DCIT 2(2)(1), MUMBAI vs. RAJENDRA G PARIKH, MAHARASTRA

1 With regard to the tax effect, it was argued that the tax effect is immaterial as the appeal was covered by the clause 3.1(h) of the above Circular which provides for exception in respect of cases involving organized tax evasion including cases of bogus capital gain/loss through penny stocks and cases of accommodation entries. He referred to the assessment order wherein such issues have been duly discussed. It was also stated that it was a case of accommodation bills also as discussed in the assessment. However, he was fair enough to admit that none of the bogus accommodation transactions pertained to the relevant assessment year 2008-09 but to subsequent years.

In rejoinder the ld.AR has contented that in the instant case, no issue involving penny stock resulting in bogus capital gain/loss or accommodation entry are involved.

We have carefully perused the records and also considered the rival submissions. The delay is condoned. In so far as the maintainability of the appeal is concerned, we have examined the relevant Circular. For ready reference the above CBDT Circular No. 5/2024 dated 15.03.2024 is reproduced below :

In supersession of the above referred communications issued by CBDT, the following may be noted in respect of departmental appeals to be filed before ITATs and HCs and SLPs/ appeals before SC:

1 Monetary limits given in paragraph 4 with regard to filing appeal/SLP shall be applicable to all cases including those relating to TDS/TCS under the Act with the following exceptions where the decision to appeal/file SLP shall be taken on merits, without regard to the tax effect and the monetary limits: a. Where any provision of the Act or the Rules or notification issued thereunder has been held to be constitutionally invalid, or b. Where any order, notification, instruction or circular of the Board or the Government has been held to be illegal or ultra vires the Act or otherwise constitutionally invalid, or c. Where the assessment is based on information in respect of any offence alleged to have been committed under any other law received from any of the law enforcement or intelligence agencies such as CBI, ED, DRI, SFIO, NIA, NCB, DGGI, state law enforcement agencies such as State Police, State Vigilance Bureau, State Anti- Corruption Bureau, State Excise Department, State Sales/Commercial Taxes or GST Department, or d. Where the case is one in which prosecution has been filed by the Department in the relevant case and the trial is pending in any Court or conviction order has been passed and the same has not been compounded, or e. Where strictures/adverse comments have been passed and/or cost has been levied against the Department of Revenue, CBDT or their officers, or AY 2016-17 f. Where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under sections 10(23C), 12A/ 12AA/12AB of the Act, order passed u/s 263 of the Act etc. The reference to cases involving sections referred here, where it is not possible to quantify tax effect or tax effect is not involved, is for the purpose of illustration only. g. Where addition relates to undisclosed foreign income/undisclosed foreign assets (including financial assets)/undisclosed foreign bank account, or h. Cases involving organized tax evasion including cases of bogus capital gain/loss through penny stocks and cases of accommodation entries, or i. Where mandated by a Court's directions, or j. Writ matters, or k. Matters related to wealth tax, fringe benefit tax, equalization levy and any matter other than the Income Tax Act, or l. In respect of litigation arising out of disputes related to TDS/TCS matters in both domestic and International taxation charges:- i. Where dispute relates to the determination of the nature of transaction such that the liability to deduct TDS/TCS thereon or otherwise is under question, or ii. Appeals of International taxation charges where the dispute relates to the applicability of the provisions of a Double Taxation Avoidance Agreement or otherwise m. Any other case or class of cases where in the opinion of the Board it is necessary to contest in P a g e | 5 A.Y. 2008-09 Rajendra G. Parikh, Mumbai the interest of justice or revenue and specified so by a circular issued by Board in this regard."

Accordingly, we find sufficient merits in the contentions of the ld.AR as the exception clause 3.1(h) is apparently not applicable in the instant case. Therefore, the appeal of the Revenue is not maintainable on account of low tax effect and is liable to be dismissed. We order accordingly. Since the appeal of the department is dismissed in limine due to low tax effect therefore, we do not propose to go into the merits of other issues involved in ground nos.2 and 3. 8. In the result, appeal of the Revenue is dismissed.