ITO, Bhadrak Ward, Bhadrak, Bhadrak V. Smt. Kuntala Mohapatra, Bhadrak

MA 20/CTK/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4907 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 10-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect; Tax effect; Penny stocks; Capital Gains; Bogus
• Section: 268A; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE S/ AND ARUN KHODPIA, ACCOUNTANT MEMBER Income Tax Officer, Bhadrak Ward, Bhadrak PAN/GIR No. (Appellant Per C.M.Garg By way of this miscellaneous application u/s.254(2) of the Act, the appellant-revenue seeks to recall the order of the ITAT dated ITA No.241/CTK/2019 on the ground that CBDT has come up with Circular No.23 of 2019 dated 6.9.2019, mentioning therein that the monetary limits fixed for filing further appeals apply in cases where the assesses are cl alleged transaction in penny stocks and appeals in such cases shall be filed on merits. It is submitted that in this case, the assessee had claimed bogus IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK S/SHRI CHANDRA MOHAN GARG, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER M.A.No.20/CTK/2019 (in ITA No.241/CTK/2019) Assessment Year : 2015-16 Income Tax Officer, Bhadrak Ward, Bhadrak Vs. Smt. Kuntala Kuansh, Bhadrak No.ABKPM 8238 R (Appellant) .. ( Respondent Assessee by : Shri P.K.Mishra and Mohit Sheth Revenue by : Shri Sovesh Chandra Mohanty, Sr Date of Hearing : 10 /3/ 20 Date of Pronouncement : 30/3 O R D E R g, JM way of this miscellaneous application u/s.254(2) of the Act, the revenue seeks to recall the order of the ITAT dated /CTK/2019 on the ground that CBDT has come up with Circular No.23 of 2019 dated 6.9.2019, mentioning therein that the monetary limits fixed for filing further appeals r.w. special circular dated 16.9.2019, apply in cases where the assesses are claiming bogus LTCG/STCL through alleged transaction in penny stocks and appeals in such cases shall be filed on merits. It is submitted that in this case, the assessee had claimed bogus Page1 | 7 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER /CTK/2019) Smt. Kuntala Mohapatra, Kuansh, Bhadrak Respondent) P.K.Mishra and Mohit Sheth, ARs Sovesh Chandra Mohanty, Sr (DR) / 2022 3/2022 way of this miscellaneous application u/s.254(2) of the Act, the revenue seeks to recall the order of the ITAT dated 20.8.2019 in /CTK/2019 on the ground that CBDT has come up with Circular No.23 of 2019 dated 6.9.2019, mentioning therein that the monetary limits r.w. special circular dated 16.9.2019,shall not aiming bogus LTCG/STCL through alleged transaction in penny stocks and appeals in such cases shall be filed on merits. It is submitted that in this case, the assessee had claimed bogus M.A.No.20/CTK/2019 (in ITA No.241/CTK/2019) Assessment Year : 2015-16 Page2 | 7 LTCG of Rs.1,02,66,280/- on sale of penny stocks of Lifeline Drugs and Pharma Ltd., and GCM Securities Limited. 2. It is stated that the Tribunal has not dealt the matter on merits but dismissed on the ground of monetary limits. Therefore, the order be recalled and decided on merits. 3. At the time of hearing, reiterating the contents raised in the miscellaneous petition, ld Sr DR submitted that in view of the CBDT Circular No.23 of 2019 dated 6 th September, 2019, r.w special circular dated 16.9.2019, the order of the ITAT needs to be recalled. 4. Ld A.R. of the assessee submitted that the order has been passed on 20.8.2019, i.e. prior to the issuance of CBDT Circular No.23 of 2019 dated 6 th September, 2019, r.w special circular dated 16.9.2019, as alleged by the ld Sr DR. Ld A.R. produced a decision of ITAT Ahmedabad in M.As No.334/Ahd/2019 and ors dated 25.3.2021, wherein, the Tribunal after following the decision of ITAT Jaipur in M.A. No.23/JP/2020 order dated 20.3.2020 has decided the similar issue. Hence, this issue is covered in favour of the assessee. 5. We have considered the rival submissions and perused the miscellaneous petition filed by the revenue. There is no dispute to the fact that the appeal of the revenue was dismissed due to tax effect, which fact, is not controverted by the revenue. However, in view of CBDT Circular M.A.No.20/CTK/2019 (in ITA No.241/CTK/2019) Assessment Year : 2015-16 Page3 | 7 dated 6.9.2019, r.w special circular dated 16.9.2019, the ld Sr D.R. contended that where the penny stock is involved, the matter should be decided on merits and not on due to low tax effect. For this preposition, ld A.R. referred to the decision of ITAT Ahmedabad in MA No.334/Ahd/2019 (supra), wherein, similar issue has been decided, by observing as under: as under: “7. We have duly considered the rival contentions and gone through the records carefully. The Tribunal has identified the appeals involving tax effect by virtue of relief given by the CIT(A) below Rs.50 lakhs on 14/08/2019 and dismissed those appeals. On 14/08/2019, no such Circular was available. The subsequent Circular, in any case, would not make the order of the Tribunal suffering from an apparent error. The Circular No.23 of 2019 or Office Memorandum F.No.279/Misc./M-93/2018-ITJ (PT.) nowhere contemplates that these will be applicable w.e.f. 08/08/2019, i.e. the date when Circular No.17 of 2019 was issued. 