The Commissioner Of Income Taxaayakar Bhavan, Near Holy Crossschool, Cantonment, Aurangabad v. Shri Surendra Shantilal Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna

IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD INCOME TAX APPEAL NO. 19 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Surendra Shantilal Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. ... WITH INCOME TAX APPEAL NO. 29 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Smt. Namrata Ravindra Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent.... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 45 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Smt. Varsha Surendra Peety,Jalna.....Respondent.... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 37 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Ravindra Shantilal Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. ... WITH INCOME TAX APPEAL NO. 32 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Surendra Shantilal Peety (HUF),Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent.... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. 3 WITH INCOME TAX APPEAL NO. 35 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Ravindra Shantilal Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. ... WITH INCOME TAX APPEAL NO. 34 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Ravindra Shantilal Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. ... WITH INCOME TAX APPEAL NO. 49 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus 4 Shri Jitendra Shantilal Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent.... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. ... WITH INCOME TAX APPEAL NO. 28 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad....Appellant. Versus Smt. Namrata Ravindra Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna.....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 41 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Shantilal Govardhan Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna.....Respondent.... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. 5 ... WITH INCOME TAX APPEAL NO. 47 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Smt. Namrata Ravindra Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna.....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 41 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Shantilal Govardhan Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna.....Respondent.... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. 5 ... WITH INCOME TAX APPEAL NO. 47 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Jitendra Shantilal Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. ... WITH INCOME TAX APPEAL NO. 26 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad....Appellant. Versus Smt. Rachana Jitendra Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 31 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Smt. Namrata Ravindra Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 27 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Smt. Rachana Jitendra Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. ... WITH INCOME TAX APPEAL NO. 56 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Jitendra Shantilal Peety (HUF),Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna.....Respondent.... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. 7 ... WITH INCOME TAX APPEAL NO. 40 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Shantilal Vovardhan Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 55 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Jitendra Shantilal Peety (HUF),Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 43 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Smt. Varsha Surendra Peety, Jalna.....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 21 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Surendra Shantilal Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent.... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 43 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Smt. Varsha Surendra Peety, Jalna.....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. … WITH INCOME TAX APPEAL NO. 21 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Surendra Shantilal Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent.... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. ... WITH INCOME TAX APPEAL NO. 36 OF 2013 The Commissioner of Income TaxAayakar Bhavan, Near Holy CrossSchool, Cantonment, Aurangabad. ...Appellant. Versus Shri Ravindra Shantilal Peety,Sharda Kutir, Shani Mandir Road,Old Jalna, Jalna. ....Respondent. ... Mr. Alok Sharka, Advocate for appellant. Mr. R.S. Padvekar with Mr. V.A. Bagdiya, Advocates for respondent. 9 CORAM : R. D. DHANUKA & S. G. MEHARE, JJ.DATED : 22/04/2022 JUDGMENT : [ PER R.D. DHANUKA, J.] 1)By these appeals filed under section 260A of the Income TaxAct, 1961, (hereinafter referred to as ‘IT Act’ for short), the appellantshave impugned the orders passed by the Income Tax Appellant Tribunal,Pune, Bench ‘B’ in this bunch of appeals for various assessment years. 