Calcutta High Court
Principal Commissioner Of Income ... vs Usha Singhania on 14 August, 2023
OD 1
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION (INCOME TAX)
ORIGINAL SIDE
ITAT/210/2022
IA NO: GA/1/2022, GA/2/2022
PRINCIPAL COMMISSIONER OF INCOME TAX 5,KOLKATA
VS
USHA SINGHANIA
BEFORE :
THE HON'BLE THE CHIEF JUSTICE T.S. SIVAGNANAM
And
THE HON'BLE JUSTICE HIRANMAY BHATTACHARYYA
Date : 14TH AUGUST, 2023.
Appearance :
Mr. Tilak Mita, Adv.
..for appellant
Mr. Avra Mazumder, Adv.
Mr. Ramesh Kr. Patodia, Adv.
Ms. Megha Agarwal, Adv.
...for respondent
RE: GA/1/2022
The Court:- Heard Mr. Tilak Mitra, learned Advocate for the appellant
and Mr. Avra Mazumder, learned Advocate for the respondent. There is a delay
of 1113 days in filing the appeal. Though the reasons given in the affidavit are
not convincing the issues involved in the appeal had been decided by this court
in earlier matters, this court exercises discretion and condone the delay in filing
the appeal. Accordingly, the application is allowed.
ITAT/210/2022
This appeal filed by the revenue under section 260A of the Income Tax
Act, 1961 [the Act] is directed against the order dated 15.2.2019 passed by the
Income Tax Appellate Tribunal "A[SMC]" Bench in ITA No.1459/Kol/2018 for
the assessment year 2015-16. The revenue has raised the following substantial
question of law for consideration :-
1. "Whether the Learned Income Tax Appellate Tribunal erred in
ignoring the direct evidence brought on record by the assessing officer
in the form of modus operandi contrived by accommodation entry
operators to manipulate the share prices of M/s Kappac Pharma
Limited to record fictitious Long Term Capital gain of Rs.14,41,173/-
in favour of the assessee which is also claimed exempted from income
tax u/s 10(38) of the Income Tax Act, 1961 giving rise thereby to the
vice perversity in the process of decision making ?
2. Whether the Learned Income Tax Appellate Tribunal erred in deleting
the disallowances of assessee's claim of Long Term Capital Gain of
Rs.14,41,173/- overlooking the facts that the entire transaction were
stage managed with the object to facilitate the assessee to plough
back its unaccounted income in the form of fictitious Long Term
Capital Gains (LTCG) of Rs.14,41,173/- and claim bogus exemption
u/s 10(38) of the Income Tax Act, 1961 on such LTCG, thereby giving
rise to the vice of flaw in the decision making processes ?"
We have heard Mr. Tilak Mitra, learned Advocate for the appellant and
Mr. Avra Mazumder, learned Counsel for the respondent.
It is not disputed before us that the issue involved in this appeal was
decided by this Court in an earlier matter in the case of Principal Commissioner
of Income Tax -5, Kolkata -vs- Vasudha Jain in ITAT No. 148/2022 reported in
(2022) 11 TMI 251 and Principal Commissioner of Income Tax (1) Kolkata Vs.
Rakesh Kumar Khemuka in ITAT No. 163 of 2021 and ITAT No. 172 of 2021
dated 20th July, 2022 and the appeal filed by the revenue was dismissed. The
said decision was followed in the case of Principal Commissioner of Income Tax,
Central - 2, Kolkata, Vs. Giridhar Lal Goenka in ITAT 34 OF 2022 dated 25th
July, 2022. The operative portion for the order reads as follows :-
"The learned tribunal had dismissed the appeal filed by the revenue by
noting the fact that the appeal is less than the monetary limit of Rs.50
lakhs fixed by the CBDT. The revenue is on appeal contesting the matter
on merits. We had an occasion to consider similar issued in the case of
Principal Commissioner of Income Tax -1, Kolkata vs. Rakesh Kumar
Khemuka in ITAT No.163 of 2021 and ITAT No.172 of 2021 and by a
judgment dated 20th July, 2022 the appeal filed by the revenue was
dismissed. The operative portion of the said judgment reads as follows:
"We have heard Mr. Soumen Bhattacharjee, learned standing Counsel
appearing for the appellant and Mr. Abhratosh Majumder, learned Senior
Counsel appearing for the respondent assessee.
