THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, RAJKOT V. SHRI PRADIPKUMAR CHANDULAL BHUVA, RAJKOT

MA 36/RJT/2020

AI Insights

The case involves two Miscellaneous Applications filed by the Revenue against two assessees, Shri Pradipkumar Chandulal Bhuva and M/s Kavery Lam Coating, concerning the assessment year 2017-2018. The Revenue sought to recall the Tribunal's earlier orders dismissing their appeals on the grounds of low tax effect, citing a new Circular No.5/2024 that expanded the scope of exceptions to the monetary limit for filing appeals. However, the Tribunal found that the Circular was prospective and did not apply retrospectively, leading to the dismissal of the Revenue's applications.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 34386 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 3 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Next Hearing Date: 27-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 11-06-2020
• Other Referred Cases: Commissioner of Customs vs Indian Oil Corporation Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: FENIL H MEHTA
• Keywords: Retrospective amendment; Tax effect; Audit objection
• Section: 143(3); 254(2); 153A; 68; 268A

Judgement Text

"MA Nos.36-37/Rjt/2020 1 आयकर अपीलीय अिधकरण, राजकोट Æयायपीठ, राजकोट । IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER िविवध आवेदन सं./M.A.Nos.36/RJT/2020 (arising out IT(SS)A.10/Rjt/2019) िनधाªरण वषª /Assessment Year : 2017-2018 Assistant Commissioner of Income-tax, Central Circle-2, Rajkot, “Amruta Estate”, 2nd Floor, M.G. Road, Rajkot-360 001 बनाम Vs. Shri Pradipkumar Chandulal Bhuva “Pitru Ashish”, Sunshine City, Street No.1 150ft Ring Road, Rajkot-360 004 Öथायीलेखासं./जीआइआरसं./PAN/GIR No.:ALMPB 6835 B (अपीलाथê/Applicant) .. (ÿÂयथê/Respondent) िविवध आवेदन सं./M.A.Nos.37/RJT/2020 (arising out IT(SS)A.11/Rjt/2019) िनधाªरण वषª /Assessment Year : 2017-2018 Assistant Commissioner of Income-tax, Central Circle-2, Rajkot, “Amruta Estate”, 2nd Floor, M.G. Road, Rajkot-360 001 बनाम Vs. M/s Kavery Lam Coating 103, Karan Square, Shishuvihar Circle, Bhavnagar-364 001 Rajkot-360 004 Öथायीलेखासं./जीआइआरसं./PAN/GIR No.:AANFK 2945 B (अपीलाथê/Applicant) .. (ÿÂयथê/Respondent) िनधाªåरती कì ओर से/Assessee by : Shri Fenil H Mehta, AR राजÖव कì ओर से/Revenue by : Shri Abhimanyu Singh Yadav, Sr- DR सुनवाई कì तारीख/Date of Hearing : 27/09/2024 घोषणा कì तारीख/Date of Pronouncement : 08/10/2024 MA Nos.36-37/Rjt/2020 2 आदेश/Order Per Dr. Arjun Lal Saini, A.M By way of these captioned two Miscellaneous Applications, the Revenue has sought to point out that mistake apparent from record within the meaning of Section 254(2) of the Income-tax Act, 1961 (in short ‘the Act’) has crept in the order of Tribunal, dated 20.08.2019, vide assessee`s appeal in IT(SS)A Nos. 10 & 11/Rjt/2019, for same assessment year, 2017-18. 2. Since the subject matter and contents of both the Miscellaneous Applications are identical and similar, therefore, we have clubbed these two Miscellaneous Applications and heard together and a consolidated order is being passed for the sake of convenience and brevity. The facts, as well as, issue raised in Miscellaneous Application No.36/Rjt/2020 for assessment year (AY) 2017-18 have been taken into consideration for deciding these two Miscellaneous Applications en masse. 3. The Ld.Sr-DR for the Revenue argued that the case of the Revenue in these two Miscellaneous Application are that an action u/s 132A of the Income tax Act, 1961 was taken place in the case of assessee on 29.11.2016. The return of income was filed by the assessee on 11/12/2017, declaring total income of Rs.6,19,810/-. The assessment u/s 143(3) r.w.s. 153A of the I.T. Act was finalized on 24/12/2018, determining total income at Rs.32,69,810/-. In the scrutiny assessment, addition of Rs. 26,50,000/- was made u/s.69A of the I T Act on account of unexplained money. On appeal, learned CIT(A) deleted the addition of Rs. 26,50,000/-. Then after, the revenue has filed the appeal before the Tribunal, the Tribunal has dismissed the appeal of the assessee, on account of low tax effect. MA Nos.36-37/Rjt/2020 3 4. The ld DR for the Revenue, argued that addition was made by the assessing officer, based on the information received from the state police department. As per the latest