2)By consent of parties, all these bunch of appeals were heardtogether and are being disposed of by common order. The learnedcounsel for the parties jointly stated that the order that would be passedin ITA No.19/2013 would apply to the rest of the appeals which wereheard together. The statement is accepted. We are, thus, dealing with thefacts and submissions made by the parties in ITA No.19/2013. 3)It is the case of the appellant that on 17[th] March 2006 thesearch action in case of Peety Group of Jalna was conducted by theIncome Tax Department. The respondent-assessee is one of the familymember of the said group. It is the case of the appellant that during thesearch action, certain statements of the share brokers were recorded bythe investigation wing of the department at Mumbai wherein they hadadmitted that they had issued bogus ‘broker notes’ and bills to the number of persons to ante-date purchases including the members of PettyGroup of Jalna to generate bogus Long term Capital Gain and Short TermCapital Loss. It is the case of the appellant that the respondent-assesseevoluntarily declared the amount shown as long term capital gain andshort term capital loss as bogus and had voluntarily stated that they willpay the taxes on the admitted amount on 17[th] March 2006. However,while filing the return, they retracted from the statement made undersection 132 (4) of the IT Act. On 31[st] December 2007 the AssessingOfficer held that the claim of long term capital gain and short termcapital loss are bogus and made addition of the amounts to the taxableincome of the respondent-assessee. 4)The respondent-assessee preferred appeal before theCommissioner of Income Tax (Appeals), Aurangabad (hereinafterreferred to as ‘CIT (A) Aurangabad’ for short). By order dated 24[th] June2008 the CIT (A) allowed the said appeal filed by the respondent-assessee. Being aggrieved by the order passed by the CIT (A), theappellant preferred appeal before the Income Tax Appellate Tribunal,Pune Bench ‘B’ (hereinafter referred to as ‘ITAT’ for short) for theassessment year 2005-06. By judgment and order dated 28[th] September2012, ITAT dismissed the said appeal preferred by the appellant. Beingaggrieved by the said order, the appellant preferred this Income Tax 5)By order dated 10[th] March 2014 passed by this Court, ITANo. 19/2013 was admitted on the following substantial questions of law. 5)By order dated 10[th] March 2014 passed by this Court, ITANo. 19/2013 was admitted on the following substantial questions of law. (i)Whether the additions made by the AO u/s. 69Ato the taxable income of assessee, is just and proper ? (ii)Whether the sale proceeds from the transaction ofshares amounts to LTGC and STGC when the assesseehimself had voluntarily admitted to pay the taxes on theadditional income ? 6)Mr. R.S. Padvekar, learned counsel for respondent-assessee inthis bunch of appeals raised the issue of maintainability of these appealson the ground that the tax effect in these appeals is less than themonetary limit of Rs. 50 lakh prescribed under the Circular No. 3/2018dated 11[th] July 2018 issued by the Government of India, Ministry ofFinance, Department of Revenue, Central Board Direct Taxes (hereinafterreferred as ‘CBDT’ for short) insofar as appeals before the High Court isconcerned. 7)The learned counsel for respondent-assessee placed relianceon the said Circular No.3/2018 issued by the CBDT in supersession of theBoard Circular dated 21/2015 dated 10[th] December 2015 and would 12 submit that since the tax effect in these appeals did not exceed monetarylimit of Rs.50 lakh, the appellant cannot proceed with this bunch ofappeals and is required to withdraw these appeals in compliance with thesaid Circular. He submits that the said Circular has been issued by CBDTunder section 268 of IT Act to control the unwarranted litigation and tosave public money. He submits that if in the case of assessee, the disputedissues arise in more than one assessment year, appeals can be filed inrespect of such assessment year or years in which the tax effect in respectof the disputed issues exceeds the monetary limit specified in para 3 ofthe said Circular No. 3/2018. 8)It is submitted by the respondent-assessee that in para 7 ofthe Circular No. 3/2018 it is further clarified that in a case where appealbefore a Tribunal or a Court is not filed only on account of the tax effectbeing less than the monetary limit specified in the said circular, the Pr.Commissioner of Income Tax shall specifically record that ‘even thoughthe decision is not acceptable appeal is not being filed only on theconsideration that the tax effect is less than the monetary limit specifiedin the said circular. Further, in such cases, there will be no presumptionthat the Income Tax Department has acquiesced in the decision on thedisputed issues. 