Assistant Commissioner Of Income Tax 1(2), Raipur Chhattisgarh v. Maruti Clean Coal And Power Ltd. Flat

HIGH COURT OF CHHATTISGARH, BILASPUR NAFR TAXC No. 44 of 2019 Assistant Commissioner of Income Tax 1(2), Raipur Chhattisgarh. ---- Petitioner Versus Maruti Clean Coal And Power Ltd. Flat No. 301 - 302, Ram Residency, ShankarNagar, Raipur Chhattisgarh. Nagar, Raipur Chhattisgarh. ---- Respondent TAXC No. 61 of 2019 Deputy Commissioner Of Income Tax 1(1), Raipur, District - RaipurChhattisgarh. Chhattisgarh. ---- Petitioner Versus Late Shri Vijay Pal Singh, Through L/ H Smt. Vimlesh Kumari Singh, prop. M/sManohar Engineering And M/s Sharda Engineering, Baikunth District - RaipurChhattisgarh.Manohar Engineering And M/s Sharda Engineering, Baikunth District - RaipurChhattisgarh. ---- Respondent For Appellant :Shri Amit Chaudhari, Shri Ajay Kumrani and Ms. Naushina Afrin Ali, Advocates.Afrin Ali, Advocates. Hon'ble Shri P.R. Ramachandra Menon, Chief JusticeHon'ble Shri Parth Prateem Sahu, Judge Order on Board Per, P.R. Ramachandra Menon, Chief Justice 25/11/2019 1.These appeals have been filed by the Department under Section 260A of theIncome Tax Act, 1961 suggesting some questions as involving in 'substantialquestions of law'.Income Tax Act, 1961 suggesting some questions as involving in 'substantialquestions of law'. 2.When the matters came up for consideration earlier, it was doubted whether itwill come within the purview of Circular No. 17 of 2019 dated 08.08.2019,whereby some riders have been placed with regard to filing of appeal before theApex Court, this Court and also the Tribunal; stipulating a monetary limit, belowwhich, no appeal could be filed or pursued. Time was sought for to getinstructions and on 11.11.2019, it was submitted that a memorandum wasissued by the Principal Chief Commissioner of Income Tax, Bhopal withreference to a Circular bearing No. 23 of 2019 dated 06.09.2019 issued by thewill come within the purview of Circular No. 17 of 2019 dated 08.08.2019,whereby some riders have been placed with regard to filing of appeal before theApex Court, this Court and also the Tribunal; stipulating a monetary limit, belowwhich, no appeal could be filed or pursued. Time was sought for to getinstructions and on 11.11.2019, it was submitted that a memorandum wasissued by the Principal Chief Commissioner of Income Tax, Bhopal withreference to a Circular bearing No. 23 of 2019 dated 06.09.2019 issued by the Board, so as to cause all the matters already disposed off / withdrawn ordismissed technically, to have them brought back by filing necessaryproceedings and to have the question examined. This made this Court to passa detailed order on 11.11.2019 in the following terms: “These matters were adjourned on the lastoccasion i.e. on 23.09.2019 to ascertain whether theseappeals were maintainable in view of the monetary limitsprescribed as per the circulars issued by the CentralBoard of Direct Taxes and in particular 17 of 2019 dated08.08.2019 to the effect that no such appeal could befiled by the Department where the monetary limit is lessthan Rs. 1 Crore before the High Court. Today, when the matters are taken up forconsideration, the learned Standing counsel submits thata fresh Circular has been issued as 23 of 2019 dated06.09.2019, paragraph 3 of which reads as follows: “3.In this context, Board has decided thatnotwithstanding anything contained in any circularissued u/s 268A specifying monetary limits for filingof departmental appeals before Income TaxAppellate Tribunal (ITAT), High Courts andSLPs/appeals before Supreme Court, appeals maybe filed on merits as an exception to said circular,where Board, by way of special order direct filing ofappeal on merit in cases involved in organised taxevasion activity.” Today, when the matters are taken up forconsideration, the learned Standing counsel submits thata fresh Circular has been issued as 23 of 2019 dated06.09.2019, paragraph 3 of which reads as follows: “3.In this context, Board has decided thatnotwithstanding anything contained in any circularissued u/s 268A specifying monetary limits for filingof departmental appeals before Income TaxAppellate Tribunal (ITAT), High Courts andSLPs/appeals before Supreme Court, appeals maybe filed on merits as an exception to said circular,where Board, by way of special order direct filing ofappeal on merit in cases involved in organised taxevasion activity.” The learned counsel submits that, based on theabove Circular, an order dated 11.09.2019 has beenissued from the office of the Principal ChiefCommissioner of Income Tax, Bhopal, the relevantportion of which, as contained in paragraph 4 is to thefollowing effect: “4.In view of aforesaid CBDT instruction dt.06/09/2019, I am directed to request theCCITs/DGIT/PCITs to identify all such cases whereappeals have been withdrawn/dismissed technicallyby the Appellate Authority in all LTCG in penny stockcases. Thereafter all such cases on their merits,petitions be filed for restoration of appeals. As far asother pending cases are concerned theCCITs/DGIT/PCITs are requested to comply to theInstruction of CBDT dt. 06/09/2019. Copy of thesaid instructions is enclosed.” After going through the contents of the Circular23 of 2019 issued by the Board and the crux ofinstructions given by the Principal Chief Commissioner ofIncome Tax, Bhopal to the other authorities of theDepartment, we find it difficult to sustain the version asput forth in paragraph 4 of the instructions issued by thePrincipal Chief Commissioner, virtually for causing to file petitions for restoration of all the appeals which havebeen disposed off with reference to the Circular issuedearlier Circular No. 17 of 2019 in relation to the monetarylimit. As per the New