8. After from the above observation, we find that this aspect has been elaborately considered by the ITAT Jaipur Benches and the discussions made by the Tribunal read as under: “3. We have heard the rival contentions and perused the material available on record. The limited issue under consideration is whether CBDT Circular no. 23 of 2019 dated 6.09.2019 read with special order of the CBDT communicated vide office memorandum dated 16.09.2019 applies to the - instant appeal and the case falls in exception of penny stock, and the matter which has been already been dismissed by the Tribunal on 21.08.2019, following CBDT's earlier circular dated 8.8.2019 on account of low tax effect, can be rectified under section 254(2) of the Act. 4. In this regard, we refer to CBDT Circular no. 23 of 2019 dated 6.09.2019, the contents thereof read as under: "Subject: -Exception to monetary limits for filing appeals specified in any Circular issued under Section 268A of the Income-tax Act, 1961- reg Reference is invited to the Circulars issued from time to time by Central Board of Direct Taxes (the Board) under section 268A of the Income-tax Act, 1961 (the Act), for laying down monetary limits and other conditions for filing of departmental appeals 'before Income M.A.No.20/CTK/2019 (in ITA No.241/CTK/2019) Assessment Year : 2015-16 Page4 | 7 Tax Appellate Tribunal (TTAT). High Courts and. SLPs/appeals before Supreme Court. 2. Several references have been received by the Board that in large number of cases where organised tax-evasion scam is noticed through bogus Long-Term Capital Gain (LTCG)/Short Term Capital Loss (STCL) on penny stocks and department is unable to pursue the cases in higher judicial forum on account of enhanced monetary limits. It has been reported that in large number of cases, JTATs and High Court have recognized the unique modus operand! involved in such scam and have passed judgments in favour of the revenue. However, in cases where some appellate forum have not given due consideration to position of law or facts investigated by the department, there is no remedy available with the department for filing further appeal in view of the prescribed monetary limits. 3. In this context, Board has decided that notwithstanding anything contained in any circular issued u/s 268A specifying monetary limits for filing of departmental appeals before Income Tax Appellate Tribunal (ITAT), High Courts and SLPs/appeals before Supreme Court, appeals may be filed on merits as an exception to said circular, where Board, by way of special order direct filing of appeal on merit in cases involved in organised tax evasion activity." 5. Pursuant to aforesaid circular, the special order has been passed by the CBDT, communicated vide office memorandum dated 16.09.2019 and the contents thereof read as under:- "Subject: -Special Order of Board exempting cases involving bogus Long Term Capital Gains(LTCG)/Short Term Capital Loss (STCL) - through penny stocks from monetary limits specified in any Circular issued under Section 268A of the Income-tax Act, 1961-reg The undersigned is directed to refer to Circular No. 23 of 2019 dated 6 th September, 2019 and to say that by virtue of powers of the Central Board of Direct Taxes u/s 268A of Income-tax Act, 1961, the monetary limits fixed for filing appeals before ITA T/HC and SLPs /appeals before Supreme Court shall not apply in case of assesses claiming bogus LTCG/STCL through penny stocks and appeals/SLPs in such cases shall be filed on merits." 6. On reading of the aforesaid circular no. 23 of 2019 so issued by the CBDT, we find that the CBDT has decided that notwithstanding monetary limits for not filing/pursuing appeals in terms of any circular already issued under section 268A of the Act specifying the monetary limits, the appeals by the Revenue can still be filed on merits in cases involving organized tax evasion activity. However, in respect of which all cases or category of cases, such appeal can be filed shall be decided by way of a special order passed by the CBDT. M.A.No.20/CTK/2019 (in ITA No.241/CTK/2019) Assessment Year : 2015-16 Page5 | 7 There is thus a specific requirement for issuance of a special order by the CBDT and therefore, unlike general exceptions carved out from filing appeals on merits, in these cases, involving long term capital gains and short term capital gains exemption through penny stocks, there is a requirement for a special order to be issued by the CBDT and only where such a special order has been issued, the appeal shall be filed by the Department. 