On 19th February, 2022 we had passed the following order:
"The Court : We have heard Mr. Soumen Bhattacharjee, learned Standing
Counsel, appearing for the appellant/revenue and Mr. Abhratosh
Majumder, learned Senior Counsel, assisted by Mr. Avra Majumder,
learned Counsel for the respondent/assessee. An important issue is raised
in this appeal as regards the applicability of the Circular issued by the
CBDT in Circular no.23, dated 6th September, 2019 and the effect of the
Office Memorandum dated 16th September, 2019. The High Court of
Gujarat in Principal Commissioner of Income-tax vs. Denisha Rajendra
Keshwani, reported in (2022)134 taxmann.com 249 (Gujarat) and Principal
Commissioner of Income-tax, (Central), Ahmedabad vs. Anand Natwarlal
Sharda, reported in (2021)128 taxmann.com 376 (Gujarat) have held that
the Office Memorandum dated 16th September, 2019 has to be read along
with the Circular No.23, dated 6th September, 2019 and can only have
prospective effect.
Learned Senior Counsel appearing for the respondent/assessee submitted
that the decisions referred above laid down the correct legal principal and
identical question was considered by the High Court of Chattisgarh in the
decision reported in (2021) 130 taxmann.com 291 and a Special Leave
Petition filed by the revenue was dismissed by the Hon'ble Supreme Court
as reported in (2021) 130 taxmann.com 292 (SC). We find that the order
impugned before us has been passed by the Tribunal in a batch of cases.
That apart, we also take note of the fact that in several cases revenue has
filed appeals with inordinate delay citing the Office Memorandum dated
16th September, 2019. Thus we have to examine as to the effect of the
office memorandum as to whether it can be given retrospective effect or
not. Since the issue has a larger ramification, appropriate assistance
should be given to the learned standing Counsel. Therefore, we direct the
Commissioner of Income tax (Judicial), Kolkata to render the required
assistance to the standing Counsel appearing for the Department, supply
adequate material and also notes on submission, which can be considered
by us on the next hearing date.
List the matter on 21st February, 2022."
In terms of the above direction the Principal Commissioner of Income Tax
(Judicial), Kolkata has addressed the learned Standing Counsel for the
appellant by letter dated 3rd March, 2022. Along with the said letter, notes
on submission dated 7th March, 2022 has been appended. The said notes
of submission reads as follows:
"Notes on Submissions
1. The issue before the Hon'ble High Court is seen to be the retrospective or
prospective applicability of Central Board of Direct Taxes Circular No. 23 dated
06.09.2019 and Central Board of Direct Taxes OM dated 16.09.2019 by which
exception to the tax effect was allowed for filing appeals in Long Term Capital
Gain/Penny Stock in ITAT in respect of appeals which were dismissed by ITAT.
2. I am therefore to submit that in view of the facts of the impugned matter,
the exception to penny stock cases from the stipulation of monetary limit would
be indeed operable from 16.09.2019 that is only in the cases where appeal was
filed on or after 16.09.2019."
In the light of the stand taken by the Department, the monetary limit would be
operable from 16th September, 2019, that is, only in cases where appeal was
filed on or after 16th September, 2019."
Mr. Soumen Bhattacharyya, learned standing counsel for the appellant/revenue
would submit that though in the instant case the appeal before the tribunal was
filed in the year 2019, as on the date when the circular was issued to take effect
from 16.9.2019, the appeal was pending before the tribunal. It is submitted that
in the case of Rakesh Kumar Khemuka, the department had given specific
instruction. In our considered view, the department having taken a decision and a
circular having been issued on 6.9.2019 followed by official memorandum of
16.9.2019 taking a decision that the stipulation of monetary limit would be
operable from 16.9.2019, it is of no significance as to whether the appeal was
pending on the said date and whether the tribunal was hearing the matter. This
is so because the cut off date fixed under the circular is that it will apply to cases
where appeals are filed on or before 16.9.2019. In the instant case, admittedly,
the appeal has been filed much prior to the said date.
For the above reason, we find that the order passed by the learned tribunal
dismissing the appeal does not call for any interference. Accordingly, the appeal
filed by the revenue (ITAT/34/2022) stands dismissed. Since the substantial
questions of law raised in this appeal do not arise for consideration, they are left
open."
Following the above decision the appeal filed by the revenue is dismissed
and the substantial question of law which have been raised does not arise for
consideration.
Accordingly, GA/1/2022 stands closed.
(T.S. SIVAGNANAM)
CHIEF JUSTICE
(HIRANMAY BHATTACHARYYA, J.)
Pkd/GH.
