The ITO, Ward-2(2)(2), Ahmedabad V. Smt. Jignashaben H.Patel, Ahmedabad

MA 27/AHD/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4315 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 28-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURSHOTTAM KUMAR
• Assessee Lawyers: VIVEK CHAUDA
• Keywords: Retrospective amendment; Wrong claim; Tax effect; Penny stocks; Capital Gains
• Section: 268A; 254(2); 68

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT) BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER MISC. APPLICATION NO.27/AHD/2020 IN ITA NO.1838/AHD/2013 / ASSTT.YEAR : 2005-06 ITO, WARD - 2(2)(3) AHMEDABAD. VS. JIGNASHABEN HARISHBAHI PATEL 27-B, SUDARSHAN SOCIETY-II NARANPURA AHMEDABAD 380 013. ( APPLICANT ) ( RESPONENT ) REVENUE BY : SHRI PURSHOTTAM KUMAR, SR.DR ASSESSEE BY : SHRI VIVEK CHAUDA, AR / DATE OF HEARING : 01/10/2021 / DATE OF PRONOUNCEMENT: 5 /10/2021 !'/ O R D E R PER RAJPAL YADAV, VICE-PRESIDENT PRESENT MISC. APPLICATION IS DIRECTED AT THE INSTAN CE OF THE REVENUE POINTING OUT AN APPARENT ERROR IN THE ORDER OF THE ITAT VIDE WHICH THE TRIBUNAL HAS DISPOSED A LARGE NUMBER OF CASES BY A COMBINED ORDER DATED 14.8.2019 DUE TO LOW TAX EFFEC T RELYING ON THE CBDT CIRCULAR NO.17 OF 2019 DATED 8.8.2019. BY WAY OF PRESENT APPLICATION, REVENUE SEEKS RECALL OF THE IMPUGNED O RDER QUA ITA NO.1838/AHD/2013 IN THE CASE OF PRESENT ASSESSEE. 2. BRIEF FACTS OF THE CASE ARE THAT REVENUE HAS FIL ED AN APPEAL AGAINST ORDER OF THE LD.CIT(A)-XIV, AHMEDABAD DATED 29.4.2013 FOR MA NO.27/AHD/2020 2 THE ASSTT.YEAR 2005-06. GRIEVANCE OF THE REVENUE W AS THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS .15,02,885/- AND RS.57,86,702/- WHICH WERE ADDED BY THE AO WITH THE AID OF SECTION 68 BY REJECTING SHORT TERM AND LONG TERM CAPITAL GAINS CLAIMED BY THE ASSESSEE AS BOGUS. THIS APPEAL OF THE REVENUE WAS D ISMISSED BY THE TRIBUNAL ON 14.8.2019 BY HOLDING THAT TAX EFFECT BY VIRTUE OF RELIEF GIVEN BY THE LD.CIT(A) IS BELOW TAX EFFECT, AND THE REFORE, CIRCULAR NO.17 OF 2019 DATED 8.8.2019 PROHIBITED THE REVENUE TO CHALLENGE ORDERS OF THE CIT(A) WHEREIN TAX EFFECT BY WAY OF R ELIEF GIVEN BY THE CIT(A) IS BELOW THRESHOLD LIMIT, NO APPEAL SHOULD B E FILED. THE TRIBUNAL HAS APPLIED THIS CIRCULAR AND DISMISSED TH E APPEAL ON 14.8.2019. 