13 9)The learned counsel for respondent-assessee invited ourattention to Clause 10 and 11 of the Circular No.3/2018 and wouldsubmit that the said circular provides for an exception in which theIncome Tax Department is permitted to contest the proceedings on meritswhere adverse judgments relating to the issues specifically set out thereinin these two clauses notwithstanding that the tax effect entailed is lessthan the monetary limits specified in para 3 of the said Circular or thereis no tax effect. He submits that in view of clause 13 of the said Circular,the said Circular will apply to the pending special leave petitions/appealsbefore the Supreme Court/High Courts or the Tribunals including thecross objections and such pending appeals below the specified tax limitneed to be withdrawn or are not required to be pressed. 10)The learned counsel for respondent-assessee placed relianceon the Circular No. 17/2019 issued by CBDT, thereby enhancing themonetary limits for filing of the appeals by the department before theAppellate Tribunal, High Court and the Supreme Court prescribed inCircular No. 3/2018. He submits that monetary limits insofar as HighCourt is concerned is increased to Rs. one crore from Rs. 50 lakhprescribed in the Circular No. 3/2018. He relied upon clause 3 of the saidCircular No. 17/2019 and would submit that in view of the said Circular,the Income Tax Department is directed not to file appeal in respect of 14 10)The learned counsel for respondent-assessee placed relianceon the Circular No. 17/2019 issued by CBDT, thereby enhancing themonetary limits for filing of the appeals by the department before theAppellate Tribunal, High Court and the Supreme Court prescribed inCircular No. 3/2018. He submits that monetary limits insofar as HighCourt is concerned is increased to Rs. one crore from Rs. 50 lakhprescribed in the Circular No. 3/2018. He relied upon clause 3 of the saidCircular No. 17/2019 and would submit that in view of the said Circular,the Income Tax Department is directed not to file appeal in respect of 14 assessment year or years in which the tax effect is less than the monetarylimit prescribed in para 3 of the said Circular. Even in a case of compositeorder of any High Court or appellate authority which involve more thanone assessment year and common issues in more than one assessmentyear, no appeal shall be filed in respect of an assessment year or years inwhich the tax effect is less than the monetary limit specified in para 3 ofthe said Circular. 11)The learned counsel for respondent-assessee invited ourattention to the Circular No. 23/2019 issued by CBDT. He submits that bythe said circular No. 23/2019 two exceptions were provided thatnotwithstanding anything contained in any circular issued under section268A of the IT Act, specifying monetary limits for filing of departmentalappeals before the ITAT, High Courts and Supreme Court, appeals may befiled on merits as an exception to the said circular where Board, by wayof special order direct filing of appeal on merit in cases involved inorganised tax evasion activity. He submits that in view of the said CircularNo. 23/2019, the CBDT has been given discretion to decide as to whetherto file an appeal or not. 12)The learned counsel for respondent-assessee invited ourattention to the Office Memorandum dated 16[th] September 2019 issued 15 by CBDT, clarifying that the monetary limits fixed for filing appealsbefore ITAT, High Court and Supreme Court shall not apply in caseassessees claiming bogus long term capital gain/short term capital lossthrough penny stocks and appeals/SLPs in such cases shall be filed onmerits and monetary limits fixed for filing such appeals before ITAT, HighCourts and Supreme Court shall not apply in such cases. He submits thatthe said circular No. 23/2019 dated 6[th] September 2019 and the saidoffice memorandum dated 16[th] September 2019 would not apply to thepending appeals before ITAT/High Courts and SLPs/appeals beforeSupreme Court. 13)The learned counsel for respondent-assessee submits thateven otherwise such memorandum issued on 16[th] September 2019 couldnot have been issued so as to take away the effect of the earlier Circularsor could not have been issued contrary to the earlier circulars prescribingthe monetary limits. 14)The learned counsel for responent-assessee placed relianceon the judgment of the Supreme Court in the case of DeputyCommissioner of Income-tax 1(1), Raipur Vs. Vijay Pal Singh (2021) 130taxmann.com 292 (SC), dismissing the appeal filed by the Revenuebefore the Supreme Court on the ground that tax effect involved in the 16 13)The learned counsel for respondent-assessee submits thateven otherwise such memorandum issued on 16[th] September 2019 couldnot have been issued so as to take away the effect of the earlier Circularsor could not have been issued contrary to the earlier circulars prescribingthe monetary limits. 