7. In cases involving long term capital gains and short term capital gains exemption through penny stocks, we find that the CBDT has since come out with a special order communicated vide office memorandum dated 16.09.2019 stating that monetary limits fixed for filing appeals in these cases before the Tribunal, High Court and Supreme Court shall not apply in case of assessee claiming bogus LTCG/STCG through penny stock and appeal shall be filed on merits. The special order thus talks about filing of appeal in such cases and therefore, it relates to any appeal in such cases which can be filed pursuant to such an order on and after the date of such special order and therefore doesn't contemplate a situation where the appeal which has already been filed prior to issuance of such a special order by the Revenue which shall be read and understood as filed pursuant to such special order. 8. We are conscious of the fact that CBDT low tax effect circulars issued from time to time wherein the tax effect have been progressively increased by the -Revenue with a view to minimize the litigation has been read by the Courts and the Tribunal, and even the CBDT has also clarified latter, that these CBDT Circulars shall apply not just to future appeals but also to pending appeals and therefore, where the appeal has already been filed'by the Revenue and is pending, such appeal has been held to be covered by a subsequent low tax effect circular and dismissed on account of low tax effect. However, in the instant case, the issue is regarding carving out an exception from such low tax effect limits and that too, not just by a general order but by way of a special order where such appeals can be filed, therefore, unless the special order has been passed by the CBDT and an appeal is filed pursuant to such a special order, the exception cannot be read and understood to apply to existing appeals which have already been filed prior to issuance of the special order. Therefore, we are of the considered view that the CBDT Circular no. 23 of 2019 should be read along with special order of the CBDT dated 16.09.2019 in respect of appeals filed pursuant to such special order and shall thus apply to all appeals filed on or after 16.09.2019 by the Revenue where the tax effect may be low but the appeal can still be filed by the Revenue on merits. 9. In the instant case, the appeal of the Revenue was filed on 22.05.2019 and therefore, the present appeal was not filed pursuant M.A.No.20/CTK/2019 (in ITA No.241/CTK/2019) Assessment Year : 2015-16 Page6 | 7 to such a special order of the CBDT dated 16.09.2019 and thus, the matter doesn't fall in any exception as so prescribed by the CBDT in its earlier circular dated 8.8.2019 and the special order doesn't apply in the instant case and the appeal has thus rightly been dismissed by the Bench on account of low tax effect in light of CBDT's circular dated 8.8.2019. 10. In any case, both CBDT Circular no. 23 of 2019 and special order dated 16.09.2019 were not in existence and thus not part of the record at the time when the matter was heard on 20.08.2019 or at the time of passing of order by the Tribunal on 21.08.2019 and therefore, non- consideration of such Circular and the special order so passed by the CBDT is not a mistake apparent from record which can be rectified within the narrow compass of section 254(2) of the Act.” 9. Since there is no disparity on facts, therefore, respectfully following the decision of Coordinate Bench(supra), we do not find any merit in these miscellaneous applications filed by the Revenue. 10. In the result, all the Miscellaneous Applications filed by the Revenue are dismissed.” 3. We find that verbatim applications have been filed in the present three cases. The stand of the Revenue is that after circular no.17/2019, the Department has issued circular no.23/2019 dated 6.9.2019. According to the new circular certain classes of cases have been carved out from availing of the benefit of circular no.17 of 2019. We have discussed this issue in our order dated 9.9.2020, and we have held that on 14.8.2019 when the appeals were dismissed on account of low tax effect involved in them by virtue of relief given by the CIT(A), the condition for exclusion of certain classes of cases was not available. Following our order dated 9.9.2020 extracted (supra), we find no merit in these misc. applications of the Revenue. They stand dismissed. 4. In the result, all the Misc. Applications of the Revenue are dismissed.” 6. In this case, we find that the order has been passed by the Tribunal on 20.8.2019 and the CBDT issued special circular on 6.9.2019, r.w special circular dated 16.9.2019 i.e. before passing the order of the Tribunal. Therefore, it cannot be alleged that special circular has not been considered by the Tribunal, which is not a mistake apparent on record to recall the order for fresh consideration. In view of above, respectfully following the M.A.No.20/CTK/2019 (in ITA No.241/CTK/2019) Assessment Year : 2015-16 Page7 | 7 decisions of the Co-ordinate Benches cited (supra), we dismiss the M.A. application filed by the revenue. 7. In the result, M.A. filed by the revenue is dismissed. Order pronounced on 30 /3/2022. Sd/- sd/- (Arun Khodpia) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 30 /03/2022 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : ITO, Bhadrak Ward, Bhadrak 2. The Respondent. Smt. Kuntala Mohapatra, Kuansh, Bhadrak. 3. The CIT(A)-, Cuttack 4. Pr.CIT-, Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//