DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLLAM vs. RAJAVALSAM MOTORS PRIVATE LIMITED, PATHANAMTHITTA
Facts
The Revenue filed appeals against orders of the CIT(A). The assessee moved for dismissal, citing CBDT Circular No. 9 of 2024, as the tax effect was below Rs. 60 lakhs. The Revenue argued that exceptions related to organized tax evasion (bogus capital gains/accommodation entries) under CBDT Circular No. 5 of 2024 and the cascading effect (referencing CIT v. Surya Herbal Ltd.) made the monetary limit circular inapplicable, with the core issue being additions under Section 68/69.
Held
The Tribunal ruled that the appeals did not fall under the specified exceptions for organized tax evasion or common principles of law, as the issue involved mixed questions of facts and law regarding Section 68/69 additions. Consequently, as the tax effect was below the Rs. 60 lakh threshold, the Revenue's appeals were dismissed in accordance with CBDT Circular No. 9 of 2024. The issues raised were kept open for future appropriate proceedings if the appeal falls under any exceptions.
Key Issues
Whether CBDT Circular No. 9 of 2024 regarding monetary limits for filing appeals is applicable to the Revenue's appeals, considering contentions of exceptions for organized tax evasion, cascading effect, or additions under Sections 68/69.
Sections Cited
68, 69
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SOUNDARARAJAN K., JM
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH
BEFORE SHRI INTURI RAMA RAO, AM AND SHRI SOUNDARARAJAN K., JM
ITA Nos. 335 & 336/Coch/2024 – AYs: 2015-16 & 2017-18 DCIT, Central Circle Sreevalsam Hotels and Resorts Pvt. Aayakar Bhavan, Karbala Ltd. vs. Junction, Kollam 691001 Rajavalsam, Panangadu, Kulanada Pandalam, Pathanamthitta 689503 (Appellant) (Respondent) ITA Nos. 338 & 339/Coch/2024 – AYs: 2015-16 & 2016-17
ACIT, Central Circle Sreevalsam Jewellers Aayakar Bhavan, Karbala Jn. Ground Floor, Sree Valsom Bldg. Kollam 691001 vs. MC Road, Pandalam Pathanamthitta 689501 [PAN: AGBFS9013C] (Appellant) (Respondent)
ITA No. 318/Coch/2024 – AY: 2016-17
DCIT, Central Circle Allebasi Builder and Developers Aayakar Bhavan, Karbala Pvt. Ltd. vs. Junction, Kollam 691001 No. 1, Shelter, LMS Junction Attingal P.O., Thiruvananthapuram (Appellant) (Respondent) ITA Nos. 174 & 320/Coch/2024 Assessment Years: 2012-13 & 2018-19
DCIT, Central Circle Valsala Raj Aayakar Bhavan, Karbala Rajavalsam, Panangadu, Kulanada vs. Junction, Kollam 691001 Pandalam, Pathanamthitta 680503 [PAN: ACAPR8941B] (Appellant) (Respondent)
2 ITA No. 335/Coch/2024 & Ors Sreevalsam Group ITA No. 319/Coch/2024 – AY: 2017-18
DCIT, Central Circle Smart Residency Hotels India Aayakar Bhavan, Karbala Pvt. Ltd. Junction, Kollam 691001 vs. XIII/325A, Marathakara Byepass Road, Ollur S.O., Thrissur 689503 [PAN: AALCS2724D] (Appellant) (Respondent)
ITA Nos. 328 , 329 & 337/Coch/2024 – AYs: 2015-16 to 17-18
DCIT, Central Circle Rajavalsam Motors Pvt. Ltd. Aayakar Bhavan, Karbala Rajavalsam, Panangadu, Kulanada vs. Junction, Kollam 691001 Pandalam, Pathanamthitta 689503 [PAN: AAFCR6993R] (Appellant) (Respondent)
ITA No. 330 /Coch/2024 – AY: 2013-14
DCIT, Central Circle Pooja Raj Pillai Aayakar Bhavan, Near Railway Rajavalsam, Panangadu, Kulanada vs. Station Road, Karbala Junction Pandalam, Pathanamthita 689503 Kollam 691001 [PAN: BOEPP9295M] (Appellant) (Respondent)
Assessee by: Shri S.K. Tulsiyan, Advocate Revenue by: Shri Suresh Sivanandan, CIT-DR
Date of Hearing: 21.03.2025 Date of Pronouncement: 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
3 ITA No. 335/Coch/2024 & Ors Sreevalsam Group Commissioner of Income Tax (Appeals)-3, Kochi [CIT(A)], dated 29.12.2023 for different Assessment Years.
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.”
4 ITA No. 335/Coch/2024 & 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.
Vide para 2 of Circular No. 9/2024 dated 17.09.2024 it is stated that in cases where the tax effect in the appeals to be filed before the Appellate Tribunal does not exceed Rs.60 lakhs appeals should not be filed. Thus, taking a note of CBDT Circular No. 9/2024 dated 17.09.2024 and considering the fact that the tax effect in the instant appeal is less than Rs.60 lakhs, the present appeal deserves to be dismissed as not pressed / not maintainable. However, we make it clear that the issues raised in the instant appeal are left open to be examined in the appropriate proceedings, if
5 ITA No. 335/Coch/2024 & Ors Sreevalsam Group arises, in future. At the same time, we also make it clear that if the appeal falls in any of the exceptions referred to in the above said CBDT Circular, the Revenue is at liberty to move an application for recalling the order if so advised.
In the light of CBDT Circular No. 9/2024 dated 17.09.2024, the appeals filed by the Revenue stand dismissed.
Order pronounced in the open court on 30th May, 2025.
Sd/- Sd/- (SOUNDARARAJAN K.) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Cochin, Dated: 30th May, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order
Assistant Registrar ITAT, Cochin