14)The learned counsel for responent-assessee placed relianceon the judgment of the Supreme Court in the case of DeputyCommissioner of Income-tax 1(1), Raipur Vs. Vijay Pal Singh (2021) 130taxmann.com 292 (SC), dismissing the appeal filed by the Revenuebefore the Supreme Court on the ground that tax effect involved in the 16 said matter was less than the prescribed monetary limit in terms of theCircular No. 17/2019 dated 8[th] August 2019 issued by CBDT. The learnedcounsel for respondent-assessee also placed reliance on the judgment ofthe Chattisgarh High Court in the case of Deputy Commissioner ofIncome Tax Vs. Vijay Pal Singh (2021) 130 taxmann.com 291(Chattisgarh) and particularly paragraph No. 6 and would submit thatthe Chattisgarh High Court after considering the Circular No. 23/2019dated 6[th] September 2019 and office memorandum dated 16[th] September2019 held that since the CBDT has not passed any special order in orderto pursue an appeal notwithstanding pecuniary limit mentioned in theearlier Circulars, the Supreme Court did not entertain the said appealfiled by the revenue and dismissed the same without prejudice to rightsand liberties of the revenue to approach the Supreme Court afresh inappropriate cases wherever special orders have been issued by the Board,as an exception to the Circular Nos. 17/2019 and 23/2019 whereorganized activity was noted. 15)The learned counsel invited our attention to the order passedby the Supreme Court, dismissing the Special Leave Petition filed by therevenue against the said judgment of Chattisgarh High Court on 2[nd]August 2021 in case of Deputy Commissioner of Income-tax, 1(1), RaipurVs. Vijay Pal Singh (supra). 16)The learned counsel for the respondent-assessee submits thatin view of circulars in question, the revenue has already withdrawnseveral appeals before this Court having tax effect less than the monetarylimits prescribed in the above referred circulars. Some of those orders areannexed to the compilation submitted by the respndent-assessee. He alsosubmitted a statement showing the status of 37 appeals and wouldsubmit that in view of the tax effect having less than the specifiedmonetary limit, 13 appeals filed by the revenue are already dismissed onthat ground. 17)Mr. Alok Sharma, learned standing counsel for appellant-revenue also invited our attention to the circulars already referred toabove by the learned counsel for respondent-assessee and would submitthat the appellant revenue had noticed organised tax evasion throughbogus long term capital gain or short term capital loss on penny stocks. Inview of the Circular No. 23/2019 dated 6[th] September 2019 and OfficeMemorandum dated 16[th] September 2016, the appellant revenue isentitled to pursue the pending appeals before this Court in view of theexception carved out by the said circular No. 23/2019 and clarified bythe Officer Memorandum dated 16[th] September 2019. The learnedcounsel for the appellant-revenue states that the said Circular No. 23/2019 and the said Office Memorandum dated 16[th] September 2019would apply with retrospective effect. 18)The learned counsel for appellant-revenue invited ourattention to the judgment of the Gujarat High Court in the case ofPrincipal Commissioner of Income-tax, (Central), Ahmedabad Vs. AnandNatwarlal Sharda (2021) 128 taxmann.com 376 (Gujarat) and wouldsubmit that the Gujarat High Court in the said judgment did not acceptthe contention raised by the revenue that the said Circular No. 23/2019dated 6[th] September 2019 and Office Memorandum dated 16[th] September2019 were applicable with retrospective effect. 23/2019 and the said Office Memorandum dated 16[th] September 2019would apply with retrospective effect. 18)The learned counsel for appellant-revenue invited ourattention to the judgment of the Gujarat High Court in the case ofPrincipal Commissioner of Income-tax, (Central), Ahmedabad Vs. AnandNatwarlal Sharda (2021) 128 taxmann.com 376 (Gujarat) and wouldsubmit that the Gujarat High Court in the said judgment did not acceptthe contention raised by the revenue that the said Circular No. 23/2019dated 6[th] September 2019 and Office Memorandum dated 16[th] September2019 were applicable with retrospective effect. 19)The learned counsel for the appellant-revenue also reliedupon the judgment of the Gujarat High Court in the case of PrincipalCommissioner of Income-tax Vs. Denisha Rajendra Keshwani (2022) 134taxmann.com 249 (Gujarat) and would submit that the Gujarat HighCourt in the said judgment also did not accept the submission of therevenue that the said Circular No. 23/2019 dated 6[th] September 2019and Office Memorandum dated 16[th] September 2019 were applicablewith retrospective effect. REASONS AND CONCLUSIONS The questions that arise for consideration of this Court are as under :- (i)Whether the Circular No. 23/2019 dated 6[th]September 2019 issued by CBDT and the officememorandum dated 16[th] September 2019 would apply tothe pending appeals before the ITAT/High Court/SLPs/appeals before the Hon’ble Supreme Court on thedate of the said circular ? (ii)Whether pending appeals having tax effect lessthan the monetary limit prescribed in Circular No. 3/2018dated 11[th] July 2018 modified by Circular No. 17/2019dated 8[th] August 2019 having organized tax evasionactivity, could be pursued without obtaining special orderfrom CBDT or not ? 