3. DISSATISFIED WITH ORDER OF THE TRIBUNAL QUA THE PRESENT ASSESSEE, REVENUE IS NOW BEFORE THE TRIBUNAL. IT IS PLEADED IN THE APPLICATION THAT SINCE THIS CASE IS COVERED/FALL UNDER THE EXCE PTIONS MENTIONED UNDER CLAUSE 10(C) OF THE CBDTS CIRCULAR NO.3/2018 DATED 11.7.2018 AND SUBSEQUENT LETTER DATED 20.8.2018 AND CIRCULAR NO.23/2019 DATED 6.9.2019 AND ITS CLARIFICATION DATED 16.9.2019, FUR THER APPEAL IS RECOMMENDED EVEN THOUGH TAX EFFECT IS BELOW THE THR ESHOLD LIMIT PRESCRIBED BY THE CBDTS CIRCULAR DATED 8.8.2019. THE FRESH CLARIFICATION CIRCULAR DATED 6.9.2019 OF THE BOARD HAS CARVED OUT CERTAIN EXCEPTIONS, AND IN VIEW OF THIS CIRCULAR, A PPEAL OF THE REVENUE WITH REGARD TO THE DELETION OF ADDITIONS MADE UNDER SECTION 68 OF THE ACT BY DISALLOWING THE CLAIM OF EXEMPTION OF LONG T ERM/SHORT TERM CAPITAL GAIN WILL BE MAINTAINABLE. IN OTHER WORDS, WHERE THE ISSUE OF ADDITION UNDER SECTION 68 OF THE ACT IN RESPECT OF BOGUS CLAIM OF SHORT MA NO.27/AHD/2020 3 AND LONG TERM CAPITAL GAIN ALLEGED TO BE MADE, AND SUCH CLAIM HAS BEEN ALLOWED BY THE CIT(A), THEN ORDERS OF THE CIT( A) WOULD BE CHALLENGED ON MERIT, AND THOSE ORDERS WOULD NOT BE UPHELD WITH THE HELP OF CBDT CIRCULAR THAT TAX EFFECT IS BELOW MAND ATORY LIMIT, AND THEREFORE, ORDER QUA THE ABOVE APPEAL OF THE REVENUE IS LIABLE TO BE RECALLED AND APPEAL THE REVENUE MAY BE LISTED FOR H EARING ON MERIT. 4. WITH THE HELP OF LD.REPRESENTATIVES, WE HAVE GON E THROUGH THE IMPUGNED ORDERS AND THE CIRCULARS CITED BY THE REVE NUE. THE POWER OF RECTIFICATION UNDER SECTION 254 OF THE INCOME TAX A CT CAN BE EXERCISED ONLY WHEN THE MISTAKE, WHICH IS SOUGHT TO BE RECTIF IED, IS AN OBVIOUS PATENT MISTAKE, WHICH IS APPARENT FROM THE RECORD A ND NOT A MISTAKE, WHICH IS REQUIRED TO BE ESTABLISHED BY ARGUMENTS AN D LONG DRAWN PROCESS OF REASONING ON POINTS, ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. THERE ARE SERIES OF DECISIONS AT THE END OF THE HON BLE SUPREME COURT AS WELL AS HONBLE HIGH COURT EXPOUND ING SCOPE OF EXERCISING POWERS UNDER SECTION 254(2) OF THE ACT. WE DO NOT DEEM IT NECESSARY TO RECITE AND RECAPITULATE ALL OF THEM, B UT SUFFICE TO SAY THAT CORE OF ALL THESE AUTHORITATIVE PRONOUNCEMENTS IS THAT P OWER FOR RECTIFICATION UNDER SECTION 254(2) OF THE ACT CAN BE EXERCISED ON LY WHEN MISTAKE, WHICH IS SOUGHT TO BE RECTIFIED, IS AN OBVIOUS AND PATENT MISTAKE, WHICH IS APPARENT FROM THE RECORD AND NOT A MISTAKE, WHICH I S REQUIRED TO BE ESTABLISHED BY ARGUMENTS AND LONG DRAWN PROCESS OF REASONING ON POINTS, ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. FO R FORTIFYING THIS VIEW, WE MAKE REFERENCE TO THE DECISION OF THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXCH ANGE LD., 262 ITR 146 WHICH HAS BEEN UPHELD BY THE HONBLE SUPREME CO URT REPORTED IN 305 MA NO.27/AHD/2020 4 ITR 227. THE HONBLE COURT HAS LAID DOWN FOLLOWING PROPOSITION WHILE