ITO 13(1)(1), MUMBAI vs. NIDHI PREMISES P LTD, MUMBAI

The Ld. Authorized Representative for Assessee, at the outset, submitted that the tax effect of quantum additions being contested by revenue is less than monetary limit of Rs.50 Lacs as prescribed by Central Board of Direct Taxes in its recently issued Circular No.17/2019 dated 08/08/2019 [F.No.279/Misc.142/2007-TTJ(Pt.) Government of India, Ministry of Finance, Department of Revenue] and therefore, the appeal is not maintainable. Reliance has been placed on the decision of this very bench in ITO V/s M/s Nishdish Infrastructure P.Ltd. (ITA No. 6003/Mum/2017 dated 28/11/2019) rendered on similar factual matrix. The Ld. AR submitted that 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 has further been submitted 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 3 Nidhi Premises Pvt. Ltd. Assessment Year :2007-08 bogus long-term capital gains (LTCG) / Short Term Capital Loss (STCL) on penny stocks.

Au Contraire, Ld. DR submitted that the additions were made on account of accommodation share application money pursuant to search action being carried out by DGIT (Investigation) in the case of Shri Praveen Jain group of cases and therefore, factual matrix was covered by exception provided in CBDT Circular No. 23 of 2019 dated 06/09/2019 read with office memorandum dated 16/09/2019.

Upon perusal of case records, prima facie, it emerges that the tax effect being contested by the revenue is less than prescribed limit of Rs.50 Lacs and the same is covered by recently issued low tax effect Circular No.17/2019 dated 08/08/2019 issued by Central Board of Direct Taxes [CBDT]. This recent circular further enhances the monetary limit fixed in earlier Circular No.3 of 2018 dated 11/07/2018 issued by CBDT as amended on 20/08/2018. Undisputedly, the factual matrix is not covered by any of the exceptions as provided in para-10 of Circular no. 3 of 2018 dated 11/07/2018. The co-ordinate bench of this Tribunal in ITO V/s Late Shri Amarchand P.Shah (ITA No.818-820/Mum/2017 dated 08/07/2019) has already held that 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, the same could not be considered as ‘external source’ as is referred to in para 10(e) of CBDT circular dated 20/08/2018. No contrary decision is on record.

We have gone through the circulars and find that the tax effect in dispute is below prescribed limit of Rs.50 Lacs and the assessee stood benefitted by the above circular issued by CBDT wherein the minimum monetary limit for filing the appeals before various appellate authorities have been fixed as under: - S. No. Appeals/ SLPs in Income-tax Monetary Limit (Rs.) matters 1 Before Appellate Tribunal 50.00,000 2 Before High Court 1,00.00,000 3 Before Supreme Court 2,00.00,000 The aforesaid limits, as per para 13 of the Circular no. 3 of 2018 dated 11/07/2018, applies to pending appeals also. In view of the same, we dismiss the revenue’s appeal.

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.