21)Some of the relevant provisions of the Circulars relied uponby both the parties are reproduced below. Para Nos.2, 3, 5, 7, 10, 11 and 13 of the Circular No. 3/2018 dated 11[th] July 2018 are extracted as under :- “2.In supersession of the above Circular, it has beendecided by the Board that departmental appeals may befiled on merits before Income Tax Appellate Tribunal andHigh Courts and SLPs/ appeals before Supreme Courtkeeping in view the monetary limits and conditionsspecified below. 3.Henceforth, appeals/SLPs shall not be filed incases where the tax effect does not exceed the monetarylimits given hereunder : It is clarified that an appeal should not be filed merelybecause the tax effect in a case exceeds the monetarylimits prescribed above. Filing of appeal in such cases is tobe decided on merits of the case. 5.The Assessing Officer shall calculate the tax effectseparately for every assessment year in respect of thedisputed issues in the case of every assessee. If in the caseof an assessee, the disputed issues arise in more than oneassessment year, appeal can be filed in respect of suchassessment year or years in which the tax effect in respectof the disputed issues exceeds the monetary limit specifiedin para 3. No appeal shall be filed in respect of anassessment year or years in which the tax effect is lessthan the monetary limit specified in para 3. In otherwords, henceforth, appeals can be filed only withreference to the tax effect in the relevant assessment year.However, in case of a composite order of any High Courtor appellate authority, which involves more than oneassessment year and common issues in more than oneassessment year, appeals shall be filed in respect of allsuch assessment years even if the tax effect is less than theprescribed monetary limits in any of the year(s), if it isdecided to file appeal in respect of the year(s) in whichtax effect exceeds the monetary limits prescribed. In casewhere a composite order/judgment involves more thanone assessee, each assessee shall be dealt with separately. 7.In a case where appeal before a Tribunal or aCourt is not filed only on account of the tax effect beingless than the monetary limit specified above, the Pr.Commissioner of Income-tax/ Commissioner of IncomeTax shall specifically record that “even though the decisionis not acceptable, appeal is not being filed only on theconsideration that the tax effect is less than the monetarylimit specified in this Circular.” Further, in such cases,there will be no presumption that the Income-taxDepartment has acquiesced in the decision on the disputedissues. The Income-tax Department shall not be precludedfrom filing an appeal against the disputed issues in thecase of the same assessee for any other assessment year, orin the case of any other assessee for the same or any otherassessment year, if the tax effect exceeds the specifiedmonetary limits. 10.Adverse judgments relating to the followingissues should be contested on merits notwithstanding thatthe tax effect entailed is less than the monetary limitsspecified in parer 3 above or there is no tax effect : (a)Where the Constitutional validity of theprovisions of an Act or Rule is under challenge, or (b)Where Board’s order, Notification, Instruction orCircular has been held to be illegal or ultra vires, or (c)Where Revenue Audit objection in the case hasbeen accepted by the Department, or (d)Where the addition relates to undisclosed foreignassets/bank accounts. 11.The monetary limits specified in para 3 aboveshall not apply to writ matters and Direct tax mattersother than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevantprovisions of statute and rules. Further, in cases where thetax effect is not quantifiable or not involved, such as thecase of registration of trusts or institutions under Section12A/12AA of the IT Act, 1961 etc., filing of appeal shallnot be governed by the limits specified in para 3 aboveand decision to file appeals in such cases may be taken onmerits of a particular case. 13.This Circular will apply to SLPs/appeals/crossobjections/references to be filed henceforth inSC/HCs/Tribunal and it shall also apply retrospectively topending SLPs/appeals/cross objections/ references.Pending appeals below the specified tax limits in para 3above may be withdrawn/ not pressed.” 22)Para Nos. 1 to 3 of the Circular dated 17/2019 dated 8[th]August 2019 are extracted as under :- “Reference is invited to the Circular No. 3 of 2018dated 11.07.2018 (one Circular) of Central Board ofDirect Taxes (the Board) and its amendment dated 20[th]August, 2018 vide which monetary limits of filing ofincome tax appeals by the Department before Income TaxAppellate Tribunal, High Courts and SLPs/appeals beforeSupreme Court have been specified. Representation hasalso been received that an anomaly in the said circular atpara 5 may be removed. 