Circular No.5/2024, dated 15.03.2024, issued by Central Board of Direct Taxes (in short, ‘CBDT’) the scope of exceptions have been enlarged, which is applicable to the assessee`s case under consideration with retrospective effect. The Ld. Sr-DR for the Revenue pointed out that in assessee`s case, although the addition made by the Assessing Officer u/s 68 of the Act, on the basis of information received from state police department, which was to the tune of Rs.26,50,000/-, which is below the prescribed monetary limit by the Circular No.3/2018 [F.No.279/MISC.142/2007-ITJ(PT)] dated 11.07.2018, at that point of time. However, recently the CBDT has issued latest Circular No.5/2024 [F.No.279/MISC.142/2007-ITJ(PT.)] dated 15.03.2024, wherein the scope of information received from various agencies have been expanded and state police department, has been included. The latest Circular No.5/2024 [F.No.279/MISC.142/2007-ITJ(PT.)] dated 15.03.2024, is applicable to the assessee, retrospectively. 5. The Ld. Sr-DR for the Revenue further pointed out that even earlier Circular No.3/2018, dated 11.07.2018, the CBDT has modified the said Circular by stating that in certain circumstances, the matter should be heard on merit, even if, the addition made by the assessing officer, is less than the prescribed monetary limit, specified in the Circular No.3/2018 dated 11.07.2018. The learned DR for the revenue, therefore, argued that both these appeals of the assessee, which contain the similar and identical issues, should be recalled and must be heard on merit, and hence, these two miscellaneous applications of the revenue may be allowed. 6. On the other hand, Shri Fenil H. Mehta, Ld. Counsel for the assessee, argued that Circular No.5/2024 dated 15.03.2024, issued by the CBDT (Revenue- Department) is prospective in nature, therefore, does not apply to the assessee MA Nos.36-37/Rjt/2020 4 under consideration. The Ld. Counsel, took us through, para No.10 of the said circular and explained the Bench, that para No.-10 of the Circular 5/2024, dated 15.03.204, clearly stated that it is prospective in nature, hence, the said circular of the CBDT does not apply to the assessee under consideration. The learned Counsel, thus stated that in the assessee`s case under consideration, old Circular No.3/2018 is applicable and the Tribunal, has dismissed the appeal of the Revenue, based on the said circular, which was prevailing at that point of time. Therefore, learned Counsel contended that both the miscellaneous applications, filed by the Revenue, may be dismissed. 7. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. We have also deliberated the case law relied on by both the parties. First, we shall deal with the arguments, advanced by ld. DR for the Revenue, to the effect that ‘as per the latest Circular No.5/2024, dated 15.03.2024, issued by Central Board of Direct Taxes (in short, ‘CBDT’), the scope of exceptions have been enlarged, which is applicable to the assessee`s case under consideration with retrospective effect.`At this juncture, it would be pertinent to refer the relevant para No.-10 of the Circular No.5/2024, dated 15.03.2024, issued by CBDT, which reads as fellows: “10. This issues under section 268A of the Act and shall come into effect from the date of issue of this Circular. This Circular will apply to SLPs/appeals to be fled henceforth before the SC/HCs/Tribunals.” Therefore, it is vivid from the above para of the Circular of CDBT, which has clearly stated that the provisions of said Circular No. 5/2024 dated 15.03.2024 is applicable perspective not retrospective, hence, Circular No. 5/2024 dated 15.03.2024 (supra) does not apply in the assessee`s case under consideration, hence, we do not agree with the arguments advanced by learned DR for the revenue. We note that CBDT, ( authority of issuing the said circular), has MA Nos.36-37/Rjt/2020 5 expressly declared the Circular No. 5/2024 dated 15.03.2024 (supra), as prospective in nature. It is also a settled law that the Circulars issued by CBDT are binding on the Revenue. This position was confirmed by the Hon`ble Apex Court in the case of Commissioner of Customs vs Indian Oil Corporation Ltd. reported in 267 ITR 272, wherein their Lordships examined the earlier decisions of the Apex Court with regard to binding nature of the Circular and laid down that when a circular issued by the Board remains in operation then the Revenue is bound by it and cannot be allowed to plead that it is not valid or that it is contrary to the terms of the statute. 