The ACIT, Central Circle-3, Vadodara V. Smt. Vidhyaben Mahendra Patel, Vadodara

MA 37/AHD/2022

AI Insights

The case revolves around the Revenue's attempt to recall an ITAT order that dismissed its appeal due to the low tax effect involved, as per CBDT Circular No.17 of 2019. The Revenue argued that the appeal fell under an exception to the circular, specifically concerning challenges to the constitutional validity of a provision, citing the interpretation of section 153A in the case of Saumya Construction Pvt. Ltd. The Tribunal, however, found that the High Court's decision did not declare section 153A constitutionally invalid but merely interpreted its applicability, and thus the Revenue's appeal did not qualify for the exception.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133541 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-02-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 28-06-2022
• Other Referred Cases: Saumya Construction Pvt. Ltd. (2016) 387 ITR 529 (Guj), JCIT vs Omprakash K Bengani in MA. No. 75/Ahd/2019 dated 02-07-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHMANT SUTHAR
• Keywords: Tax effect; Tax effect
• Section: 132; 153A

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MISS SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER Misc. Application No.37/Ahd/2022 IN IT(S)A No.344/Ahd/2019 Assessment Year : 2013-14 ACIT, Cent.Cir.3 Vadodara. Vs. Smt.VidyabenMahendra Patel D/22, Ajanta Society Ellora Park, Subhanpura Vadodara. PAN : ADKPP 1996 R अपीलाथ / (Appellant) यथ /(Respondent) Assesseeby : Shri Mehmant Suthar, AR Revenue by : Ms.Pooja Parekh, Sr.DR स ु नवाई क तार ख/Date of Hearing : 24/02/2023 घोषणा क तार ख /Date of Pronouncement: 13/03/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present Misc. Application has been filed by the Revenue seeking recall of the order of the ITAT dated 24.01.2022 passed in Revenue appeal for Assessment Year 2013-14 in IT(SS)A No.344/Ahd/2019. 2. It was contended that the Department’s appeal had been dismissed following CBDT Circular No.17 of 2019 dated 8.8.2019 directing withdrawal of appeals of Revenue where tax effect involved was below the limit specified. In the impugned Miscellaneous Application the Department’s contention is that the appeal fell in the exception provided to the withdrawal of appeal as notified by the MA No.37/Ahd/2022 2 Board. Comments of the AO was sought regarding the exception in which the case fell, who has responded vide letter dated 3.8.2022 stating that it fell within the ambit of clause 10(a)of the CBDT Instruction No.3 of 2018 dated 11.7.2018 ,as per which cases involving issues where constitutional validity of the provision was under challenge were to be argued on merits and not withdrawn even if tax effect was below that prescribed in the Circular. As per the AO, the Ld.CIT(A) had allowed the assessee’s appeal following the decision of jurisdictional High Court in the case of Saumya Construction Pvt.Ltd.(2016) 387 ITR 529 (Guj), which laid down the proposition that in the assessment framed in search cases under section 153A of the Act for block of six years, in relation to those assessment years where the assessment was unabated and no incriminating material was found during the search no addition should be made in the hands of the assessee. The contention of the Revenue is that this interpretation of the provision of section 153A by the Hon’ble High Court is an incorrect interpretation which was neither intended nor included in the provisions of section 153A; that for this reason, it fell under the Exception 10(a) of the Circular; since the validity of the provision was under question by virtue of this interpretation. The contents of the report of the AO are reproduced hereunder: MA No.37/Ahd/2022 3 3. The Ld.Counsel for the assessee however pointed out that an identical issue raised in Miscellaneous Application of the Revenue was dealt with by the ITAT in the case of JCIT vs Omprakash K Bengani in MA. No. 75/Ahd/2019 dated 02-07-2019, dismissing the Revenues plea. Copy of the order was placed before us and our MA No.37/Ahd/2022 4 attention was drawn to the relevant findings of the ITAT at para 3 of the order as under: “3. We have heard both the parties on the issue of recall of the impugned order as prayed by the Revenue. We find that the Tribunal has dismissed the appeal of the Revenue on the ground that tax effect in that appeal is below Rs.20 lakhs, and therefore, the same is not admissible in view of the recent CBDT circular No.3 of 