ACIT CIRCLE-3(3)(2), MUMBAI V. M/S WATERMARK CAPITAL LTD.[PREVIOUSLY, WATERMARK FINANCIAL CONSULTANTS LTD], MUMBAI

MA 235/MUM/2022

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The case involves the Assistant Commissioner of Income-tax, Circle 3(3)(1), Mumbai, as the applicant, and M/s Watermark Capital Limited, previously known as Watermark Financial Consultants Ltd, as the respondent. The Revenue filed a Miscellaneous Application under section 254(2) of the Income-tax Act, 1961, seeking to recall the Tribunal's order dated 07/02/2022, which had dismissed the Revenue's appeal due to the monetary limit of tax effect prescribed by the CBDT. The Revenue argued that the case fell under exceptions to the monetary limit as the information leading to the assessment was received from the CBI, an external law enforcement agency. The Tribunal initially dismissed the application but later recalled it upon finding that the information was indeed received from the CBI, thus falling under the specified exceptions of the CBDT Circular.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123785 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-01-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-01-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 29-08-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI PAVAN KUMAR GADALE (JUDICIAL MEMBER) M.A. No.235/Mum/2022 (Arising out of ITA No.800/Mum/2020) (Assessment Year : 2013-14) The Asst. Commissioner of Income-tax, circle 3(3)(1) Room No.609, 6 th Floor Aayakar Bhavan, Mumbai 400 020 Vs. M/s Watermark Capital Limied(Previously, Watermark Financial Consultants Ltd) 1010, Maker Chambers-V 10 th Floor, Nariman Point Mumbai-400 021 PAN No. AAACW 3474 H Applicant Respondent Assessee by : Shri Vimal Punmiya Revenue by : Shri Chetan M Kacha, Sr.AR Date of Hearing : 25/11/2022 ; 13/01/2023 Date of pronouncement : 19/01/2023 ORDER PER OM PRAKASH KANT, AM This Miscellaneous Application by the Revenue has been preferred under section 254(2) of the Income-tax Act, 1961 (in short, ‘the Act’) seeking to recall the order of the Tribunal dated 07/02/2022 passed in ITA No.800/Mum/2020 for A.Y. 2013-14. 2. The Ld. DR addressing the miscellaneous application submitted that in this case, appeal of the Revenue has been dismissed in view of monetary limit of tax effect under prescribed by the CBDT vide circular dated 17/2017 circular No.3 of 2018 as amended on 20 he submitted that the issue in dispute involved in this appeal falls in the category of exceptions specified by the CBDT vide letter dated 20 th August, 2018. The relevant exceptio prescribed by the CBDT for not filing appeal to the Tribunal are reproduced as under: “10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less para 3 above or there is no tax effect: (a) to (d) xxxxxxxxxxxxxxxxxxxxxx (e) Where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI (DGGI). (f) xxxxxxxxxxxxxxxxxxxxxxxxxxx” 3. The said exception prescribed that where the addition is based on information received from external source in the nature of law enforcement agencies such as General of GST Intelligence (DGGI) apply. The Ld. DR submitted that in this case received from CBI and, the exception to the tax effect circular and, therefore, this being a DR addressing the miscellaneous application submitted that in this case, appeal of the Revenue has been dismissed in view of monetary limit of tax effect under prescribed by the CBDT vide circular dated 17/2017 circular No.3 of 2018 as amended on 20 th August, 2018. he submitted that the issue in dispute involved in this appeal falls in the category of exceptions specified by the CBDT vide letter dated August, 2018. The relevant exception to the monetary tax limit prescribed by the CBDT for not filing appeal to the Tribunal are reproduced as under:- 10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: (a) to (d) xxxxxxxxxxxxxxxxxxxxxx (e) Where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI, ED, DRI, SFIO, Directorate General of GST Intelligence (f) xxxxxxxxxxxxxxxxxxxxxxxxxxx” The said exception prescribed that where the addition is based on information received from external source in the nature of law enforcement agencies such as CBI, ED, DRI, SFIO, General of GST Intelligence (DGGI), the tax effect Circular will not DR submitted that in this case information received from CBI and, therefore, the case is squarely covered by the exception to the tax effect circular and, therefore, this being a M/s Watermark Capital Ltd M.A. 235/Mum/2022 2 DR addressing the miscellaneous application submitted that in this case, appeal of the Revenue has been dismissed in view of monetary limit of tax effect under ₹50 lakhs as prescribed by the CBDT vide circular dated 17/2017 read with August, 2018. However, he submitted that the issue in dispute involved in this appeal falls in the category of exceptions specified by the CBDT