8. We find that original Circular No.3/2018, dated 11.07.2018, issued by the CBDT, is applicable to the assessee, under consideration, for both the appeals of the assessee, and therefore the Tribunal has rightly dismissed the appeals of the Revenue, on account of low tax effect, in pursuance of the said circular. Later on, the CBDT has modified the para No.10 of said Circular No.3/2018, dated 11.07.2018(supra), on 20.08.2018, the relevant para No.10 of the said Circular is reproduced below: “[10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax 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 (b) Where Board’s order, Notification, Instrucin or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where addition relates to undisclosed foreign income/undisclosed foreign assets (including financial assets)/undisclosed foreign bank account. (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). (f). Cases where prosecution has been filed by the Department and is pending in the Court.]” MA Nos.36-37/Rjt/2020 6 The Ld. Sr-DR for the Revenue pointed out that above modified Circular No.3/2018 dated 11.07.2018 (supra), stated that in certain circumstances, the matter should be heard on merit, even if addition made by the assessing officer, is less than the prescribed monetary limit, specified in the modified Circular No.3/2018 dated 11.07.2018(supra). We do not agree with learned DR for the revenue, because, in the assessee`s case under consideration, the addition was made by the assessing officer, based on the information received from the state police department and not on the basis of enforcement agencies such as CBI/ED/DRI/SFIO/Directorate General of GST Intelligences (DGGI), which is mentioned in the modified said Circular No. No.3/2018(supra). Hence, even modified Circular No. No.3/2018 ( modified on 20.08.2018,) is not applicable, to the assessee`s case under consideration. The various agencies defined in the circular, such as, CBI/ED/DRI/SFIO/Directorate General of GST Intelligences (DGGI), are exhaustive in nature. Exhaustive means comprehensive, thorough or tending to exhaust and no further ‘word’/ ‘Agency’ should be added. It is a settled position of law that an act done by the assessee, which is legal, when it was done, cannot be made illegal by enacting a new circular. Therefore we find that even in modified said Circular No. No.3/2018(supra), state police department, is not mentioned, by CBDT, therefore, the said modified circular does not apply to the assessee`s case under consideration. In our humble opinion, the claim of the Revenve, to recall the order of the Tribunal, and to hear on merit, is misconceived. Hence, based on these facts and position in law, we note that miscellaneous application filed by the Revenue deserve to be dismissed. Accordingly, we dismiss the miscellaneous application filed by the Revenue. 9. Since we have adjudicated the issue, by taking the lead case in MA No.36/Rjt/2020, filed by the revenue, and the issue and facts mentioned in MA No.37/Rjt/2020, is also similar and identical. Accordingly, our observations MA Nos.36-37/Rjt/2020 7 mentioned in MA No.36/Rjt/2020, shall apply mutatis mutandis to the aforesaid other MA No.37/Rjt/2020 also. For the parity of reasons, we dismiss the abovementioned MA No.37/Rjt/2020 of Revenue, in terms of directions noted in MA No.36/Rjt/2020. 10. In the result, both Miscellaneous Applications ( MA No.36/Rjt/2020 and MA No.37/Rjt/2020) of the Revenue are dismissed. A copy of the instant common order be placed in the respective case file(s). Order pronounced in open court on 08/10/2024. Sd/- Sd/- (DINESH MOHAN SINHA) (DR. ARJUN LAL SAINI) Æयाियक सदÖय/JUDICIAL MEMBER लेखा सदÖय/ACCOUNTANT MEMBER राजकोट /Rajkot िदनांक/ Date: 08/10/2024 DKP Outsourcing Sr.P.S आदेश कì ÿितिलिप अúेिषत/ Copy of the order forwarded to :  अपीलाथê/ The Appellant  ÿÂयथê/ The Respondent  आयकर आयुĉ/ CIT  आयकर आयुĉ(अपील)/ The CIT(A)  िवभागीय ÿितिनिध, आयकर अपीलीय आिधकरण, राजकोट/ DR, ITAT, RAJKOT  गाडªफाईल/ Guard File By order/आदेश से, सहायक पंजीकार आयकर अपीलीय अिधकरण, राजकोट "