ACIT, CC- 15, NEW DELHI V. SALONI NARANG, NEW DELHI

MA 718/DEL/2019

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The case revolves around the Revenue's application to recall an earlier Tribunal order which dismissed their appeal due to the tax effect being below Rs. 20 lakhs, as per CBDT Circular No. 3/2018. The Revenue argued that the case fell under an exception in the Circular concerning penalties related to undisclosed foreign assets. However, the Tribunal referenced decisions from Mumbai Benches which clarified that such exceptions apply only to quantum proceedings, not to penalty proceedings under section 271(1)(c) of the Income Tax Act. Consequently, the Tribunal dismissed the Revenue's application, affirming that the monetary limits for filing appeals should be adhered to unless explicitly stated otherwise in the Circular.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129934 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 24-11-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 29-08-2019
• Other Referred Cases: ITO Vs. M/s. Maniar Electricals Pvt. Ltd., DCIT Vs. Aluvind Architectural Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BHARAT BAREWAL; BHAWNA CHAUHAN
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c)

Judgement Text

MA. No. 718/Del/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH (SMC) “F” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER A N D SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER Misc. App. No. 718/Del/2019 [ in आ.अ.सं .I.T.A No. 3912/Del/2017 ] ( िनधाᭅरण वषᭅ/Assessment Year: 2007-08 ) ACIT, Central Circle : 15, New Delhi बनाम Vs. Smt. Saloni Narang, No. 5, Dr. G.C. Narang Marg, Mall Road, Cavalery Lane, New Delhi PAN No. AAFPN2692C अपीलाथŎ /Applicant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरतीकᳱओरसे /Assessee by : Shri Bharat Barewal, Adv.; & Ms. Bhawna Chauhan, Adv.; राज᭭वकᳱओरसे /Revenue by : Shri Kumar Pranav, Sr. D. R.; सुनवाईकᳱतारीख/ Date of hearing : 25/11/2022 उद्घोषणाकीतारीख/Pronouncement on : 14/02/2023 आदेश / O R D E R PER C. N. PRASAD, J. M. : 1. Through this Miscellaneous application the Revenue seeks to recall of the order of the Tribunal in ITA. No. 3912/Del/2017 MA. No. 718/Del/2019 2 dated 28.08.2018 which was disposed of by the Tribunal on the ground that the tax effect is less than Rs.20 lakhs as specified in CBDT Circular No. 3/2018 dated 11.07.2018, on the ground that the case of the Revenue falls under clause 10(d) of the Circular of CBDT. 2. The ld. DR contends that since the addition was made by the Assessing Officer in respect of undisclosed foreign assets/ bank accounts the appeal of the Revenue against the order of the ld. CIT (Appeals) in deleting the penalty under section 271(1)(c) of the Income Tax Act, 1961 (the Act) also falls under exception specified under clause 10(d) of the CBDT Circular No. 3/2018 dated 11.07.2018. 3. On the other hand, the ld. Counsel for the assessee submits that the appeal of the Revenue in ITA. No. 3912/Del/2017 was filed against the order of the ld. CIT (Appeals) in deleting the penalty levied under section 271(1)(c) of the Act. The ld. Counsel submits that the exception clause 10(d) specified in the CBDT Circular No. 3/2018 applies only to the quantum proceedings where addition made while completing the assessment under section 143(3) of the Act and the said clause will not apply to the penalty proceedings initiated and levied under section 271(1)(c) of the Act. The ld. Counsel submits that since the Revenue appeal in ITA. No. 3912/Del/2017 which was filed against deletion of penalty levied under section 271(1)(c) of the Act the exception clause 10(d) of the CBDT Circular No. 3/2018 dated 11.07.2018 has no application. The ld. Counsel placed reliance on the decisions of the Mumbai Benches in the case of ITO Vs. MA. No. 718/Del/2019 3 M/s. Maniar Electricals Pvt. Ltd. In ITA. No. 6186/Mum/2019 dated 21.05.2021 and DCIT Vs. Aluvind Architectural Pvt. Ltd. [(2021) 88 ITR (Trib) 421]. 4. Heard rival submissions. We observe that the appeal of the Revenue in ITA. No. 3912/Del/2017 was filed against deletion of penalty levied under section 271(1)(c) of the Act which was dismissed by the Tribunal by order dated 28.08.2018 on the ground that the tax effect involved in the appeal is less than Rs.20 lakhs as specified in CBDT Circular No. 3/2018. The contention of the Revenue was that as the addition made in the quantum proceedings relates to undisclosed foreign assets/bank account the penalty appeal of the Revenue falls under the exception specified in clause 10(d) of the said circular. 