DCIT Vs Bhojraj Lal Chand Nawani (Chhattisgarh High Court)
Summary: The Chhattisgarh High Court, in Deputy Commissioner of Income Tax 1, Bhilai Vs Bhojraj Lal Chand Nawani, considered an application filed by the Income Tax Department seeking reconsideration of the dismissal of TAXC No. 11 of 2019 on account of the monetary limits prescribed for departmental appeals. The earlier tax appeal had been dismissed in accordance with CBDT Circular dated 11 July 2018, as amended by the subsequent circular dated 20 August 2018, governing the filing of appeals before the Income Tax Appellate Tribunal, High Courts and Supreme Court. The Revenue contended that the dispute fell within the exception provided under clause 10(e) of the circular, which excluded certain cases involving additions based on information received from external sources from the prescribed monetary limits. According to the Department, the additions were based on information obtained from the Maharashtra Sales Tax Department and, therefore, the appeal should have been considered on merits notwithstanding the monetary threshold.
The High Court examined clause 10(e) and held that the exception applied to additions based on information received from specified law enforcement agencies, such as the Central Bureau of Investigation (CBI), Enforcement Directorate (ED), Directorate of Revenue Intelligence (DRI), Serious Fraud Investigation Office (SFIO) and Directorate General of GST Intelligence (DGGI). In the present case, the information relied upon by the Revenue had been received from the Department of Sales Tax, Government of Maharashtra, which did not fall within the category of agencies contemplated under the exception. Consequently, the Court held that clause 10(e) was inapplicable and that the original tax appeal had been correctly dismissed in accordance with the CBDT circular dated 11 July 2018, read with its amendment dated 20 August 2018. Finding no justification to reconsider the earlier dismissal, the High Court dismissed MCC No. 621 of 2019 by its order dated 16 September 2019.
FULL TEXT OF THE JUDGMENT/ORDER OF CHHATTISGARH HIGH COURT
1. It is argued that TAXC No.11 of 2019, has been dismissed applying the Central Board Direct Taxes (in short “the CBDT”) circular dated 11.07.2018 whereby the CBDT has directed that the Department Appeals may be filed on merits before the Income Tax Appellate Tribunal, High Courts and SLPs/Appeals before the Supreme Court keeping in view the monetary limits for the High Courts. 2019:CGHC:25800-DB 2 MCC No. 621 of 2019
2. Applying the circular, the tax case was dismissed however, the same circular also says that when the issue falls within the exception clause, the same shall not be hit by the monetary limit. Referring to clause 10(e) of the circular, it is argued that where the addition is based on information received from external sources, the exception clause would apply and the ceiling of monetary limit would not apply.
3. Having heard learned counsel for revenue and having seen the subject clause 10(e), it appears the same would apply where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ ED/ DRI/ SFIO/ Directorate General of GST Intelligence (DGGI). In the case at hand the information on the basis of which this MCC has been filed was received from the Department of Sales Tax of the State of Maharashtra. Thus, the said information having not emanated from the CBI/ ED/ DRI/ SFIO/ DGGI, clause 10(e) would have no application.
4. In our considered view, the TAXC No.11 of 2019, was rightly dismissed being hit by the Circular dated 11.7.2018 read with the amendment in the said circular vide subsequent CBDT circular dated 20.08.2018.
5. The MCC deserves to be and is accordingly dismissed.