CONCLUDING THE JUDGMENT: '(A) THE TRIBUNAL HAS POWER TO RECTIFY A MISTAKE AP PARENT FROM THE RECORD ON ITS OWN MOTION OR ON AN APPLICATION BY A PARTY UNDER S. 254(2) OF THE ACT; (B) AN ORDER ON APPEAL WOULD CONSIST OF AN ORDER MA DE UNDER S. 254(1) OF THE ACT OR IT COULD BE AN ORDER MADE UNDE R SUB-S. (1) AS AMENDED BY AN ORDER UNDER SUB-S. (2) OF S. 254 OF T HE ACT; (C) THE POWER OF RECTIFICATION IS TO BE EXERCISED T O REMOVE AN ERROR OR CORRECT A MISTAKE AND NOT FOR DISTURBING FINALIT Y, THE FUNDAMENTAL PRINCIPLE BEING THAT POWER OF RECTIFICATION IS FOR JUSTICE AND FAIR PLAY; (D) THAT POWER OF RECTIFICATION CAN BE EXERCISED EV EN IF A MISTAKE IS COMMITTED BY THE TRIBUNAL OR EVEN IF A MISTAKE HAS OCCURRED AT THE INSTANCE OF PARTY TO THE APPEAL; (E) A MISTAKE APPARENT FROM RECORD SHOULD BE SELF-E VIDENT, SHOULD NOT BE A DEBATABLE ISSUE, BUT THIS TEST MIGHT BREAK DOWN BECAUSE JUDICIAL OPINIONS DIFFER AND WHAT IS A MISTAKE APPA RENT FROM THE RECORD CANNOT BE DEFINED PRECISELY AND MUST BE LEFT TO BE DETERMINED JUDICIALLY ON THE FACTS OF EACH CASE; (F) NON-CONSIDERATION OF A JUDGMENT OF THE JURISDIC TIONAL HIGH COURT WOULD ALWAYS CONSTITUTE A MISTAKE APPARENT FROM THE RECORD, REGARDLESS OF THE JUDGMENT BEING RENDERED PRIOR TO OR SUBSEQUENT TO THE ORDER PROPOSED TO BE RECTIFIED; (G) AFTER THE MISTAKE IS CORRECTED, CONSEQUENTIAL O RDER MUST FOLLOW AND THE TRIBUNAL HAS POWER TO PASS ALL NECESSARY CO NSEQUENTIAL ORDERS.' 5. WE FIND THAT ON SIMILAR ISSUE, THE DEPARTMENT HA S FILED A WRIT PETITION BEFORE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. ANAND NATWARLAL SHARDA & OTHERS. THE DEPARTMENT HA S CHALLENGED ORDER OF THE ITAT VIDE WHICH APPLICATION OF THE REV ENUE FOR RECALL OF SAID ORDER ON THE BASIS OF CIRCULAR DATED 6.9.2019 WAS REJECTED. AT THIS MA NO.27/AHD/2020 5 STAGE, WE DEEM IT APPROPRIATE TO TAKE NOTE OF THE F INDING RECORDED BY THE HONBLE GUJARAT HIGH COURT IN SCA NO.7520/2021. IT READS AS UNDER: 5. THE PETITIONER-ORIGINAL APPLICANT HAVING FILED THE MISCELLANEOUS APPLICATION BEFORE THE TRIBUNAL UNDER SECTION 254(2 ) OF THE SAID ACT FOR RECTIFYING THE MISTAKE APPARENT FROM THE RECORD , IT WOULD BE ALSO BENEFICIAL TO REPRODUCE THE RELEVANT PART OF SECTIO N 254(2) OF THE SAID ACT: 254. ORDERS OF APPELLATE TRIBUNAL (1) *** (2) THE APPELLATE TRIBUNAL MAY, AT ANY TIME WITHIN SIX YEARS FROM THE DATE OF THE ORDER, WITH A VIEW TO RECTIFYING ANY MISTAKE APPARE NT FROM THE RECORD, AMEND ANY ORDER PASSED BY IT UNDER SUB-SECT ION (1), AND SHALL MAKE SUCH AMENDMENT IF THE MISTAKE IS BRO UGHT TO ITS NOTICE BY THE ASSESSEE OR THE