ACIT, CENTRAL CIRCLE-13, NEW DELHI vs. DEEPAK AGARWAL, DELHI

At the outset of the hearing, the Ld. Counsel for the assessee submitted that the tax effect involved in all the three captioned appeals is below the prescribed limit of Rs. 50 lakhs as per CBDT Circular No. 17/2019 dated 08.08.2019 vide which the Revenue has been directed not to prefer any appeal in case the tax effect is less than Rs. 50,00,000/- and

The Ld. CIT-DR fairly conceded that the subject matter of the appeals in all the relevant AYs have low tax effect. He, however, claimed that the assessee’s case falls within the exception carved out by the CBDT in Circular No. 23 of 2019 dated 06.09.2019 thereby enabling the Revenue to file the appeal in spite of there being low tax effect. In support therefor, he placed on record a copy of the letter wherein instructions regarding the applicability of the said Circular No. 23 of 2019 to all the three captioned appeals were sought from the concerned Assessing Officer and the reply received from him.

In rebuttal, the Ld. AR pointed out that the said Circular relied upon by the Ld. CIT-DR is not applicable to assessee’s case as it does not involve any bogus capital gains through penny stocks but pertains to commission income of the assessee and the concerned Assessing Officer in his reply has taken a categorical note of the same. The Ld. CIT-DR had nothing to say in this regard.

We have heard both the parties and perused the material on record. Perusal of the aforesaid appeals filed by the Revenue apparently show that the same are having low tax effect as per CBDT Circular No. 17/2019 dated 08.08.2019 and this factual position has been fairly conceded by the Ld. CIT-DR. We have also pursued the CBDT Circular No. 23 of 2019 dated 06.09.2019 which states that notwithstanding anything contained in any circular issued under section 268A specifying mandatory limits for filing of departmental appeals before ITAT, etc. appeals may be filed on merits as an exception to the said circular, where Board, by way of special order direct filing of appeal on merits in cases involved in organized tax evasion activity. Exception by way of the special order issued by the CBDT is in respect of assessee’s claiming bogus LTCG/ STCL through penny stocks. It is an admitted fact that the subject matter of the assessee’s appeal in all the

As per the CBDT Circular No. 17/2019 dated 08.08.2019, the monetary limit for filing of appeal by the Department before the Income Tax Appellate Tribunal has been enhanced from Rs. 20 lakhs to Rs. 50 lakhs. The said Circular also makes reference to the earlier Circular No. 3/2018 dated 11.7.2018 and specially states that as a step towards further management of litigation, the Board has decided to enhance the monetary limit for filing of the appeals. This circular is not in supersession of the earlier circular but only amends the monetary limits as well as gives clarification with regard to paragraph 5 of the earlier circular. This inter alia means that all the other conditions mentioned in the earlier Circular No. 3 of 2018 dated 11.7.2018 will apply mutatis mutandis including that is, it will apply to all the pending appeals. For the sake of ready reference, the latest circular is reproduced hereunder:

Further, the CBDT has issued a directive dated 20.08.2019 (F.No.279/19-93/2018-ITJ) in which it has clarified that the enhanced monetary limits stipulated in Circular No. 17/2019 dated 08.08.2019 is applicable to all pending SLPs/ appeals/ cross objections/references.

Thus, in view of the aforesaid circular, the appeal of the Revenue is dismissed as not maintainable because tax effect is below Rs. 50 lakhs. However, in case, the present appeals are found to be maintainable at any stage for any technical reasons, the Revenue shall be at liberty to seek recall of this order under relevant provisions of law.

In the result, all the three appeals of the Revenue in ITA Nos. 8794, 8795, 8796/Del/2019 are dismissed.