Principal Commissioner Of Income ... vs Anand Natwarlal Sharda
2021 Latest Caselaw 6829 Guj

    C/SCA/7520/2021                               CAV JUDGMENT DATED: 24/06/2021




              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                R/SPECIAL CIVIL APPLICATION NO. 7520 of 2021


FOR APPROVAL AND SIGNATURE:


HONOURABLE MS. JUSTICE BELA M. TRIVEDI

and
HONOURABLE DR. JUSTICE ASHOKKUMAR C. JOSHI

==========================================================

1 Whether Reporters of Local Papers may be allowed NO to see the judgment ?

2      To be referred to the Reporter or not ?                           YES

3      Whether their Lordships wish to see the fair copy                 NO
       of the judgment ?

4      Whether this case involves a substantial question                 NO

of law as to the interpretation of the Constitution of India or any order made thereunder ?

========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) AHMEDABAD Versus ANAND NATWARLAL SHARDA ========================================================== Appearance:

MR M.R. BHATT, SENIOR ADVOCATE FOR MRS MAUNA M BHATT(174)

==========================================================

CORAM:HONOURABLE MS. JUSTICE BELA M. TRIVEDI and HONOURABLE DR. JUSTICE ASHOKKUMAR C. JOSHI

Date : 24/06/2021

CAV JUDGMENT (PER : HONOURABLE MS. JUSTICE BELA M. TRIVEDI)

1. The petitioner- The Principal Commissioner of Income Tax

C/SCA/7520/2021 CAV JUDGMENT DATED: 24/06/2021

(Central) Ahmedabad, has filed the present petition under Article

226/227 of the Constitution of India challenging the order dated

09.09.2020 passed by the Income Tax Appellate Tribunal,

Ahmedabad Bench, Ahmedabad (hereinafter referred to as "the

Tribunal") in M.A. No. 77/AHD/2020 in ITA No. 1274/AHD/2019

(Annexure A) filed by the petitioner under Sections 254(2) of the

Income Tax Act, 1961 (hereinafter referred to as "the said Act"),

seeking prayer to recall the order dated 14.08.2019 passed by the

Tribunal in ITA No. 1274 of 2019 and others. The Tribunal vide the

impugned order dated 09.09.2020 has dismissed the said M.A. No.

77 of 2020 filed in ITA No. 1274 of 2019 along with the other

Miscellaneous Applications filed by the petitioner (original

applicant) holding that there was no mistake apparent on the face

of record which could be rectified within the narrow compass of

Sections 254(2) of the said Act.

2. The petitioner had filed the appeal being ITA No. 1274 of

2019 challenging the order dated 01.05.2019 passed by the CIT

(Appeals), by which the CIT (Appeals) had allowed the Appeal filed

by the respondent -assessee challenging the assessment order

dated 24.12.2018 passed by the Assessing Officer. The Tribunal

vide the order dated 14.08.2019 dismissed the said Appeal along

with other 627 Appeals on the ground that the Tax Effect involved

in all the said appeals did not exceed Rs.50,00,000/- in each of the

C/SCA/7520/2021 CAV JUDGMENT DATED: 24/06/2021

Appeals, in view of the circular issued by the CBDT on 08.08.2019,

with clarification that the appellant (i.e. the petitioner herein) shall

be at liberty to point out the cases which were wrongly included in

the Appeals so summarily dismissed, either owing to wrong

computation of tax effect or owing to such cases being covered by

the permissible exceptions or for any other reason. The petitioner

filed Miscellaneous Applications including M.A. No. 77 of 2020 in

case of the respondent, under Section 254(2) of the said Act, on the

ground that the case was covered under the exception carved out

under the CBDT Circular No. 23 of 2019 dated 06.09.2019. The

Tribunal vide the impugned order dated 09.09.2019 dismissed the

said Miscellaneous application alongwith the other Miscellaneous

Applications.

3. The learned Senior Advocate Mr. M.R.Bhatt appearing for the

petitioner vehemently submitted that the Tribunal had committed

gross error by not entertaining the Miscellaneous Application filed

by the petitioner under Section 254(2) of the said Act in view of the

subsequent circular No. 23/2019 dated 06.09.2019 as well as the

Office Memorandum No. 279 dated 16.09.2019. According to Mr.