2018. It is not disputed by the Revenue that the tax effect involved on the disputed addition is less than Rs.20 lakhs. The case of the Revenue is that its appeal falls within the scope of exceptions provided in clause 10(a) of the above circular, therefore, it has to be decided on merit even though tax effect involved therein is below taxable limit prescribed by the CBDT. We find from the CIT(A)'s order that the CIT(A) has allowed the appeal of the assessee while considering various case laws including the decision in the case of Saumya Construction 387 ITR 529 (Guj). Revenue in MA itself has contended that SLP against decision of Hon'ble Gujarat High Court in the case of Saumya Construction has been dismissed by the Hon'ble Supreme Court vide order dated 24.4.2018. There is nothing before us to show that constitutional validity of the provisions of an Act or Rule is under challenge on the issue, as stipulated in clause 10(a) of the above CBDT Circular. In our view, there is no justification or merit in the plea of the Revenue for recall of the impugned order of the Tribunal. MA of the Revenue being devoid of any merit, stands rejected.” 4. We have heard both the parties. We are not convinced with the contention of the Revenue that the dismissal of appeal of the Revenue by the ITAT on account of low tax effect involved was incorrect since the case fell in the exception to the applicability of the said CBDT Circular. 5. The exception to the withdrawal of appeals of the Revenue on account of tax effect being below the prescribed limit as per CBDT Circular, being referred to in the present case is that the issue involved in the present appeal involved challenge to the constitutional validity of the provision. The exception to the withdrawal of appeals as provided in Board Circular No.03/2018 is 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) Where the Constitutional validity of the provisions of an Act or Rule IS under challenge, or MA No.37/Ahd/2022 5 (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection m the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign assets/ bank accounts.” 6. The issue in challenge in the present case by the Revenue before the ITAT in its appeal related to addition made in assessments framed u/s 153A of the Act consequent to search action undertaken on the assessee u/s 132 of the Act. The Ld.CIT(A) noted that the assessment for the impugned year was unabated and further that the addition made was not based on any incriminating material found during search. Accordingly following the proposition laid down by the Hon’ble jurisdictional High Court in the case of Saumya Construction (supra) that in unabated assessments no addition could be made in assessments framed u/s 153A of the Act dehors any incriminating material found, he deleted the additions made. The appeal of the Revenue against this order of the Ld.CIT(A) was dismissed as withdrawn on account of tax effect involved being below the limit prescribed for filing appeals vide CBDT Circular No.17 of 2019. 7. The case of the Revenue now before us is that the proposition of law followed by the Ld.CIT(A) as laid down by the Hon’ble jurisdictional High Court nullified the provision of section 153A itself and thus tantamounted to holding the provision as constitutionally invalid. That therefore the case fell in the exception to the application of the withdrawal circular of CBDT as above. Admittedly the Hon’ble jurisdictional High Court has only interpreted the scope of applicability of the said section 153A of the Act in its decision in Saumya Construction(supra). The Hon’ble high MA No.37/Ahd/2022 6 court has not held the section to be constitutionally invalid. The Revenue in the present case is interpreting the said decision likewise. Though admittedly this is not the case. 8. In such circumstances where clearly the proposition relied upon by the Ld.CIT(A) for deleting the additions does not hold the section to be constitutionally invalid, there arises no question of the constitutional validity of the provision being under challenge so as to bring the case in the exception clause(a) para 10 of the CBDT Circular No.03/2018. 9. The plea of the Revenue for recall of the order for the aforesaid reason is therefore found to be without any merits and is accordingly rejected. 10. In the result, Miscellaneous Application of the Revenue is dismissed. Order pronounced in the Court on 13 th March, 2023 at Ahmedabad. Sd/- Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 13/03/2023