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Income Tax Appellate Tribunal, ‘’ A’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED & MS SUCHITRA KAMBLE
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal and the CO. have been filed at the instance of the Revenue and the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-9, Ahmedabad, dated 22/03/2019 (in short “Ld. CIT(A)”) arising in the matter of assessment order passed under s. 143(3) r.w.s 147 of the Income Tax Act 1961 (here-in-after referred to as "the Act"). The assessee has filed the Cross Objection in the Revenue’s appeal bearing Assessment Year 2013-2014.
C.O.No.164/Ahd/2019 A.Y. 2013-14 2
At the outset, the Ld. AR for the assessee submitted that the tax involved in the appeal preferred by the revenue is less than Rs.50 lacs and therefore the appeal preferred by the revenue is not maintainable in pursuance to the CBDT Circular No.17/ 2019 dated 08/08/2019. Thus the appeal filed by the revenue deserves to be dismissed in-limine.
On the contrary, the Ld. DR, submitted that the case of the assessee falls under the exception i.e. involving organized tax evasion scam through bogus Long Term Capital Gain (LTCG)/Short Term Capital Loss (STCL) on penny stocks. As per the Ld. DR, CBDT vide Circular No. 23/2019 dated 6th September, 2019 has clarified that the monetary limit as specified in the Circular No. 17/2019 dated 8-8-2019 would not be applicable where the assessee has claimed bogus long term capital gain/short term capital loss. As such the issue involved has to be contested on merit.
The Ld. AR in his re-joinder has contended that the Circular issued by the CBDT beaning No. 23/2019 dated 06/09/2019 providing exception for deciding the issue on merit despite the fact that the tax effect was less than Rs.50 lacs was applicable to the appeals which were filed by the Revenue after 06/09/2019. In other words, the Circular issued by the CBDT bearing no. 23/2009 dated 06/09/2019 shall be applicable prospectively
We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that CBDT in it Circular no. 17/2019 dated 8-8-2019 has prohibited its officer not to contest the appeal against the order of the Ld. CIT(A) where tax effect was less than Rs. 50 lacs. However, this limit was not applicable to certain cases as provided therein. In the Circular dated 08/08/2019 there was no exception with respect to the bogus long term capital gain/short term capital loss. As such the exception of bogus long
C.O.No.164/Ahd/2019 A.Y. 2013-14 3 term capital gain/short term capital loss was brought by the CBDT in its Circular dated 06/09/2019.
5.1 The Hon’ble Gujarat High Court in the case of PCIT vs Anand Natwarlal Sharda reported in 128 taxmann.com 376 has held that the Circular issued by the CBDT bearing no. 23/2019 dated 06/09/2019 is applicable prospectively, meaning thereby, the appeal preferred by the Revenue prior to the 06/09/2019 shall not be contested on merit where the tax effect is less than Rs. 50 lacs. The relevant extract of the judgment is reproduced as under: “On the contrary, from the language employed in the said Circular dated 6-9-2019, it clearly transpires that the appeals may be filed on merits as an exception to the other Circulars issued earlier, where the Board by way of special order direct filing of Appeals on merits in the cases involved in organized tax evasion activity. Therefore, by virtue of the said Circular dated 6-9-2019, the appeals could be filed on merits, irrespective of the monetary limits fixed in earlier cases, if the Board passes special order for filing appeals in cases involving tax evasion activity. The said Circular speaks about the Appeals that may be filed with the special order of the Board in future, and hence could not be construed to have retrospective effect.”
5.2 In view of the above, we hold that the appeal preferred by the Revenue prior to 06/09/2019 will not be under the category of exception in terms of CBDT Circular as discussed above.
5.3 In the case on hand the appeal was preferred by the Revenue dated 21/05/2019 which is a date much before the Circular of the CBDT making the bogus long term capital gain/short term capital loss as one of the exception. Thus in our humble understanding, the case of the assessee on hand does not fall under the exception category in pursuance to the CBDT Circular no. 23/2019.
5.4 Thus respectfully following the decision of Jurisdictional High Court we dismiss the appeal preferred by the revenue in-limine as not maintainable. Hence the appeal filed by the revenue is dismissed.
5.5 In the result, the appeal filed by the revenue is dismissed.
C.O.No.164/Ahd/2019 A.Y. 2013-14 4 Coming to the CO No. 164/Ahd/2018 in ( A.Y. 2013-14, filed by the assessee.
At the outset, Ld. AR submitted that if the appeal preferred by the revenue is dismissed in-limine, he does not want to press the ground raised in the Cross Objection.
As such we have decided that the appeal preferred by the Revenue is not maintainable therefore we do not find any reason to adjudicate the issue raised by the assessee in its CO. Accordingly, the CO is dismissed as infructuous.
7.1 In the result, CO filed by the assessee is dismissed.
In the combined result, the appeal filed by the Revenue is dismissed whereas the Cross Objection filed by the Assessee is also dismissed as infructuous.
Order pronounced in the Court on 13/04/2022 at Ahmedabad.