PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2 vs. M/S FINANCIAL WORLD (INDIA) PVT. LTD.
What did the High Court hold?
The High Court held that the submissions made by the revenue were not impressive. The Court reasoned that circulars issued by the CBDT are binding on the revenue at the relevant point in time. In this case, the ITAT had correctly followed Circular No. 17/2019, which was in force when the revenue's appeal was dismissed. This circular did not contain the exception later introduced in Circular No. 23/2019. Therefore, the Court found no error apparent on the face of the record that would have given the Tribunal jurisdiction to recall its earlier order. The appeal was accordingly closed, meaning the High Court did not disturb the ITAT's order dismissing the miscellaneous application.
What were the facts?
The appeal concerns Assessment Year 2015-16 and challenges an order dated August 23, 2019, passed by the Income Tax Appellate Tribunal (ITAT) in a miscellaneous application filed by the appellant/revenue. The revenue sought to recall an earlier ITAT order dated August 23, 2019, which had dismissed the revenue's appeal (ITA No. 6268/Del/2018) due to the tax effect being below the prescribed threshold of Rs. 50 lakhs, as per CBDT Circular No. 17/2019. The revenue argued that a subsequent circular (Circular No. 23/2019) introduced an exception for appeals concerning bogus long-term capital gains from penny stocks, and thus the appeal should have been decided on merits. The ITAT dismissed the miscellaneous application, holding that the second circular could not be applied retrospectively.
What were the issues?
1. Whether the Tribunal erred in dismissing the miscellaneous application seeking recall of its order, when it is the prerogative of the litigant to press or not press an appeal? (Question of law) 2. Whether the Tribunal ought to have decided the revenue's appeal on merits, considering the change in CBDT policy via Circular No. 23/2019, which carved out an exception for penny stock cases, even though the original appeal was dismissed based on Circular No. 17/2019? (Question of mixed law and fact) Assessee's arguments: Not recorded. Revenue's arguments: The impugned order is unsustainable because it is the prerogative of the litigant to decide whether to press an appeal. Furthermore, since the CBDT policy changed and an exception was made for penny stock transactions, the Tribunal should have decided the appeal on merits. The revenue relied on the principle that a litigant has the right to withdraw or not press an appeal.
Which sections of the Income-tax Act were involved?
Not specified
AI-generated summary — verify with the full judgment below
ITA 242/2023
Page 1 of 3
$~32
* IN THE HIGH COURT OF DELHI AT NEW DELHI %
Date of decision : 25.04.2023 + ITA 242/2023
PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2 ..... Appellant Through: Mr Sanjay Kumar, Sr. Standing Counsel with Ms EashaKadian and Ms Hemlata Rawat, Advs.
versus
M/S FINANCIAL WORLD (INDIA) PVT. LTD. ..... Respondent
Through: None.
CORAM:
HON'BLE MR JUSTICE RAJIV SHAKDHER
HON'BLE MS JUSTICE TARA VITASTA GANJU [Physical Hearing/Hybrid Hearing (as per request)] RAJIV SHAKDHER, J. (Oral): CM Appl.20277/2023 1. This is an application moved on behalf of the appellant/revenue seeing condonation of delay in filing the appeal. 1.1 According to the appellant/revenue, there is a delay of 1 day. 2. For the reasons given in the application, the delay is condoned. 3. The application is disposed of in the aforesaid terms. CM Appl.20278/2023 4. This is an application moved on behalf of the appellant/revenue seeking condonation of delay in re-filing the appeal. 4.1 According to the appellant/revenue, there is a delay of 25 days. 5. For the reasons given in the application, the delay is condoned. 6. The application is disposed of in the aforesaid terms. ITA 242/2023 7. This appeal concerns Assessment Year (AY) 2015-16. Digitally Signed By:RAHUL Signing Date:30.05.2023 15:27:09 Signature Not Verified
ITA 242/2023
Page 2 of 3
The appeal seeks to assail the order dated 23.08.2019 passed by the Income Tax Appellate Tribunal [in short, “ITAT”]. The impugned order was passed in a miscellaneous application i.e., MA No. 30/Del/20202 filed on behalf of the appellant/revenue. 9. The record shows, that the appellant/revenue had sought recall of the order dated 23.08.2019 passed by the Tribunal in its appeal i.e., ITA No.6268/Del/2018. The aforementioned order i.e., 23.08.2019 was passed by the Tribunal, having regard to the fact that the tax effect was less than the prescribed threshold monetary limit i.e., Rs.50 lakhs. 10. In this context, the Tribunal had taken note of circular no. 17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes [in short, “CBDT”]. 11. Evidently, the CBDT issued another circular i.e., circular no. 23/2019 dated 06.09.2019, whereby an exception was made concerning appeals which pertains to bogus long term capital gains obtained from transacting in penny stocks. It is in this context, that the miscellaneous application came to be filed by the appellant/revenue which, as noticed above, was dismissed by the Tribunal via the order dated 23.09.2019. 12. The Tribunal, in arriving at the conclusion, that the second circular could not be taken into account, in view of the fact, that at the time when the appeal of the appellant/revenue was dismissed, what was in force was the first circular i.e., circular no. 17/2019 dated 08.08.2019, relied upon the following judgments of the Gujarat High Court: i. PCIT v. Denisha Rajendra Keshwani (2022) 134 Taxmann.com 249 (Gujarat); and ii. PCIT v. Anand Natwarlal Sharda (2021) 128 Taxmann.com 376 Digitally Signed By:RAHUL Signing Date:30.05.2023 15:27:09 Signature Not Verified
ITA 242/2023
Page 3 of 3
(Gujarat). 13. Mr Sanjay Kumar, learned senior standing counsel, who appears on behalf of the appellant/revenue, says that the impugned order is unsustainable, for the reason that it is the prerogative of the litigant, whether or not to press the appeal. 13.1 Furthermore, Mr Kumar submits, that since the policy of the CBDT had changed and an exception was carved out with regard to matters which concern transacting in shares of penny stock companies, the Tribunal ought to have decided the appellant/revenue’s appeal on merits. 14. We are not impressed with the submissions made by Mr Kumar. The reason being, that the circulars issued by CBDT which are prevalent at the relevant point in time, are binding on the appellant/revenue. 15. The scope of the present appeal before us is to ascertain, as to whether any substantial question of law has arisen or not. Since the Tribunal went by the first circular, which was decidedly in force on the given date, and did not contain the exception which was carved out in the second circular, we are not inclined to disturb the impugned order. 16. Therefore, clearly, there was no error apparent on the face of the record, which would have, if at all, given jurisdiction to the Tribunal to recall its earlier order. 17. The appeal is, accordingly, closed. RAJIV SHAKDHER, J
TARA VITASTA GANJU, J
APRIL 25, 2023/r
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Digitally Signed By:RAHUL Signing Date:30.05.2023 15:27:09 Signature Not Verified
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