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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SHRI SAKTIJIT DEY & SHRI B.R.R. KUMAR
This is an appeal by the Revenue against order dated 25.04.2017 of learned Commissioner of Income Tax (Appeals)-23, New Delhi. Though, learned Commissioner (Appeals) in the impugned order has disposed of appeals relating to three assessment years, i.e., assessment years 2013-14, 2014-15 and 2015-16, however, in the present appeal, we are concerned with assessment year 2015-16 only.
Only effective ground raised by the Revenue is ground no. 2 which reads as under:
“2. On the facts and circumstances of the case, the CIT(A) has erred in deleting the disallowance of Rs.88,22,803/- made by the AO on account of bogus short term capital loss.”
At the outset, learned counsel for the assessee submitted that the appeal of the Revenue is not maintainable as the tax effect on the amount disputed by the Revenue is below the monetary limit of Rs. 50 lakhs in terms of CBDT Circular No. 17/2019 dated 08th August, 2019.
Opposing the contention of learned counsel for the assessee, learned Departmental Representative submitted, since the assessee has claimed short term capital loss in respect of penny stocks, assessee’s case falls within the exception provided to Circular No.17/2019 dated 08th August, 2019. In this context, he drew our attention to CBDT Circular No. 23/2019 dated 06.09.2019 and Office Memorandum No. 279 dated 16.09.2019.
In reply, learned counsel for the assessee submitted, the exception to Circular No. 17/2019 dated 08th August, 2019 as provided in CBDT Circular No. 23/2019, dated 06.09.2019 and Office Memorandum No. 279 dated 16.09.2019 would apply prospectively to the appeals filed on or after 16.09.2019. In support of such contention, learned counsel for the assessee relied upon the following decisions:
PCIT Vs. Anand Natwarlal Sharda [2021] 128 taxmann.com 376 (Gujarat) 2. PCIT Vs. Denisha Rajendra Keshwani [2022] 134 taxmann.com 249 (Gujarat) 3. PCIT Vs. Dhwani Jateen Gupta [2022] (1) TMI 487 (Gujarat)
We have considered rival submissions on the preliminary issue of maintainability of the present appeal. We have also perused the materials on record. Learned Departmental Representative has fairly agreed that the tax effect on the amount disputed by the Revenue in the present appeal, otherwise, is below the monetary limit of Rs. 50 lakhs fixed by the CBDT in Circular No. 17/2019 dated 08th August, 2019 for maintaining an appeal by the Revenue before the Tribunal. However, the specific contention of learned Departmental Representative is, the present appeal falls within the exception provided in CBDT Circular No. 23/2019 dated 06.09.2019 read with Officer Memorandum No. 279 dated 16.09.2019. Whereas, learned counsel for the assessee has countered the aforesaid contention of the Revenue by submitting that CBDT Circular No. 23/2019 dated 06.09.2019 read with Officer Memorandum No. 279 dated 16.09.2019 would operate prospectively, hence, would be applicable to the appeals filed by the Revenue after 16.09.2019. Thus, the crucial issue arising before us is, the applicability of CBDT Circular No.23/2019 dated 06.09.2019 read with Office Memorandum No. 279 dated 16.09.2019 to the present appeal.
Undisputedly, in supersession of CBDT Circular No. 3 of 2018 dated 11.7.2018 prescribing the monetary limit for filing appeals by the Revenue before the Tribunal above Rs. 20 lakhs, the CBDT issued one more circular, being Circular No. 17/2019 dated 08.08.2019 revising the monetary limit for filing the appeal before the Tribunal to Rs. 50 lakhs. The aforesaid circular also made it clear that it will apply not only to the appeals to be filed subsequent to the issuance of the circular, but also to all the pending appeals. Therefore, in terms with CBDT Circular No. 17/2019, dated 08.08.2019, no appeal of the Revenue, either pending or fresh, can be entertained, if the tax effect on the amount disputed in the appeal is below the monetary limit of Rs.50 lakhs. However, CBDT, vide Circular No. 23/2019 dated 06.09.2019 carved out certain exceptions to CBDT Circular No. 17/2019 dated 08.08.2019 by providing that in respect of certain categories of cases/appeals involving organized tax evasion scam through bogus long term capital gain/short term capital loss or penny stock would not be covered under tax effect and have to be decided on merits. However, the circular stated that in such type of cases the Board, by way of special order, will direct for filing of appeal on merits. Thereafter, on 16.09.2019, CBDT issued an Office Memorandum vide F. No. 279/Misc./M-93/2018-ITJ(Pt.) providing that the monetary limit for filing the appeals before ITAT/HC/SC as per CBDT Circular No. 17/2019 dated 08.08.2019 would not be applicable in case of assessee claiming bogus LTCG/STCG through penny stock. Thus, Office Memorandum No. 279 dated 16.09.2019 is in the nature of special order of the Board for filing appeal on merits in cases involving claim of bogus LTCG/STCG through penny stock.
The applicability of Circular No. 23/2019 dated 06.09.2019 and Office Memorandum No. 279 dated 16.09.2019 to appeals filed by the Department prior to 16.09.2019 came up for consideration before the Hon’ble Gujarat High Court in case of PCIT Vs. Anand Natwarlal Sharda (supra). The Hon’ble High Court held that there is nothing in the aforesaid circulars to suggest that they shall have retrospective effect. Thus, ultimately, the Hon’ble Court concluded that the exceptions to CBDT Circular No.17/2019 dated 08.08.2019 as provided in CBDT Circular No. 23/2019 dated 06.09.2019 read along with Office Memorandum No. 279 dated 16.09.2019 would be applicable to appeals filed by the Revenue on or after 16.09.2019. The view expressed by the Hon’ble Court, as aforesaid, was reiterated in the other decisions cited before us by learned counsel for the assessee.
9. Learned Departmental Representative failed to bring to our notice any decision of any other High Court or Hon’ble Supreme Court expressing a view contrary to the view expressed by the Hon’ble Gujarat High Court in the aforesaid decision. Since, these decisions are directly on the issue and are the only decisions of any High Court dealing with issue, adhering to the norms of judicial discipline, we respectfully follow the view expressed in these decisions. Therefore, we hold that the present appeal having been filed by the Revenue prior to 16.09.2019, the date on which, Office Memorandum No. 279 dated 16.09.2019 was issued by the Board by way of a special order, the exceptions provided therein would not apply. Thus, assessee’s appeal would be covered under CBDT Circular No.17/2019 dated 08.08.2019. Since, the tax effect on the amount disputed by the Revenue in the present appeal is below the monetary limit of Rs.50 lakhs, which learned Departmental Representative accepts, the present appeal of the Revenue is not maintainable, hence, deemed to have been withdrawn. Accordingly, the appeal is dismissed as withdrawn.
In the result, the appeal is dismissed.
Order pronounced in the open court on 20th May, 2022