PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S HYCRON ELECTRONICS THROUGH ITS PROPRIETOR

Respondent herein, (for short ‘assessee’), declared Rs.11,75,41,974/- as income in the ITR filed for the A.Y. 2014-2015. Assessment u/s 143(3) of the Income Tax Act (for short ‘Act’) was completed on 25.11.2016 and income of the assessee was assessed at Rs. 11,85,64,020/- by making addition of Rs.10,22,046/- on account of disallowing 1% of total assessment of Rs. 10,22,04,600/- u/s 14A of the Act. 4. Assessee assailed above noted order of A.O before CIT(A) by way of appeal No. IT/174/16-17/SML and the same was rejected. 5. Subsequently A.O on re-assessment found that assessee had invested Rs.10,22,04,600/- in purchase of shares and mutual funds, income arising as dividend/interest was not taxable under Section 14A of the Act. It was accordingly opined that interest to the tune of Rs. 15,91,976/- was liable to be disallowed and such omission has resulted in under assessment of Rs. 5,69,930/- (Rs. 15,91,976 - Rs.10,22,046/-). An order u/s 154 of the Act was accordingly passed by A.O on 18.08.2017 whereby addition of Rs. 5,69,930/- was made.

The assessee assailed the above said order by filing an appeal before the CIT(A). Vide order dated 28.3.2019, CIT(A) allowed the appeal of the assessee. 7. The revenue challenged the order dated 28.3.2019 of the CIT(A) before the ITAT, Chandigarh. The appeal of the revenue was dismissed vide impugned order assailed in the instant appeal. 8. The grievance of the appellant herein, is that the ITAT, Chandigarh had wrongly proceeded to dismiss the appeal of the revenue on the basis of Circular No. 17/2019 issued by the CBDT whereby the monetary limit for filing the appeal by the Department before the ITAT was enhanced to Rs.50,00,000/-. As per appellant, the benefit of the above noted circular could not be made available to the assessee in the instant case, though, the liability of tax was much less than the prescribed limit of Rs.50,00,000/- for the reason that para 10 (b) of Circular No. 3/2018 of CBDT dated 11.7.2018 exempted those cases where Board’s order, notification, instruction or circular has been held to be illegal or ultra vires. The appellant contends that in the present case also the CBDT Circular No. 17/2019 did not apply to the facts of the case and the ITAT had erred in not deciding the matter on merits.

We have heard learned counsel for the parties and have also gone through the records of the case. 10. The controversy can be summed up in narrow encompass. The issue for adjudication is whether the exemption Clause 10 (b) of Circular No. 3/2018 dated 11.7.2018 issued by the CBDT was applicable to facts of the case. 11. Perusal of impugned order passed by the ITAT reveals that it has taken into consideration the Circular No.17/2019 dated 8.8.2019 issued by the CBDT, which reads as under:

It is not in dispute that the above noted Circular No. 17/2019 is extension of Circular No. 3/2018 issued by the CBDT whereby certain modifications have been made in the original circular especially in respect of enhancement of revision of monetary limits for appeals/SLPs in income tax matters. 13. It is evident from the impugned order that the ITAT after detailed consideration held clause 10(b) of Circular No.3/2018 issued by CBDT to be not applicable in the facts of the case. CIT(A) had not decided the legality of Circular No.5/2014 issued by CBDT nor was there any adjudication on said circular being ultra vires, therefore, no exception can be taken to the impugned order on this account. 14. The ITAT has correctly held the appeal before it to be not maintainable in view of clear mandate of Circular No. 17/2019. Same principle applies to the filing of present appeal. Hence, no substantial question of law arises for determination by this Court.

No other infirmity has been pointed out in the impugned order. 16. In the light of above discussion, we find no merit in the appeal and the same is dismissed, so also the pending application(s), if any.