ASSESSING OFFICER 6. SO FAR AS THE FACTS OF THE CASE ARE CONCERNED, T HE APPEAL FILED BY THE PETITIONER BEFORE THE TRIBUNAL AGAINST THE ORDE R PASSED BY THE CIT(APPEALS) WAS DISMISSED BY THE APPELLATE TRIBUNA L BY A COMMON ORDER PASSED ON 14.08.2019, IN VIEW OF THE CBDT CIR CULAR DATED 08.08.2019. ADMITTEDLY, AT THE RELEVANT TIME WHEN T HE TRIBUNAL PASSED THE ORDER DATED 14.08.2019, NEITHER THE CIRC ULAR NO. 23 OF 2019 DATED 06.09.2019 NOR THE OFFICE MEMORANDUM NO. 279 DATED 16.09.2019 WAS IN EXISTENCE. APART FROM THE FACT TH AT THE SAID CIRCULAR AND THE OFFICE MEMORANDUM BEING NOT IN EXI STENCE AND THEREFORE NOT TAKEN INTO CONSIDERATION BY THE TRIBU NAL WHILE DISPOSING ALL THE APPEALS COULD NOT BE SAID TO BE A MISTAKE APPARENT FROM THE RECORD AS CONTEMPLATED UNDER SUB-SECTION ( 2) OF SECTION 254 OF THE SAID ACT, THE COURT ALSO DOES NOT FIND A NY SUBSTANCE IN THE SUBMISSION OF MR. BHATT THAT THE TRIBUNAL SHOULD HA VE RECALLED THE ORDER DATED 14.08.2019 IN VIEW OF THE SAID CIRCULAR DATED 06.09.2019 AND THE OFFICE MEMORANDUM DATED 16.09.20 19, WHICH HAD RETROSPECTIVE EFFECT. THE COURT AT THIS JUNCTUR E DOES NOT THINK IT APPROPRIATE TO DEAL WITH THE FACTS OF THE CASE, AS THE MAIN ISSUE THAT FALLS FOR CONSIDERATION BEFORE THIS COURT IN THE PR ESENT PETITION WOULD BE, AS TO WHETHER THE CIRCULAR DATED 06.09.2019 AND THE OFFICE MEMORANDUM DATED 16.09.2019 HAD ANY RETROSPECTIVE E FFECT AS SOUGHT TO BE SUBMITTED BY LEARNED ADVOCATE MR. BHAT T. 7. FROM THE BARE READING OF THE CIRCULAR DATED 06 .09.2019, IT APPEARS THAT THE CBDT HAD DECIDED THAT NOTWITHSTAND ING ANYTHING MA NO.27/AHD/2020 6 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 SLPS / APPEALS BEFORE THE SUPREME COURT, APPEALS MAY BE FILED ON M ERITS AS THE EXCEPTION TO THE SAID CIRCULAR, WHERE THE BOARD BY WAY OF SPECIAL ORDER DIRECT FILING OF APPEALS ON MERITS IN CASES I NVOLVED IN ORGANIZED TAX EVASION ACTIVITY. THE OFFICE MEMORAND UM 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 CO URT AND SLPS/APPEALS BEFORE SUPREME COURT SHALL NOT LIE IN CASE OF ASSESSEES CLAIMING BOGUS LTCG/STCL THROUGH PENNY STOCKS AND A PPEALS/ 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 TH E LANGUAGE EMPLOYED IN THE SAID CIRCULAR DATED 06.09.2019, IT CLEARLY TRANSPIRES THAT THE APPEALS MAY BE FILED ON MERITS AS AN EXCEP TION TO THE OTHER CIRCULARS ISSUED EARLIER, WHERE THE BOARD BY WAY OF SPECIAL ORDER DIRECT FILING OF APPEALS ON MERITS IN THE CASES INV OLVED IN ORGANIZED TAX EVASION ACTIVITY. THEREFORE, BY VIRTUE OF THE S AID CIRCULAR DATED 06.09.2019, THE APPEALS COULD BE FILED