DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLLAM vs. RAJAVALSAM MOTORS PRIVATE LIMITED, PATHANAMTHITTA

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ITA 328/COCH/2024Status: DisposedITAT Cochin30 May 2025AY 2016-17Bench: SHRI INTURI RAMA RAO (Accountant Member), SHRI SOUNDARARAJAN K. (Judicial Member)5 pages

AI SummaryDismissed

Facts

The Revenue filed appeals against orders of the CIT(A) for various assessment years. The assessee contended that these appeals should be dismissed due to a low tax effect (less than Rs. 60 lakhs) as per CBDT Circular No. 9 of 2024. The Revenue countered by arguing that the cases fell under exceptions enumerated in CBDT Circular No. 5 of 2024 and that the circular should not be applied blindly due to a Supreme Court judgment.

Held

The Tribunal rejected the Revenue's arguments, finding that the specific exceptions cited from CBDT Circular No. 5 of 2024 regarding organized tax evasion or bogus transactions did not apply, and the Supreme Court judgment was not relevant as no common principle of law was involved in these appeals which concerned additions under Sections 68/69. Therefore, applying CBDT Circular No. 9 of 2024, the appeals filed by the Revenue were dismissed for having a tax effect below Rs. 60 lakhs, though the issues remain open for examination in appropriate future proceedings.

Key Issues

Whether appeals filed by the Revenue should be dismissed for low tax effect (below Rs. 60 lakhs) in light of CBDT Circular No. 9/2024, and whether exceptions specified in CBDT Circular No. 5/2024 or a Supreme Court judgment preclude such dismissal.

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.