The Deputy Commissioner of Income Tax, Morbi Circle, Morbi V. Smt Binaben Dharmendrakumar Gadhiya, Morbi

MA 21/RJT/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4082 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 3 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Tax effect; Penny stocks
• Section: 268A; 264; 254(2)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, राजकोट 瀈यायपीठ 瀈यायपीठ瀈यायपीठ 瀈यायपीठ, , , , राजकोट IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND T.R. SENTHIL KUMAR, JUDICIAL MEMBER Misc. Application No.21/RJT/2020 IN ITA No. 272/RJT/2017 Assessment Year : 2010-11 ACIT, Morbi Circle Morbi. Vs Binaben Dharmendrakumar Gadhiya Shaktikrupa, Reliance Nagar Ravapar Road Morbi. PAN : AHMPG 0524 G (Applicant) (Responent) Assessee by : Shri Vimal Desai, AR Revenue by : Shri S.S.Rathi, Sr.DR स ु नवाई क तार ख/D a t e o f H e a r i n g : 3 0 / 0 3 / 2 0 2 2 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 3 1 / 0 5 / 2 0 2 2 आदेश/O R D E R PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER This MA is filed by the Revenue on the sole ground that the Revenue appeal was dismissed by the Tribunal in ITA No.554/RJT/2012 along with 264 other appeals and cross objections vide order dated 20.8.2019 on account of low tax effect as per the CBDT No.3 of 2018. MA No.21/RJT/2020 2 2. The CBDT has come with subsequent Circular no.23 of 2019 dated 6.9.2019 wherein the cases in which organized tax evasion scam is noticed through bogus long term capital gain (penny stock cases) are not covered under the low tax circular, therefore such Revenue appeal cannot be dismissed on that ground and to be adjudicated by the Revenue in the appropriate legal forums. The assessment in the case of the present assessee involved bogus long term capital gain, scrips in question of penny stock, thinly traded scrips, Kolkata based company thus as per the Circular No.23 of 2019, the Revenue’s appeal in ITA No.272/RJT/2017 ought not to have been dismissed. Therefore, present MA is filed to restore the appeal to the file of the Tribunal for fresh hearing on merit. 3. Per contra, the ld.counsel for the assessee has brought to our notice that the present appeal has been dismissed by order dated 20.8.2019 whereas CBDT Circular No.23 of 2019 is dated 6.9.2019 which is prospective in nature and Co-ordinate Bench of this Tribunal in MA No.401/Ahd/2019 and others on similar issues were being dismissed on the ground that Circular No.23 of 2019 or Office Memorandum No.F.No.279/Misc/M-93/2018-ITJ nowhere contemplates that this new Circular will be applicable w.e.f. 8.8.2019 i.e. the date of original Circular No.17 of 2019 was issued. Further, the Co-ordinate Bench after considering decision of ITAT, Jodhpur Bench in MA No.23/JP/2020 order dated 20.3.2020 dismissed MA filed by the Revenue. On Revenue’s further appeal to the Hon’ble High Court of Gujarat in SCA No.7520 of 2021 dated 24.6.2021, the Hon’ble Court held as follows: “7. From the bare reading of the Circular dated 06.09.2019, it appears that the CBDT had decided that notwithstanding anything contained in any Circular issued under Section 268A specifying monetary limits for filing of departmental appeals before the Income Tax Appellate Tribunal (ITAT), High Courts and MA No.21/RJT/2020 3 SLPs/ Appeals before the Supreme Court, appeals may be filed on merits as the exception to the said Circular, where the Board by way of special order direct filing of appeals on merits in cases involved in organized tax evasion activity. The Office Memorandum dated 16.09.2019 was issued pursuant to the said circular dated 06.09.2019 stating inter alia that by virtue of the powers of CBDT under Section 268A of the Income Tax Act, the monetary limits fixed for filing appeals before ITAT/High Court and SLPs/Appeals before Supreme Court shall not lie in case of assessees claiming bogus LTCG/STCL through penny stocks and appeals/ SLPs in such cases appeals shall be filed on merits. There is nothing to suggest in the said Circular/ Office Memorandum that they shall have retrospective effect. On the contrary, from the language employed in the said Circular dated 06.09.2019, it clearly transpires that the appeals may be filed on merits as an exception to the other Circulars issued earlier, where the Board by way of special order direct filing of Appeals on merits in the cases involved in organized tax evasion activity. Therefore, by virtue of the said Circular dated 06.09.2019, the appeals could be filed on merits, irrespective of the monetary limits fixed in earlier cases, if the Board passes special order for filing appeals in cases involving tax evasion activity. The said Circular speaks about the Appeals that may be filed with the special order of the Board in future, and hence could not be construed to have retrospective effect. The Tribunal interpreting the said Circular/ Office Memorandum in the impugned order has rightly observed that in respect of each case or category of cases whether an appeal should be filed in view of the Circular dated 06.09.2019 or not shall be decided by the Board by way of special order, and thus a specific requirement of issuance of special order by CBDT is a must. The Tribunal therefore has rightly held that the CBDT Circular No. 23/2019 dated 06.09.2019 should be read along with the Office Memorandum dated 16.09.2019, in respect of the appeals to be filed pursuant to such special orders of CBDT and shall apply to all the appeals filed on or after 16.09.2019 by the revenue, where the tax effect may be low but the appeal could still be filed by the revenue on merits. 8. The appeals including the appeal in case of the respondent, which were disposed of by the Tribunal vide the common order dated 14.08.2019 could not be said to have been filed pursuant to the special order of the CBDT in view of the Circular dated 06.09.2019 read with the Office Memorandum dated 16.09.2019, and therefore it could not be said that the Tribunal had committed any mistake apparent from the record, which would require rectification as envisaged in Section 254(2) of the said Act. 4. Respectfully following the judgment of the jurisdictional High Court cited (supra), we have no hesitation in dismissing the MA filed MA No.21/RJT/2020 4 by the Revenue on the ground that Revenue’s appeals are dismissed by the Tribunal on 20.8.2019, which was well before the issuance of CBDT Circular dated 6.9.2019 and there is no error in the common order dated 20.8.2019 passed by the Tribunal. 5. In the result, MA of the Revenue is dismissed. Order pronounced in the Court on 31 st May, 2022 at Ahmedabad. Sd/- Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER (T.R. SENTHIL KUMAR) JUDICIAL MEMBER Ahmedabad, dated 31/05/2022