2.As a step towards further management oflitigation, it has been decided by the Board that monetarylimits for filing of appeals in income-tax cases beenhanced further through amendment in Para 3 of theCircular mentioned above and accordingly, the table formonetary limits specified in Para 3 of the Circular shallread as follows : 3.Further with a view to provide parity in filing ofappeals in scenarios where separate order is passed byhigher appellate authorities for each assessment year vis-a-vis where composite order for more than one assessmentyear is passed, para 5 of the circular is substituted by thefollowing para : 2.As a step towards further management oflitigation, it has been decided by the Board that monetarylimits for filing of appeals in income-tax cases beenhanced further through amendment in Para 3 of theCircular mentioned above and accordingly, the table formonetary limits specified in Para 3 of the Circular shallread as follows : 3.Further with a view to provide parity in filing ofappeals in scenarios where separate order is passed byhigher appellate authorities for each assessment year vis-a-vis where composite order for more than one assessmentyear is passed, para 5 of the circular is substituted by thefollowing para : “5.The Assessing Officer shall calculate the taxeffect separately for every assessment year in respectof the disputed issues in the case of every assessee. If,in the case of an assessee, the disputed issues arise inmore than one assessment year, appeal can be filed inrespect of such assessment year or years in which thetax effect in respect of the disputed issues exceeds themonetary limit specified in para 3. No appeal shall befiled in respect of an assessment year or years inwhich the tax effect is less than the monetary limitspecified in para 3. Further, even in the case ofcomposite order of any High Court or appellateauthority which involves more than one assessmentyear and common issues in more than oneassessment year, no appeal shall be filed in respect ofan assessment year or years in which the tax effect isless than the monetary limit specified in para 3. Incase where a composite order/judgment involvesmore than one assessee, each assessee shall be dealtwith separately”. 23)Para Nos. 1 to 3 of the Circular No. 23/2019 dated 6[th] September 2019 are extracted as under :- 24) “Reference is invited to the Circulars issued from time-to-time by Central Board of Direct Taxes (the Board) undersection 268A of the Income-tax Act, 1961 (the Act), forlaying down monetary limits and other conditions forfiling of departmental appeals before Income TaxAppellate Tribunal (ITAT), High Courts and SLPs/appealsbefore Supreme Court. 2.Several references have been received by theBoard that in large number of cases where organised tax-evasion scam is noticed through bogus Long-Term CapitalGain (LTCG)/ Short Term Capital Loss (STCL) on pennystocks and department is unable to pursue the cases inhigher judicial fora on account of enhanced monetarylimits. It has been reported that in large number of cases.ITATs and High Court have recognized the unique modusoperandi involved in such scam and have passedjudgments in favour of the revenue. However, in caseswhere some appellate for a have not given dueconsideration to position of law or facts investigated bythe department, there is no remedy available with thedepartment for filing further appeal in view of theprescribed monetary limits. 3.In this context, Board has decided thatnotwithstanding anything contained in any circular issuedU/s. 268A specifying monetary limits for filing ofdepartmental appeals before Income Tax AppellateTribunal (ITAT), High Courts and SLPs/appeals beforeSupreme Court, appeals may be filed on merits as anexception to said circular, where Board, by way of specialorder direct filing of appeal on merits in cases involved inorganised tax evasion activity.” Office Memorandum dated 16[th] September 2019 is extracted “The undersigned is directed to refer to Circular No. 23 of2019 dated 6th September, 2019 and to say that by virtueof powers of the Central Board of Direct Taxes underSection 268A of Income-tax Act, 1961, the monetary limitsfixed for filing appeals before ITAT/HC and SLPs/appealsbefore Supreme Court shall not apply in case of assesseesclaiming bogus LTCG/STCL through penny stocks andappeals/SLPs in such cases shall be filed on merits.” Section 268A of the IT Act, 1961 reads thus :- Filing of appeal or application for reference by income-tax—authority. Office Memorandum dated 16[th] September 2019 is extracted “The undersigned is directed to refer to Circular No. 23 of2019 dated 6th September, 2019 and to say that by virtueof powers of the Central Board of Direct Taxes underSection 268A of Income-tax Act, 1961, the monetary limitsfixed for filing appeals before ITAT/HC and SLPs/appealsbefore Supreme Court shall not apply in case of assesseesclaiming bogus LTCG/STCL through penny stocks andappeals/SLPs in such cases shall be filed on merits.” Section 268A of the IT Act, 1961 reads thus :- Filing of appeal or application for reference by income-tax—authority. 268A.(1) The Board may, from time to time, issueorders, instructions or directions to other income-taxauthorities, fixing such monetary limits as it may deem fit,for the purpose of regulating filing of appeal orapplication for reference by any income-tax authorityunder the provisions of this Chapter. (2) Where, in pursuance of the orders, instructions ordirections issued under sub-section (1), an income-taxauthority has not filed any appeal or application forreference on any issue in the case of an assessee for anyassessment year, it shall not preclude such authority fromfiling an appeal or application for reference on the sameissue in the case of— (a ) the same assessee for any other assessment year;or (b )any other assessee for the same or any otherassessment year. (3) Notwithstanding that no appeal or application forreference has been filed by an income-tax authoritypursuant to the orders or instructions or directions issuedunder sub-section (1), it shall not be lawful for anassessee, being a party in any appeal or reference, tocontend that the income-tax authority has acquiesced inthe decision on the disputed issue by not filing an appealor application for reference in any case. (4) The Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to the orders, instructionsor directions issued under sub-section (1) and thecircumstances under which such appeal or application forreference was filed or not filed in respect of any case. (5) Every order, instruction or direction which has beenissued by the Board fixing monetary limits for filing anappeal or application for reference shall be deemed tohave been issued under sub-section (1) and the provisionsof sub-sections (2), (3) and (4) shall apply accordingly." 26)A perusal of the section 268A of the IT Act 1961 clearlyprovides that the CBDT is empowered to issue orders, instructions ordirections to the income tax authorities thereby fixing such monetarylimits as it may deem fit for the purpose of filing of appeal or applicationfor reference by any income tax authority under the provisions of ChapterXX. By exercising the powers under the said provisions, the CBDT hasalready issued various circulars referred to above. 27) The Division Bench of this Court in the case of Commissioner of Income-tax Vs. Polycott Corpn. (2009) 178 Taxman 255 (Bombay) hasheld that the instructions cannot be interpreted as a statute though it ispursuant to the power conferred under section 268A of the IT Act. Whatthe Court has to consider is the plain language of the paragraph and theobject behind the said provisions. The object appears to be not to burdenCourts and Tribunals in respect of the matters where the tax effect is lessthan the limit prescribed. Even before issuing the Circular No. 5/2008dated 15[th] May 2008 which was under consideration of this Court, the CBDT had been issuing instructions whereby the monetary limit had beenfixed. It is held by this Court that the duty is cast upon Assessing Officerthat even if disputed questions arise for more than one assessment year,then an appeal should be filed only in respect of that year where themonetary limit as specified in para 3 of the said circular would haveexceeded. CBDT had been issuing instructions whereby the monetary limit had beenfixed. It is held by this Court that the duty is cast upon Assessing Officerthat even if disputed questions arise for more than one assessment year,then an appeal should be filed only in respect of that year where themonetary limit as specified in para 3 of the said circular would haveexceeded. 28)A perusal of the Circular No. 3/2018 indicate that by the saidcircular, in supersession of the CBDT’s Circular No. 21/2015 dated10.12.2015, the CBDT decided that the departmental appeals may befiled on merits before ITAT and High Courts and special leavepetitions/appeals before Supreme Court keeping in view the monetarylimits and conditions specified therein. Insofar as those proceedingsbefore the High Courts are concerned, the monetary limit is prescribed asRs.50 lakh. 29)In clause 7 of the said circular, it was made clear that in acase where appeal before the Tribunal or a Court is not filed only onaccount of the tax effect being less than the monetary limit specifiedtherein, the Pr. Commissioner of Income Tax/Commissioner of IncomeTax shall specifically record that “even though the decision is notacceptable, appeal is not being filed only on the consideration that the tax effect is less than the monetary limit specified in the said Circular.” Asafeguard has been provided that there shall be no presumption that theIncome-tax Department has acquiesced in the decision on the disputedissues. It was further clarified in the said circular that the Income-taxDepartment shall not be precluded from filing an appeal against thedisputed issues in the case of the same assessee for any other assessmentyear or in the case of any other assessee for the same or any otherassessment year, if the tax effect exceeds the specified monetary limits. 