agr/2020 Shailesh Kumar 3 Rs. 50 lakhs, but the case was covered by the exception as laid down in para 3(c) of the amended para 10 of CBDT Circular No. 03/2018, dated 20.08.2018 as the order u/s 154 of the Act was passed as a consequence of an audit objection. It was, therefore, requested that the Tribunal may kindly recall its earlier order dismissing the appeal on account of low tax effect and restore the appeal for a fresh hearing on merits 6. We have heard both the parties and perused the material available on record. We have considered the facts of the case. The para 3(c) of the amended para 10 of CBDT Circular No. 03/2018, dated 20.08.2018 relied upon by the department is reproduced as under: “(c) Where Revenue Audit objection in the case has been accepted by the Department, or” 6.1 However, the CBDT has issued two recent Circulars u/s 268A of the Act, - Circular no. 5/2024 dated 15.03.2024 and Circular no. 9/2024 dated 17.09.2024. The Circular no. 5/2024 dated 15.03.2024, has been issued in supersession of Circular no. 3/2018 dated 11.07.2018 which has been relied upon by the department in its present M.A. We further note that in these two circulars, the Printed from counselvise.com MA No.- 23/Agr/2020 Shailesh Kumar 4 exception clause relating to issues arising out of audit objections does not find place. Further, para 5 of the Circular no. 9/2024, dated 17.09.2024 states that the circular no. 5/2024, dated15.03.2024 shall apply to the SLPs/ appeals pending before the Supreme Court / High Court/ Tribunal, which may accordingly be withdrawn. 6.2 In view of the above Circulars dated 15.03.2024 and 17.09.2024, issued by the CBDT, this M.A. of the Revenue is not maintainable and the same is dismissed. 7. In the result, M.A. of the Revenue is dismissed. Order pronounced in the open court on 13th October, 2025. Sd/- Sd/- [SUNIL KUMAR SINGH] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 13 .10.2025. Pooja Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra, Printed from counselvise.com "