Bhatt, the CBDT had in supercession of the earlier circular dated

11.07.2018 prescribed minimum monetary limit at Rs. 20,00,000/-

for filing Appeal before the Appellate Tribunal, providing certain

exceptions. The said Circular was made retrospectively applicable

C/SCA/7520/2021 CAV JUDGMENT DATED: 24/06/2021

to all the pending appeals. The said circular dated 11.07.2018

came to be modified by Circular No. 17/2019 dated 08.08.2019,

whereby the monetary limit for filing the appeal before the

Appellate Tribunal was revised to Rs. 50,00,000/-. Thereafter the

CBDT issued the Circular No. 23/2019 dated 06.09.2019 under

Section 268A of the said Act which provided that the cases

involving organized tax evasion scam through bogus long term

capital gain/ short term capital loss on penny stocks were not made

subject to the monetary limits prescribed for filing the Appeals.

Thus, according to Mr. Bhatt, the said circular dated 06.09.2019

being clarificatory in nature would relate back to the circular dated

11.07.2018 as modified by the circular dated 08.08.2019. He

further drew the attention of the Court to the Office Memorandum

No. 279 dated 16.09.2019 issued by the CBDT and submitted that

the monetary limits fixed for filing appeals before the Tribunals/

High Court/ Supreme Court would not apply in case of assessee

claiming LTCG/STCL through penny stocks. The said Office

Memorandum also being clarificatory in nature would apply

retrospectively to all the pending appeals and hence the petitioner

had filed Miscellaneous Application in case of the respondent and

others, falling under the exception carved out in Circular dated

06.09.2019 and Office Memorandum dated 16.09.2019 seeking

recall of the common order passed by the Tribunal on 14.08.2019.

According to him, the Tribunal without appreciating the

submissions made on behalf of the petitioner-Department in the

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right perspective has dismissed the Miscellaneous Application.

4. In order to appreciate the submissions made by the learned

Senior Advocate Mr. M.R.Bhatt it would be beneficial to reproduce

the circular dated 06.09.2019 and Office Memorandum dated

16.09.2019:

                   "                          Circular No. 23 of 2019.

                       F. No. 279/Misc./ M-93/2018-ITJ(Pt.)

                              Government of India

                               Ministry of Finance

                             Department of Revenue

                          Central Board of DirectTaxes

                                 Judicial Section

                         New Delhi, 6th September 2019

Subject: Exception to monetary limits for filing appeals specified in any Circular issued under Section 268A of the Income Tax Act, 1961-reg.

Reference is invited to the Circulars issued from time to time by Central Board of Direct Taxes (the Board) under Section 268A of the Income Tax Act, 1961( the Act), for laying down monetary limits and other conditions for filing of departmental appeals before Income Tax Appellate Tribunal (ITAT), High Courts and SLPs/appeals before Supreme Court.

2. Several references have been received by the Board

C/SCA/7520/2021 CAV JUDGMENT DATED: 24/06/2021

that in large number of cases where organised tax evasion scam is noticed through bogus Long Term Capital Gain (LTCG)/Short Term Capital Loss (STCL) on penny stocks and department is unable to pursue the cases in higher judicial fora on account of enhanced monetary limits. It has been reported that in large number of cases, ITATs and High Court have recognized the unique modus operandi involved in such scam and have passed judgements in favour of the revenue. However, in cases where some appellate fora have not given due considerations to position of law or facts investigated by the department there is no remedy available with the department for filing further appeal in view of the prescribed monetary limits.

3. In this context, Board has decided that notwithstanding anything contained in any circular issued u/s 268A specifying monetary limits for filing of departmental appeals before Income Tax Appellate Tribunal (ITAT), High Courts and SLPs/appeals before Supreme Court, appeals may be filed on merits as an exception to said circular, where Board, by way of special order direct filing of appeal on merit in cases involved in organised tax evasion activity.

(Neetika Bansal) Director (ITJ) CBDT, New Delhi.

