DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLLAM vs. SMART RESIDENCY HOTELS INDIA PRIVATE LIMITED, THRISSUR

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ITA 319/COCH/2024Status: DisposedITAT Cochin30 May 2025AY 2017-18Bench: SHRI INTURI RAMA RAO (Accountant Member), SHRI SOUNDARARAJAN K. (Judicial Member)5 pages

AI SummaryDismissed

Facts

The Revenue filed multiple appeals against CIT(A) orders, with the tax effect being less than Rs. 60 lakh. The assessee sought dismissal based on CBDT Circular No. 9 of 2024, while the Revenue argued for exceptions related to organized tax evasion and cited the Supreme Court's judgment in CIT v. Surya Herbal Ltd. against applying the circular.

Held

The Tribunal dismissed the Revenue's appeals, ruling that the cases did not fall under the organized tax evasion exceptions of CBDT Circular No. 5 of 2024. It also held that the Surya Herbal Ltd. judgment was not applicable as the appeals involved additions under Sections 68/69, which are mixed questions of fact and law. The issues raised were left open for examination in future appropriate proceedings if exceptions were applicable.

Key Issues

Whether the Revenue's appeals, with a tax effect below Rs. 60 lakhs, should be dismissed based on CBDT Circular No. 9 of 2024, and if exceptions for organized tax evasion or the Supreme Court's CIT v. Surya Herbal Ltd. judgment prevented such dismissal, particularly for additions under Sections 68/69 of the Act.

Sections Cited

68, 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH

Before: SHRI INTURI RAMA RAO, AM & SHRI SOUNDARARAJAN K., JM

For Appellant: Shri S.K. Tulsiyan, Advocate

For Respondent: Shri Suresh Sivanandan, CIT-DR

Hearing: 21.03.2025Pronounced: 30.05.2025

O R D E R Per Bench 2. These are appeals filed by the assessee and Revenue and Cross Objection filed by the assessee directed against the orders of the

At the outset the learned counsel for the assessee submits that the tax effect involved in these appeals filed by the Revenue is less than Rs. 60,00,000/-. Therefore, in view of the CBDT Circular No. 9 of 2024 dated 17.09.2024 the appeal should be dismissed on law tax effect.

On the other hand, the learned CIT DR submits that the present appeals are covered by the exception enumerated in clause (h) of para 3.1 of CBDT Circular No. 5 of 2024 dated 15.03.2024 and, therefore, low tax effect cannot be applied on the appellant’s case. It is further submitted that in view of the judgement of the Hon'ble Supreme Court in the case of CIT v. Surya Herbal Ltd. the CBDT circular should not be applied ispo facto when the matter has a cascading effect.

We have heard the rival contentions and perused the material available on record. The issue that comes up for our consideration is whether the CBDT circular No. 5 of 2024 can be applied ispo facto or not. The exceptions enumerated in clause (h) in para 3.1 of the circular reads as under: -

“(h) Cases involving organised tax evasion including cases of bogus capital gains/losses through penny stock, cases of accommodation entries.”

& Ors Sreevalsam Group The present matter does not involve the issue bogus capital gains/losses through penny stock and case of accommodation entries nor it can be said to be organised tax evasion. Therefore, the objections of the learned Sr. DR is ruled out. As regards the other contention of the learned Sr. DR that in view of the decision of the Hon'ble Supreme Court in the case of Surya Herbal Ltd. (supra) the circular should not be applied ispo facto also cannot be accepted in view of the fact that the no common principle of law is involved in these matters as the issue involved in the present appeal is the addition made u/s. 68/69 of the Act, which is undoubtedly a mixed question of facts and law. Therefore, we are of the considered opinion that CBDT Circular No. 5 of 2024 cannot be applied in the present matter. Accordingly the matter is disposed as under.