5. We observe that whether the exceptions provided in the Circular No. 3/2018 dated 11.07.2018 also applicable for the appeal filed against penalty levied under section 271(1)(c) of the Act has been considered by the Mumbai Tribunal in the case of ITO Vs. M/s. Maniar Electricals Pvt. Ltd. In ITA. No. 6186/Mum/2019 dated 21.05.2021 and the Tribunal held that exception carved out in CBDT Circular No. 3/2018 would not take within its realm that penalty imposed under section 271(1)(c) of the Act with respect to the additions made in the quantum proceedings by the Assessing Officer. While holding so, the Tribunal observed as under:- “8. Before adverting any further it would be relevant to cull out the exception carved out in clause 10(e) of the CBDT Circular No. 3/2018 (as amended on 20.08.2018), which reads as under: MA. No. 718/Del/2019 4 “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) ................................. ................................. .................................. (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 (DGGI)”. Admittedly, it is a settled position of law that quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of an addition cannot on a standalone basis justify imposition/upholding of a penalty u/s 271(1)(c) of the Act. Adopting the same logic, we are of the considered view that unless a specific exception is provided in the Circular w.r.t penalty also, it could by no means be construed that penalty was to be treated at par with the quantum additions. As is discernible from Clause 10(e) of the aforesaid CBDT Circular No. 3/2018 (as amended on 20.08.2018), the same applied only to additions which were based on information received from external sources. As noticed by us hereinabove, since the levy of penalty by no means could be construed as an addition within the meaning of Clause 10(e) of the aforesaid circular therefore, we do not find any merit in the contentions advanced by the ld. D.R that the aforesaid exception carved out in the CBDT Circular No. 3/2018 (supra) would also take within its realm a penalty imposed under Sec. 271(1)(c) w.r.t the additions made by the Assessing Officer towards bogus purchases on the basis of information received from Sales Tax Department, i.e. an external agency. Accordingly, finding favour with the claim of the ld. A.R that the appeal of the revenue is covered by the CBDT Circular No. 17/2019, dated 08.08.2019, the same, thus, in our considered view is not maintainable. Accordingly, we herein dismiss the appeal of the revenue, for the reason, that the tax effect therein involved is lower than that contemplated in the aforesaid CBDT Circular fixing the monetary limit of filing of appeals by the revenue before the Tribunal.” MA. No. 718/Del/2019 5 6. Similarly in the case of DCIT Vs. DCIT Vs. Aluvind Architectural Pvt. Ltd. (supra) the Mumbai Bench of the Tribunal held as under:- “3. We find at the outset, the ld AR argued that penalty that is in dispute before us, falls below the monetary limit prescribed by the CBDT in its Circular No. 17/2019 dated 08/08/2019 for preferring appeal by the Revenue before this Tribunal. We find that the ld. DR vehemently argued that the said case falls within the exception provided in para 10(e) of the said Circular and accordingly he argued that the appeal is maintainable. We find that the exception provided in para 10(e) of the Circular 17/2019 dated 08/08/2019 is applicable only for the quantum proceedings and the same cannot be made applicable for penalty proceedings. It is well settled that penalty and quantum assessment proceedings are distinct and separate. Accordingly, we dismiss this appeal of the Revenue by following the aforesaid Circular No.17/2019 dated 08/08/2019 and hold that the appeal of the Revenue is not maintainable.” 7. In view of the above, we see no mistake in the order passed by the Tribunal in ITA. No. 3912/Del/2017 dated 28.08.2018 and the Misc. application filed by the Revenue is rejected. 8. In the result, the Miscellaneous application filed by the Revenue is dismissed. Order pronounced in the open court on : 14/02/2023. Sd/- Sd/- (ANADEE NATH MISSHRA) ( C. N. PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 14/02/2023. MA. No. 718/Del/2019 6 *MEHTA* Copy forwarded to 1. Applicant; 2. Respondent; 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, New Delhi. Date of dictation 10.02.2023 Date on which the typed draft is placed before the dictating member 13.02.2023 Date on which the typed draft is placed before the other member 14.02.2023 Date on which the approved draft comes to the Sr. PS/ PS 14.02.2023 Date on which the fair order is placed before the dictating member for pronouncement 14.02.2023 Date on which the fair order comes back to the Sr. PS/ PS 14.02.2023 Date on which the final order is uploaded on the website of ITAT 14.02.2023 Date on which the file goes to the Bench Clerk 14.02.2023 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the order