vide letter dated n to the monetary tax limit prescribed by the CBDT for not filing appeal to the Tribunal are 10. Adverse judgments relating to the following issues should be contested on merits than the monetary limits specified in (e) Where addition is based on information received from external sources in the nature of Directorate General of GST Intelligence The said exception prescribed that where the addition is based on information received from external source in the nature of law I, SFIO, Directorate , the tax effect Circular will not information was therefore, the case is squarely covered by the exception to the tax effect circular and, therefore, this being a mistake apparent from record, the order of the Tribunal need to be recalled. 4. During the course of hearing on counsel of the assessee submitted that information was received only from Director General of Investigation which is an internal source and therefore, In view of the objections raised by the Ld. he Ld. DR was directed to file received from the CBI. In compliance, the Ld. said information before this bench and also a copy of the same was provided to the Ld. matter was again fixed on 13.01.2013, the Ld. bench has dismissed the miscellaneous application. The relevant finding of the Tribunal in M.A. “2. Per contra, the ld. AR vehemently argued that there was no search conducted by the CBI on the assessee company and that the CBI search happened only in the case of Mr. Harsh Dalmia. He also drew our attention to para 2 of the assessment are recorded. Accordingly, he pleaded that since there was absolutely no search by CBI in the hands of the assessee company, even though the assessments were reopened for the assessee company, the same would not tantamount to reop information received. Ultimately, the assessments were reopened only based on information received from Investigation Wing. The ld. DR was not able to rebut the arguments of the ld. AR in this regard. Hence, we hold that the informa sources and not external sources. Hence, the same does not fall under the exceptions provided in para 10 of the CBDT Circular. Accordingly, no error could be attributed in the order passed by this Tribunal for all the a the appeals of the Revenue on the ground of low tax effect. mistake apparent from record, the order of the Tribunal need to be During the course of hearing on 25/11/2022 of the assessee submitted that information was received only from Director General of Investigation which is an internal source and therefore, said exceptions do not apply to this appeal. view of the objections raised by the Ld. Counsel of the assesse DR was directed to file a copy of the relevant information received from the CBI. In compliance, the Ld. DR filed a copy of the said information before this bench and also a copy of the same was Counsel of the assessee and th matter was again fixed on 13.01.2013. During the hearing on Counsel submitted that on identical issue, the bench has dismissed the miscellaneous application. The relevant finding of the Tribunal in M.A. No.104/Mum/2020 is 2. Per contra, the ld. AR vehemently argued that there was no search conducted by the CBI on the assessee company and that the CBI search happened only in the case of Mr. Harsh Dalmia. He also drew our attention to para 2 of the assessment order wherein these facts are recorded. Accordingly, he pleaded that since there was absolutely no search by CBI in the hands of the assessee company, even though the assessments were reopened for the assessee company, the same would not tantamount to reopening based on external information received. Ultimately, the assessments were reopened only based on information received from Investigation Wing. The ld. DR was not able to rebut the arguments of the ld. AR in this regard. Hence, we hold that the information was received only from internal sources and not external sources. Hence, the same does not fall under the exceptions provided in para 10 of the CBDT Circular. Accordingly, no error could be attributed in the order passed by this Tribunal for all the assessment years under consideration dismissing the appeals of the Revenue on the ground of low tax effect.” M/s Watermark Capital Ltd M.A. 235/Mum/2022 3 mistake apparent from record, the order of the Tribunal need to be 25/11/2022, the learned of the assessee submitted that information was received only from Director General of Investigation which is an internal not apply to this appeal. Counsel of the assessee, copy of the relevant information DR filed a copy of the said information before this bench and also a copy of the same was Counsel of the assessee and thereafter the . During the hearing on Counsel submitted that on identical issue, the bench has dismissed the miscellaneous application. The relevant /Mum/2020 is as under:- 2. Per contra, the ld. AR vehemently argued that there was no search conducted by the CBI on the assessee company and that the CBI search happened only in the case of Mr. Harsh order wherein these facts are recorded. Accordingly, he pleaded that since there was absolutely no search by CBI in the hands of the assessee company, even though the assessments were reopened for the ening based on external information received. Ultimately, the assessments were reopened only based on information received from Investigation Wing. The ld. DR was not able to rebut the arguments of the ld. tion was received only from internal sources and not external sources. Hence, the same does not fall under the exceptions provided in para 10 of the CBDT Circular. Accordingly, no error could be attributed in the ssessment years under consideration dismissing 5. Though the Ld. decision, but we are not aware whether the relevant information from the CBI in that c Department before the bench. relevant information has been received from the Office of Joint Director, CBI, Mumbai was addressed to the Dire Department, Mumbai, who has further forwarded this information to the Assessing Officer. In the said information name of the assessee company, i.e. known as Watermark Capital Ltd) advance receipt of ₹400 crores in the form of advance during the period from 1999 to 2008. In the case of the assessee, an amount of ₹1,50,00,000/- has been shown as pending balance as on 01/04/2004 and an amount of on 20 th August, 2007. 6. In view of the above factual information pertaining to the instant case specifically, we are not relying on the decision of the Tribunal cited by the Ld. 7. In our opinion, the exception 10(e) of the letter dated 20 is a mistake being apparent from record, we recall the order of the Tribunal and fix the appeal for hearing on 27 Though the Ld. Counsel of the assessee has cited the above decision, but we are not aware whether the relevant information in that case was provided by the Income Department before the bench. But in the present case before us, the relevant information has been received from the Office of Joint Director, CBI, Mumbai vide letter dated 05 th March, 2010 was addressed to the Director of Investigation, Income Department, Mumbai, who has further forwarded this information to the Assessing Officer. In the said information name of the assessee company, i.e. Watermark Financial Consultants Ltd known as Watermark Capital Ltd) is mentioned with reference to 400 crores in the form of advance during the period from 1999 to 2008. In the case of the assessee, an amount has been shown as pending balance as on 01/04/2004 and an amount of ₹10 lakhs was received from HFCL August, 2007. In view of the above factual information pertaining to the instant case specifically, we are not relying on the decision of the Tribunal cited by the Ld. Counsel of the assessee. In our opinion, the instant appeal squarely falls under the exception 10(e) of the letter dated 20 th August, 2018 and thus, there is a mistake being apparent from record, we recall the order of the Tribunal and fix the appeal for hearing on 27 th February, 2023. As M/s Watermark Capital Ltd M.A. 235/Mum/2022 4 Counsel of the assessee has cited the above decision, but we are not aware whether the relevant information ase was provided by the Income-tax in the present case before us, the relevant information has been received from the Office of Joint March, 2010, which ctor of Investigation, Income-tax Department, Mumbai, who has further forwarded this information to the Assessing Officer. In the said information name of the Consultants Ltd (now is mentioned with reference to 400 crores in the form of advance during the period from 1999 to 2008. In the case of the assessee, an amount has been shown as pending balance as on s was received from HFCL In view of the above factual information pertaining to the instant case specifically, we are not relying on the decision of the instant appeal squarely falls under the August, 2018 and thus, there is a mistake being apparent from record, we recall the order of the February, 2023. As this date was announced in the open court, therefore, no separate notice shall be issued to either party. 8. In the result, Miscellaneous Application allowed. Order pronounced the ITAT Rules, 1963 on Sd/- (PAVAN KUMAR GADALE JUDICIAL MEMBER Mumbai; Dated: 19/01/2023 Pavanan, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// was announced in the open court, therefore, no separate notice shall be issued to either party. Miscellaneous Application filed by the Revenue is Order pronounced in the open Court/under Rule 34(4) of the ITAT Rules, 1963 on 19/01/2023. Sd/- PAVAN KUMAR GADALE) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai M/s Watermark Capital Ltd M.A. 235/Mum/2022 5 was announced in the open court, therefore, no separate filed by the Revenue is under Rule 34(4) of - OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Sr. Private Secretary) ITAT, Mumbai