INCOME-TAX OFFICER, WARD - 1,, NANDED vs. SHRI. NANDKISHORE K. DILERAO,, NANDED

Briefly stated the relevant facts include that the assessee is engaged in the business of wholesale trade in cement. The assessee filed the return of income declaring total income of Rs.2,11,090/-. Based on the information received from the Sales Tax Department, Maharashtra, the Assessing Officer found that the assessee was a beneficiary of the bogus purchases bills issued by Vaishnav Trading Company amounting to Rs.76,20,165/-. On verification of the same, the Assessing Officer found that the VAT payment of Rs.8,46,685/- was included in the said amount of Rs.76,20,165/-. Hence, the net Hawala transaction involved was Rs.67,73,480/-. The assessee was asked to explain the same and issued the notice u/s 148 of the Act for reopening of the assessment. As the assessee did not proper reply to the said notice, the Assessing Officer passed the reassessment order u/s 143(3) r.w.s. 147 of the Act and added the sum of Rs.8,46,685/- on account of gross profit at the rate of 12.5% estimated on the bogus purchases to the total income of the assessee. Aggrieved with the said decision of the Assessing Officer, the assessee carried the matter before the CIT(A). The CIT(A) restricted the addition of Rs.7,62,016/- (10% of total Hawala transaction of Rs.76,20,165/-) instead of Rs.8,46,685/- as made by the Assessing Officer in the assessment proceedings.

Aggrieved with the said decision of the CIT(A), the Revenue is in appeal before the Tribunal.

Deviating from the grounds raised by the Revenue, ld. DR filed a copy of the Circular of the CBDT No.F.No.279/Misc.142/2007-ITJ (Pt) dated 20.08.2018 relating to non-filing of appeals in view of low tax effect. Mentioning that the Assessing Officer received certain information against the assessee from the Sales Tax Department, Maharashtra relating to the bogus purchases and the additions were made on account of such bogus purchases. Relying on the orders of the Assessing Officer and the CIT(A), ld. DR submitted that such cases falls in the scope of clause (e) of para 3 of the said Circular (supra). As per the clause (e) of para 3 of the said Circular (supra), certain appeals are exempted from the restriction of filing the appeals on grounds of tax limitation.

On the other hand, ld. AR for the assessee read out the relevant clause (e) of the Circular (supra) and submitted that the information received from the Sales Tax Department of the Maharashtra Government does not fall within the said clause (e) of the said CBDT Circular (supra). The restriction is provided only in respect of the information received from the agencies i.e. CBI nor ED nor DRI nor SFIO nor DGGI. Therefore, the restriction provided by the CBDT applies to the present case and, therefore, the appeal of the Revenue is required to be dismissed in view of the said Circular of CBDT (supra). Otherwise, there is no dispute on the fact that the tax effect on the addition made only Rs.8,46,685/- and the tax effect there is certainly much less than the limit of Rs.20 lakhs prescribed by the Circular of CBDT (supra).

In this case, I find that the Circular applies to the present case where Sales Tax information is involved. I agree with the argument of ld. AR (para 6 above of this order). On going through the facts of the case and the orders of the Revenue, the total tax effect involved in the present appeal is undisputedly less than Rs.20 Lakhs. The CBDT circular dated 20.08.2018 raised the monetary limit of tax effect for filing of appeal by the Department before the Tribunal to Rs.20 Lakhs. The Circular applies to the pending appeals of the Department before the Tribunal too. Thus, in view of the CBDT circular, I am of the opinion that the present appeal of the Revenue is liable to be dismissed on account of low tax effect without going into the merits of the case.

In the result, the appeal of the Revenue is dismissed. Order pronounced on this 11th day of February, 2019. (D. KARUNAKARA RAO) लेखा सद" / ACCOUNTANT MEMBER पुणे / Pune; "दनांक Dated : 11th February, 2019. Sujeet आदेश क" "ितिलिप अ"ेिषत/Copy of the Order is forwarded to : अपीलाथ" / The Appellant;

The CCIT, Pune; िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, पुणे “एक-सद"य मामला” /

DR ‘SMC’, ITAT, Pune; गाड" फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स"यािपत "ित //// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune