The Principal Commissioner Of Income Tax 3, Ahmedabad v. Sumita Devchandbhai Savaliya

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/SPECIAL CIVIL APPLICATION NO. 369 of 2022 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX 3, AHMEDABAD VersusSUMITA DEVCHANDBHAI SAVALIYA ==========================================================Appearance: MR MR BHATT SENIOR COUNSEL WITH MR KARAN SANGHANI,ADVOCATE FOR M R BHATT & CO.(5953) for the Petitioner(s) No. 1 for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAandHONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 11/01/2022 ORAL ORDER (PER : HONOURABLE MS. JUSTICE NISHA M. THAKORE) 1By way of this writ application, the writ applicant has prayed forquashing and setting aside the order dated 25[th] March 2021 passed bythe Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad inMiscellaneousApplicationNo.402/AHD/2019(inITANo.1611/AHD/2017). 2The brief facts which emerges from the record are as under: 2.1The writ applicant had preferred the aforesaid MiscellaneousApplication seeking recall of the order dated 14[th] August 2019 in ITANo.1611/Ahd/2017 for A. Y. 2014 - 15, whereby the ITAT had dismissedthe appeal of the Revenue due to low tax effect as per CBDT’s circularNo.17/2019 dated 8[th] August 2019. 2.2The Tribunal was pleased to dispose of the appeal on the groundof low tax effect being involved more particularly by referring theaforesaid circular. 2.3The department has thereafter preferred MiscellaneousApplication by referring to circular No.23 of 2019 dated 6[th] September2019 and the Office Memorandum F. No.279/Misc./M-93/2018-ITJ(PT.) dated 16[th] September 2019 and has contended that in the givencase, addition of Rs.1,35,05,050/- related to LTCG of penny stock, whichfalls under exception carved out in CBDT’s circular No.23 of 2019 dated6[th] September 2019 and O.M. dated 16[th] September 2019. 2.4The ITAT, Ahmedabad Bench, Ahmedabad was pleased to rejectthe aforesaid Miscellaneous Applications vide impugned order dated 25[th]March 2021. The observations made in para 7 are as under: “We have duly considered the rival contentions and gone through therecords carefully. The Tribunal has identified the appeals involving taxeffect by virtue of relief given by the CIT(A) below Rs.50 Lakhs on14/08/2019 and dismissed those appeals. On 14/08/2019, no suchcircular was available. The subsequent circular, in any case, would notmake the order of the Tribunal suffering from an apparent error. TheCircular No.23 of 2019 or Office Memorandum F. No.279/Misc./M-93/2018-ITJ (PT.) nowhere contemplates that these will be applicablew.e.f. 08/08/2019, i.e. the date when circular No.17 of 2019 wasissued.” 3The department has thus preferred the present writ application. 4We have heard learned Senior Counsel Mr. M. R. Bhatt assisted by learned advocate Mr. Karan Sanghani for the Revenue. 5The attention of this court is drawn to the order dated 24[th] June2021 passed by the Coordinate Bench of this Court in Special CivilApplication No.7520 of 2021 as well as the oral order dated 4[th] January2022 passed in Special Civil Application No.13610 of 2021. We quotethe relevant observations made in paras 7, 8 and 9 by the CoordinateBench in the order dated 24[th] June 2021 as under: 3The department has thus preferred the present writ application. 4We have heard learned Senior Counsel Mr. M. R. Bhatt assisted by learned advocate Mr. Karan Sanghani for the Revenue. 5The attention of this court is drawn to the order dated 24[th] June2021 passed by the Coordinate Bench of this Court in Special CivilApplication No.7520 of 2021 as well as the oral order dated 4[th] January2022 passed in Special Civil Application No.13610 of 2021. We quotethe relevant observations made in paras 7, 8 and 9 by the CoordinateBench in the order dated 24[th] June 2021 as under: “7. From the bare reading of the Circular dated 06.09.2019, it appearsthat the CBDT had decided that notwithstanding anything contained inany Circular issued under Section 268A specifying monetary limits forfiling of departmental appeals before the Income Tax AppellateTribunal (ITAT), High Courts and SLPs/Appeals before the SupremeCourt, appeals may be filed on merits as the exception to the saidCircular, where the Board by way of special order direct filing ofappeals on merits in cases involved in organized tax evasion activity.The Office Memorandum dated 16.09.2019 was issued pursuant to thesaid circular dated 06.09.2019 stating inter alia that by virtue of thepowers of CBDT under Section 268A of the Income Tax Act, themonetary limits fixed for filing appeals before ITAT/High Court andSLPs/Appeals before Supreme Court shall not lie in case of assesseesclaiming bogus LTCG/STCL through penny stocks and appeals/ SLPs insuch cases appeals shall be filed on merits. There is nothing to suggestin the said Circular/ Office Memorandum that they shall haveretrospective effect. On the contrary, from the language employed inthe said Circular dated 06.09.2019, it clearly transpires that the appealsmay be filed on merits as an exception to the other Circulars issuedearlier, where the Board by way of special order direct filing of Appealson merits in the cases involved in organized tax evasion activity.Therefore, by virtue of the said Circular dated 06.09.2019, the appealscould be filed on merits, irrespective of the monetary limits fixed inearlier cases, if the Board passes special order for filing appeals in casesinvolving tax evasion activity. The said Circular speaks about theAppeals that may be filed with the special order of the Board in future,and hence could not be construed to have retrospective effect. TheTribunal interpreting the said Circular/ Office Memorandum in theimpugned order has rightly observed that in respect of each case orcategory of cases whether an appeal should be filed in view of theCircular dated 06.09.2019 or not shall be decided by the Board by wayof special order, and thus a specific requirement of issuance of specialorder by CBDT is a must. The Tribunal therefore has rightly held that the CBDT Circular No. 23/2019 dated 06.09.2019 should be read alongwith the Office Memorandum dated 16.09.2019, in respect of theappeals to be filed pursuant to such special orders of CBDT and shallapply to all the appeals filed on or after 16.09.2019 by the revenue,where the tax effect may be low but the appeal could still be filed bythe revenue on merits. 8. The appeals including the appeal in case of the respondent, whichwere disposed of by the Tribunal vide the common order dated14.08.2019 could not be said to have been filed pursuant to the specialorder of the CBDT in view of the Circular dated 06.09.2019 read withthe Office Memorandum dated 16.09.2019, and therefore it could notbe said that the Tribunal had committed any mistake apparent from therecord, which would require rectification as envisaged in Section254(2) of the said Act. 9. In that view of the matter, the Court does not find any illegality orinfirmity in the impugned order dated 09.09.2020 passed by theTribunal dismissing the Miscellaneous Application filed by thepetitioner. The petition being devoid of merits is dismissed in limine.” 8. The appeals including the appeal in case of the respondent, whichwere disposed of by the Tribunal vide the common order dated14.08.2019 could not be said to have been filed pursuant to the specialorder of the CBDT in view of the Circular dated 06.09.2019 read withthe Office Memorandum dated 16.09.2019, and therefore it could notbe said that the Tribunal had committed any mistake apparent from therecord, which would require rectification as envisaged in Section254(2) of the said Act. 9. In that view of the matter, the Court does not find any illegality orinfirmity in the impugned order dated 09.09.2020 passed by theTribunal dismissing the Miscellaneous Application filed by thepetitioner. The petition being devoid of merits is dismissed in limine.” 6In view of the aforesaid, the present writ application standsdismissed and is hereby rejected. (J. B. PARDIWALA, J) CHANDRESH (NISHA M. THAKORE,J)