What did the Tribunal hold?

The Tribunal held that information received from the investigation wing is considered an internal agency, not an external source as per the circular. Therefore, the appeal was not maintainable on grounds of low tax effect.

The revenue's appeal was filed against an assessment order. The assessee argued that the appeal was not maintainable due to low tax effect as per CBDT Circular No. 17/2019.

What were the issues?

Whether the revenue's appeal is maintainable on account of low tax effect, considering the source of information received by the department.

ITO vs Shri Harshad Ramesh Patel | ITAT Mumbai 2021

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: HON’BLE SHRI VIKAS AWASTHY, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

For Appellant: Shri Sanjay J. Sethi-Ld. DR, Shri Ashok Sharma- Ld. AR

For Respondent: Shri Ashok Sharma- Ld. AR

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member):-

The Ld. AR, at the outset, submitted that revenue’s appeal is not maintainable on account of low tax effect in terms of CBDT Circular No. 17/2019 dated 08/08/2019 [F.No.279/Misc. 142/2007- TTJ(Pt.).

The Ld. DR submitted that the assessment has been framed pursuant to receipt of information from investigation wing of the department which should be considered to be an external agency for the purpose of exception clause 10(e) of the circular. 3. We are of the considered opinion that the Directorate of Income Tax (investigation) is a law enforcement agency under the control of Ministry of Finance and would thus constitute internal agency / wing of Income Tax Department which works under the aegis of its controlling authority CBDT and therefore, it could not be considered as ‘external source’ as is referred to in para 10(e) of CBDT circular dated 20/08/2018. When CBDT is referring to external sources, it is certainly referring to sources which are not internal sources within the Income Tax Department and various wings functioning within its aegis. It could also be seen that the subsequent CBDT Circular No. 23 of 2019 dated 06/09/2019 read with office memorandum dated 16/09/2019 applies only to cases involving bogus long-term capital gains (LTCG) / Short Term Capital Loss (STCL) on penny stocks. The same is not the case here. 4. In view of the foregoing, the revenue’s appeal is not maintainable on account of low tax effect. At the same time, a liberty is given to revenue to seek recall of the appeal, if at a later stage, it is found that the matter is covered by any exceptions provided in any of the circular or in case the tax effect as agitated by revenue exceeds the prescribed monetary limit. 5. In the result, the appeal stands dismissed. Order pronounced on 15th June, 2021. Sd/- Sd/- (Vikas Awasthy) (Manoj Kumar Aggarwal) न्याययक सदस्य / Judicial Member लेखा सदस्य / Accountant Member मुंबई Mumbai; यदनांक Dated : 15/06/2021 Sr.PS, Jaisy Varghese आदेशकीप्रधिधलधपअग्रेधर्ि/Copy of the Order forwarded to : अपीलाथी/ The Appellant 1. प्रत्यथी/ The Respondent 2. 3. आयकरआयुक्त(अपील) / The CIT(A) आयकरआयुक्त/ CIT– concerned 4. यवभागीयप्रयतयनयध, आयकरअपीलीयअयधकरण, मुंबई/ DR, ITAT, Mumbai 5. गार्डफाईल / Guard File 6. आदेशान सार/ BY ORDER,

ITO 27 (1)(3), NAVI MUMBAI vs. SHRI HARSHAD RAMESH PATEL, MUMBAI

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