ON MERITS, I RRESPECTIVE OF THE MONETARY LIMITS FIXED IN EARLIER CASES, IF THE BOAR D PASSES SPECIAL ORDER FOR FILING APPEALS IN CASES INVOLVING TAX EVA SION ACTIVITY. THE SAID CIRCULAR SPEAKS ABOUT THE APPEALS THAT MAY BE FILED WITH THE SPECIAL ORDER OF THE BOARD IN FUTURE, AND HENCE COU LD NOT BE CONSTRUED TO HAVE RETROSPECTIVE EFFECT. THE TRIBUNA L INTERPRETING THE SAID CIRCULAR/ OFFICE MEMORANDUM IN THE IMPUGNED OR DER HAS RIGHTLY OBSERVED THAT IN RESPECT OF EACH CASE OR CA TEGORY OF CASES WHETHER AN APPEAL SHOULD BE FILED IN VIEW OF THE CI RCULAR 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 RIGHT LY 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 RES PECT 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 AP PEAL 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 OR DER DATED 14.08.2019 COULD NOT BE SAID TO HAVE BEEN FILED PUR SUANT TO THE SPECIAL ORDER OF THE CBDT IN VIEW OF THE CIRCULAR D ATED 06.09.2019 MA NO.27/AHD/2020 7 READ WITH THE OFFICE MEMORANDUM DATED 16.09.2019, A ND THEREFORE IT COULD NOT BE SAID THAT THE TRIBUNAL HAD COMMITTED A NY MISTAKE APPARENT FROM THE RECORD, WHICH WOULD REQUIRE RECTI FICATION AS ENVISAGED IN SECTION 254(2) OF THE SAID ACT. 9. IN THAT VIEW OF THE MATTER, THE COURT DOES NOT F IND ANY ILLEGALITY OR INFIRMITY IN THE IMPUGNED ORDER DATED 09.09.2020 PA SSED BY THE TRIBUNAL DISMISSING THE MISCELLANEOUS APPLICATION F ILED BY THE PETITIONER. THE PETITION BEING DEVOID OF MERITS IS DISMISSED IN LIMINE. 6. A READING OF THE ABOVE JUDGMENT WOULD INDICATE T HAT SUBSEQUENT DECISION OF HONBLE JURISDICTIONAL HIGH COURT ON PO INT OF LAW COULD BRAND THE TRIBUNALS ORDER SUFFERING FROM APPARENT ERROR. IN THE PRESENT CASE, THE SUBSEQUENT JUDGMENT OF HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF ANAND NATWARLAL SHARDA (SUPRA) LAID DOWN THAT ON THE DAY WHEN THE TRIBUNAL HAS DECIDED THE APPEAL, C IRCULAR NO.23, GUIDANCE NOTE ETC. WERE NOT IN THE PICTURE. IN THA T CASE, EVEN THE APPEALS WERE DECIDED ON 14.8.2019 AND THE IMPUGNED CIRCULAR CAME ON 6.9.2019. IN OTHER WORDS, APPEALS WERE DECIDED BY THE TRIBUNAL INCLUDING THAT OF THE PRESENT ASSESSEE ON 14.8.2019 I.E. PRIOR TO THE CIRCULAR ISSUED BY THE BOARD ON 6.9.2019, AND 16.9. 2019. THEREFORE, THE JUDGMENT OF HONBLE HIGH COURT IS FULLY APPLICA BLE ON THE FACTS OF THE PRESENT CASE AND ACCORDINGLY, MA OF THE REVENUE HAS NO MERIT. IT IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 5 TH OCTOBER, 2021 AT AHMEDABAD. S D / - (WASEEM AHMED) ACCOUNTANT MEMBER S D / - (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED 5/10/2021