Income Tax Department vs. M/S Chugh Real Estate Pvt. Ltd.

ITA/92/2018HC Madhya Pradesh31 October 2019Bench: HON'BLE SHRI JUSTICE S.C.SHARMA2 pages

For Petitioner: Veena Mandlik

AI SummaryWithdrawn

What did the High Court hold?

The High Court allowed the prayer for withdrawal of the appeals. The Court noted that the present appeals were covered under the circulars issued by the Department. Consequently, the appeals were dismissed as withdrawn. However, the Court explicitly stated that the question of law was left open. The reasoning for allowing withdrawal was based on the appellant's counsel's prayer, indicating a decision not to press the appeals on their merits at that stage, possibly due to the applicability of the circulars or other strategic considerations. The operative direction was the dismissal of the appeals as withdrawn.

What were the facts?

The Principal Commissioner of Income Tax, Indore, filed two appeals (Income Tax Appeal Nos. 91/2018 and 92/2018) before the High Court of Madhya Pradesh, Bench at Indore, against an order passed by the Income Tax Appellate Tribunal. The appeals were filed under Section 260A of the Income Tax Act, 1961. The Central Board of Direct Taxes (CBDT) had issued circulars (No. 3/2018 dated 11/07/2018, revised on 20/08/2018, and further circulars on 08/08/2019 and 06/09/2019) specifying monetary limits for filing appeals. The learned counsel for the appellant (Principal Commissioner of Income Tax) prayed for the withdrawal of the present appeals.

What were the issues?

1. Whether the appeals filed by the Revenue are maintainable in light of the monetary limits prescribed by CBDT Circular No. 3/2018 and its subsequent amendments, and if the present case falls under any of the exceptions allowing appeals irrespective of the tax effect. The Revenue, through its learned counsel, argued that the appeals were filed in accordance with the circulars issued by the CBDT, which provide for contesting adverse judgments on merits under specific circumstances, even if the tax effect is below the monetary limits. The judgment does not record specific arguments from the assessee (M/s. Chugh Real Estate Pvt Ltd.).

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

--- 1 --- HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE D.B.: HON'BLE MR. S. C. SHARMA AND HON'BLE MR. SHAILENDRA SHUKLA, JJ INCOME TAX APPEAL No. 91 / 2018 THE PRINCIPAL COMMISSIONER OF INCOME TAX Vs. M/S. CHUGH REAL ESTATE PVT LTD. INCOME TAX APPEAL No. 92 / 2018 THE PRINCIPAL COMMISSIONER OF INCOME TAX Vs. M/S. CHUGH REAL ESTATE PVT LTD. * * * * * O R D E R (31/10/2019) PER : S. C. SHARMA, J :- The present appeal has been filed u/S. 260A of the Income Tax Act 1961 by the Commissioner of Income Tax Indore against the order passed by the Income Tax Appellate Tribunal. The Central Board of Direct Taxes has issued a circular No. 3/2018 fixing the monetary limit for filing of appeals before the High Courts and before the Supreme Court. However, certain appeals are to be decided on merits. Paragraph 10 of the Circular dated 11/07/2018 reads as under: Para 10 of the Circular dated 11/7/2018 reads as under : 10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect : (a) Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign assets / bank accounts. That the circular no. 3/2018 was further revised by the circular dated 20/08/2018 and paragraph 10 was amended as under : --- 2 --- 3. Para 10 of the said Circular provides that adverse judgments relating to the issues enumerated in the said para should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 thereof or there is no tax effect. Para 10 of the Circular No.3 of 2018 dated 11/7/2018 is hereby amended as under: 10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect : (a) Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign income / undisclosed foreign assets (including financial assets) / undisclosed foreign bank account. (e) Where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI / ED / DRI / SFIO / Directorate General of GST Intelligence (DGGI). (f) Cases where prosecution has been filed by the Department and is pending in the Court. Thereafter another circular was issued on 08/08/2019 and the monetary limit was enhanced to Rs. 1.00 crore in respect of High Court. A further clarificatory circular was issued on 6th September, 2019 and the Department has been permitted, irrespective of valuation, to file an appeal on merits in cases involved in organized tax evasion activity (Circular dated 6th September, 2019). The present appeal is covered under the circular issued by the Department and the learned counsel for the appellant prays for withdrawal of the present appeal. The prayer is allowed. The appeal is dismissed as withdrawn. However, the question of law is left open. (S. C. SHARMA) J U D G E (SHAILENDRA SHUKLA) J U D G E KR Digitally signed by Kamal Rathor Date: 2019.11.04 17:01:11 +05'30'

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