30)However, in the said Circular dated 3/2018 dated 11[th] July2018 and more particularly in para Nos. 10 and 11 various exceptionswere provided and if adverse judgments were filed in respect of thoseexceptions, the revenue has been directed to contest those judgments onmerits notwithstanding that the tax effect entailed is less than themonetary limits specified in para 3 of the said Circular No. 3/2018. Inpara 13 of the said Circular, it is further clarified that the said Circularwas applicable to the special leave petitions/appeals/crossobjections/references to be filed after the date of the said Circular beforeSupreme Court/High Courts/Tribunals and it shall apply retrospectivelyto pending Special Leave Petitions/appeals/cross objections/references. Itwas directed that the pending appeals below the specified tax limits inpara 3 of the said Circular may be withdrawn or not pressed. 31)However, by the Circular No. 17/2019 dated 8[th] August2019, the CBDT enhanced the monetary limit from Rs.50 lakh to Rs.oneCrore insofar as the appeals before the High Courts are concerned as steptowards further management of the litigation. 32)In the Circular No. 23/2019 dated 6[th] September 2019, theCBDT noticed that several references had been received by the Board inlarge number of cases where organised tax evasion came through boguslong term capital gain and short term capital loss on penny stocks and thedepartment was unable to pursue the cases in higher judicial fora onaccount of enhanced monetary limits. The Board further noticed that inlarge number of cases ITATs and High Court have recognized the uniquemodus operandi involved in such scam and had passed judgments infavour of the revenue. However, in cases where some appellate fora hadnot given due consideration to position of law or facts investigated by thedepartment, there was no remedy available with the department for filingfurther appeal in view of the prescribed monetary limits. 33)The CBDT accordingly clarified that notwithstandinganything contained in Circular issued under section 268A specifyingmonetary limits for filing of departmental appeals before ITAT and High 33)The CBDT accordingly clarified that notwithstandinganything contained in Circular issued under section 268A specifyingmonetary limits for filing of departmental appeals before ITAT and High Courts and SLPs/appeals before Supreme Court, appeals may be filed onmerits as an exception to the said Circular where the Board, by way ofspecial order direct filing of appeal on merit in cases involved inorganised tax evasion activity. The said Circular No. 23/2019 wasclarified by the Office Memorandum No. F.No. 279/MISC./M-93/2018-ITJ (PT.) dated 16[th] September 2019 that by virtue of powers of the CBDTunder section 268A of the IT Act 1961, the monetary limits fixed forfiling appeals before ITAT/High Court and SLPs/appeal before SupremeCourt shall not apply in cases of assessees claiming bogus long termcapital gain/short term capital loss through penny stocks andappeals/SLPs in such cases shall be filed on merits. It is, thus, clearbeyond reasonable doubt that the exception is carved out by the CircularNo. 23/2019 to file appeal on merits in cases involved in organized taxevasion activity notwithstanding anything contained in any circularissued under section 268A of IT Act, specifying monetary limits for filingof departmental appeals. 34)However, on plain reading of the said Circular No. 23/2019read with Office Memorandum dated 16[th] September 2019, it is clear thatthe appeals are directed to be filed on merits as exception to the earlierCirculars issued under section 268A of the IT Act in cases involved inorganized tax evasion activity from the date of the said Circular No. 23/2019 dated 6[th] September 2019 and not to the appeals already filedand were pending involved in organized tax evasion activity on the partof assessee prior to the date of the said Circular dated 16[th] September,2019. 35)In our view, the said Circular No. 23/2019 read with OfficeMemorandum dated 16[th] September 2019 would not apply to thepending appeals though involving an organized tax evasion activity onthe date of the said Circular. The said Circular No. 23/2019 does notprovide that the said Circular would apply even to the pending caseslodged on the date of the Circular. In our view, those pending appeals onthe date of the said Circular No. 23/2019 thus would not be covered bythe said Circular No. 23/2019 even with the special order of the CBDT. 36)In our view, the said Circular No. 23/2019 dated 6[th]September 2019 read with Office Memorandum dated 16[th] September2019 do not empower the CBDT to pass any special order directing theincome tax department to file an appeal on merits in pending cases evenif alleging organized tax evasion activity on the part of the assessee. 37)At this stage, it would be appropriate to refer to the CircularNo. 3/2018 dated 11[th] July 2018 and more particul