OFFICE MEMORANDUM

F.No. 279/Misc./M-93/ 2018-ITJ(Pt.) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes

New Delhi, Dated:101' September, 2019

OFFICE MEMORANDUM

Subject:- Special order of Board exempting cases involving bogus Long Term Capital Gains (LTCG)/ Short Term Capital Loss (STCL) through penny stocks

C/SCA/7520/2021 CAV JUDGMENT DATED: 24/06/2021

from monetary limits specified in any Circular issued under Section 268A of the Income Tax Act, 1961-reg.

The undersigned is directed to refer to Circular No. 23 of 2019 dated 6th September, 2019 and to say that by virtue of powers of the Central Board of Direct Taxes u/s. 268A of Income Tax Act, 1961, the monetary limits fixed for filing appeals before ITAT/HC and SLPs/ appeals before Supreme Court shall not apply in case of assesses claiming bogus LTCG/STCL through penny stocks and appeals/ SLPs in such cases shall be filed on merits.

(Abhishek Gautam) DCIT(OSD)(ITJ-1), CBDT, New Delhi. "

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 Section

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 apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer"

6. So far as the facts of the case are concerned, the Appeal filed

by the petitioner before the Tribunal against the order passed by

the CIT(Appeals) was dismissed by the Appellate Tribunal by a

C/SCA/7520/2021 CAV JUDGMENT DATED: 24/06/2021

common order passed on 14.08.2019, in view of the CBDT circular

dated 08.08.2019. Admittedly, at the relevant time when the

Tribunal passed the order dated 14.08.2019, neither the Circular

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 that the

said circular and the Office Memorandum being not in existence

and therefore not taken into consideration by the Tribunal 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 any

substance in the submission of Mr. Bhatt that the Tribunal should

have recalled the order dated 14.08.2019 in view of the said

Circular dated 06.09.2019 and the Office Memorandum dated

16.09.2019, which had retrospective effect. The Court at this

juncture 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 present petition would be, as to whether the Circular dated

06.09.2019 and the Office Memorandum dated 16.09.2019 had any

retrospective effect as sought to be submitted by learned Advocate

Mr. Bhatt.

7. From the bare reading of the Circular dated 06.09.2019, it

appears that the CBDT had decided that notwithstanding anything

contained in any Circular issued under Section 268A specifying

C/SCA/7520/2021 CAV JUDGMENT DATED: 24/06/2021

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 merits

as the exception to the said Circular, where the Board by way of

special order direct filing of appeals on merits in cases involved in

organized tax evasion activity. The Office Memorandum 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 Court and SLPs/Appeals

before Supreme Court shall not lie in case of assessees claiming

bogus LTCG/STCL through penny stocks and appeals/ 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 the language employed

in the said Circular dated 06.09.2019, it clearly transpires that the

appeals may be filed on merits as an exception to the other

Circulars issued earlier, where the Board by way of special order

direct filing of Appeals on merits in the cases involved in organized

tax evasion activity. Therefore, by virtue of the said Circular dated

06.09.2019, the appeals could be filed on merits, irrespective of the

monetary limits fixed in earlier cases, if the Board passes special

order for filing appeals in cases involving tax evasion activity. The

said Circular speaks about the Appeals that may be filed with the

special order of the Board in future, and hence could not be

C/SCA/7520/2021 CAV JUDGMENT DATED: 24/06/2021

construed to have retrospective effect. The Tribunal interpreting

the said Circular/ Office Memorandum in the impugned order has

rightly observed that in respect of each case or category of cases

whether an appeal should be filed in view of the Circular 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 rightly 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 respect 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 appeal 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 order

dated 14.08.2019 could not be said to have been filed pursuant to

the special order of the CBDT in view of the Circular dated

06.09.2019 read with the Office Memorandum dated 16.09.2019,

and therefore it could not be said that the Tribunal had committed

any mistake apparent from the record, which would require

rectification as envisaged in Section 254(2) of the said Act.

C/SCA/7520/2021 CAV JUDGMENT DATED: 24/06/2021

9. In that view of the matter, the Court does not find any

illegality or infirmity in the impugned order dated 09.09.2020

passed by the Tribunal dismissing the Miscellaneous Application

filed by the petitioner. The petition being devoid of merits is

dismissed in limine.

(BELA M. TRIVEDI, J)

(A. C. JOSHI,J) SINDHU NAIR