Circular dated 06.09.2019issued by the Board, notwithstanding the monetary limitprescribed by the Board earlier, appeal could be filed bythe Department on merit, as an 'exception' to the saidCircular, where the Board, by way of special order directfiling of appeal on merit in cases involving organised taxevasion activity. This means, considering the merit ofeach case, a 'special order' has to be passed by theBoardand on such event, it is possible for theDepartment to pursue the appeal, based on such orderspassed by the Board. The scope of the Circularapparently has been misunderstood by the PrincipalChief Commissioner of Income Tax, Bhopal, whileissuing the directions/instructions on 11.09.2019, asaforesaid. In the said circumstance, we direct theAppellants to produce 'special orders' passed by theBoard, if any, to file/pursue the appeals, which shall bedone within 10 days.” In the said circumstance, we direct theAppellants to produce 'special orders' passed by theBoard, if any, to file/pursue the appeals, which shall bedone within 10 days.” 3.This Court observed that, as per paragraph 3 of the Circular No. 23 of 2019dated 06.09.2019, the Board observed that appeals could be filed,notwithstanding the pecuniary limits as mentioned in the earlier Circulars,where the Board, by way of Special Order directed filing of appeal on merit, incases involving organized Tax Evasion Activity. It was with reference to the saidspecific rider, that we made an observation, that the way in which matter wassought to be pursued as instructed by the Principal Chief Commissioner ofIncome Tax, Bhopal as per order dated 11.09.2019 prima facie appeared to beincorrect and hence we required the Appellants to produce the 'Special Order'from the Board, as per which direction, if any, was given to file appeal on merit,holding that the present cases were of such nature as involving organized TaxEvasion Activity, notwithstanding the pecuniary limit.dated 06.09.2019, the Board observed that appeals could be filed,notwithstanding the pecuniary limits as mentioned in the earlier Circulars,where the Board, by way of Special Order directed filing of appeal on merit, incases involving organized Tax Evasion Activity. It was with reference to the saidspecific rider, that we made an observation, that the way in which matter wassought to be pursued as instructed by the Principal Chief Commissioner ofIncome Tax, Bhopal as per order dated 11.09.2019 prima facie appeared to beincorrect and hence we required the Appellants to produce the 'Special Order'from the Board, as per which direction, if any, was given to file appeal on merit,holding that the present cases were of such nature as involving organized TaxEvasion Activity, notwithstanding the pecuniary limit. 4.Today, when the matters are taken up for further consideration, an OfficeMemorandum bearing No.F.No.279/Misc./M-93/2018-ITJ(Pt.) dated 16.09.2019is placed before this Court, which reads as given below:Memorandum bearing No.F.No.279/Misc./M-93/2018-ITJ(Pt.) dated 16.09.2019is placed before this Court, which reads as given below: “Subject: -Special order of Board exempting casesinvolving bogus Long Term Capital Gains(LTCG)/ShortTerms Capital Loss(STCL) through penny stocks frommonetary limits specified in any Circular issued underSection 268A of the Income-tax Act, 1961-reg The undersigned is directed to refer to Circular No. 23 of2019 dated 16[th] September, 2019 and to say that by virtueof powers of the Central Board of Direct Taxes u/s 268A ofIncome-tax Act, 1961, the monetary limits fixed for filingappeals before ITAT/HC and SLPs/appeals before SupremeCourt shall not apply in case of assesses claiming bogusLTCG/STCL through penny stocks and appeals/SLPs insuch cases shall be filed on merits.” 5.The above OM is only with reference to the decision already taken by the Board and notified as well by Circular No. 23 of 2019 (paragraph 3 of which hasalready been extracted in the order dated 11.11.2019). After hearing thelearned Standing Counsel for the Appellants, we are of the view that as per thedecision taken by the Board and the instructions given thereby, which forms thecrux of the Circular No. 23 of 2019 dated 06.09.2019; that in order to pursue anappeal notwithstanding pecuniary limit mentioned in the earlier Circulars, it hasto be an as exception, where the Boardby way of 'Special Order'directs to fileappeal on merit, in cases involving organized Tax Evasion Activity. 5.The above OM is only with reference to the decision already taken by the Board and notified as well by Circular No. 23 of 2019 (paragraph 3 of which hasalready been extracted in the order dated 11.11.2019). After hearing thelearned Standing Counsel for the Appellants, we are of the view that as per thedecision taken by the Board and the instructions given thereby, which forms thecrux of the Circular No. 23 of 2019 dated 06.09.2019; that in order to pursue anappeal notwithstanding pecuniary limit mentioned in the earlier Circulars, it hasto be an as exception, where the Boardby way of 'Special Order'directs to fileappeal on merit, in cases involving organized Tax Evasion Activity. Insofar as no such 'Special Order' passed by the Board has been producedbefore this Court, we find it difficult to entertain these appeals; in view of thecontents of the relevant Circulars issued as above. Accordingly, the appealsare dismissed, however, without prejudice to rights and liberties of theAppellants to approach this Court afresh in appropriate cases wherever 'SpecialOrders' have been issued by the Board, as an exception to the Circular Nos. 17of 2019 and 23 of 2019, where organized Tax Evasion Activity is noted. Sd/- (P.R. Ramachandra Menon)Chief Justice Sd/- (Parth Prateem Sahu) Judge