Case Law Details
DCIT Vs Shri Rajesh Aggarwal (ITAT Delhi)
Introduction: This case pertains to an appeal filed by the Department against the order of the Commissioner of Income-Tax (Appeals) in New Delhi. The Department’s appeal was directed against the assessment order passed by the Deputy Commissioner of Income Tax for the assessment year 2011-12.
Detailed Analysis: The grounds cited by the Department in their appeal revolve around the addition of Rs. 7,20,130 made by the Assessing Officer. The form submitted indicates a tax effect of Rs. 2,22,520 on the mentioned addition of Rs. 7,20,130.
During the proceedings, the bench queried the Senior Deputy Registrar about the applicability of CBDT Circular no. 17/2019 dated 08.08.2019, as the tax effect was below the threshold prescribed by the circular.
The Senior Deputy Registrar argued that the present appeal pertained to Long Term Capital Gains arising from the sale of shares of Nouveau Multimedia Ltd., which had been classified as a penny stock. The Assessing Officer treated these share transactions as bogus or sham with the involvement of accommodation entries. Consequently, the Senior Deputy Registrar claimed that this appeal falls within the exception clause of the CBDT Circular and must be dealt with based on the merits of the case.
The counsel for the assessee referred to a recent decision of the ITAT, Delhi, in the case of ITO vs. Ankit Agarwal (ITA No. 73/Del/2021) dated 17.05.2023. This case involved identical facts and issues. In the decision concerning Ankit Agarwal, the Assessing Officer confirmed that Nouveau Global Ventures Ltd. was not a penny stock, and the case was not recommended for further appeal. This decision was presented to highlight the similarity in circumstances.
Conclusion: The ITAT Delhi dismissed the Revenue’s appeal due to a low tax effect, which fell below the threshold established by the CBDT Circular. While dismissing the appeal, the ITAT granted the Revenue the liberty to approach the Tribunal if the Assessing Officer determined that the appeal was not covered by the CBDT Circular and was therefore eligible for further consideration. This decision takes into account the tax effect and the applicability of CBDT Circular no. 17/2019, ensuring that appeals are pursued based on their financial significance.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the Department is against the order of learned Commissioner of Income-Tax(Appeals)-14, New Delhi in appeal no.212/18-19/CIT(A)-14, vide Order dated 22.09.2020 against the assessment order of DCIT, Circle 43(1), New Delhi passed under Section 143(3)/147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 11.12.2018 for assessment year 2011-12.
2. Grounds taken by the Department are reproduced as under:
1. Whether on facts and circumstances of the case, the CIT(A) has erred on facts in deleting the addition of Rs.7,20,130/-made by the AO.
2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of the appeal.
2.1 Perusal of Form No.36 reveals that the tax effect in the present appeal is of Rs.2,22,520 on an addition of Rs.7,20,130. Specific query was raised by the Bench on the learned Sr. DR as to applicability of CBDT Circular no.17/2019 dated 08.08.2019.
2.2 Learned Sr. DR submitted that the present appeal is in respect of Long Term Capital Gain earned by the assessee on sale of shares of Nouveau Multimedia Ltd. which has been treated as a penny stock. Learned Assessing Officer has held the transaction in these shares as bogus or sham by way of taking accommodation entry. Therefore, the issue in the present appeal is covered in the exception clause of the said CBDT Circular and thus has to be dealt with on merit of the case.
3. In this respect, learned counsel for the assessee placed on record a recent decision of ITAT, Delhi in the case of ITO vs. Ankit Agarwal in ITA No.73/Del/2021 dated 17.05.2023 wherein identical facts and issue have been dealt with. The learned counsel for the assessee submitted that in the case of Ankit Agarwal, similar transactions were undertaken. In the said decision, a letter from the learned Assessing Officer i.e. ITO, Ward 43(6), Delhi dated 07.12.2022 confirmed that Nouveau Global Ventures Ltd. is not a penny stock and, therefore, the case is not recommended for further appeal. The said letter from the decisions of Shri Ankit Aggarwal (supra) is reproduced for ease of reference:
“To
The Sub Registrar,
ITAT, Flo, Lak Nayak han CWing Khan Market
New Delhi
Dated: 07.12.2022
Madam Sir,
SUB: Appeal in the case of Sh. Ankit Agarwal -ITA 73/D/2021 for AY2011-12 IPAN AJAPA7220M) Reference: letter F.No.SR(DR)/A Bench/Del/2022-23 dated 06.09.2022 received from O/o SR. DR. ITAT, A Beach, New Delhi
Kindly refer to the above mentioned subject.
2. In this regard it as submitted that considering the tax effect i.e. Rs 10,36,590/- which is below the limit prescribed for filing appeal in the light of Circular no.17/2019 F. No 279/Misc. M- 142/2007-ITJ (Pt.) dated 08.08.2019 issued by CBDT and decision of Hon’ble ITAT, Bench- G Delhi wherein it has held in its order vide ITA No. 8701/DEL/2019 dated 29.06.2020 in the case of Suresh Kumar Aggarwal Vs ACIT, CC-25, New Delhi that M/s Nouveau Global Ventures Ltd. is not a penny stock, this case is not recommended for further appeal.
This issue with the approval of PCTT-15, New Delhi.
Yours faithfully,
Sd/-
(Jitender Pal)
Income Tax Officer
War 43(6), Delhi”
4. It was pointed out by the learned counsel that name of the company mentioned in the letter is Nouveau Global Ventures Ltd. whose earlier name was Nouveau Multimedia Ltd. The fact of change in name of the company is noted by the learned Assessing Officer in the impugned order at page 4. Thus, in the present case, it is not a transaction of shares in penny stock and, therefore, not covered by the exception clause of the aforesaid CBDT Circular.
5. Considering the above facts and the decision of Shri Ankit Aggarwal as well as the letter from the Assessing Officer, Ward 43(6), Delhi reproduced above, the present appeal by the Revenue is dismissed owing to the low tax effect. However, liberty is granted to the Revenue, if the learned Assessing Officer finds that appeal is not hit by the aforesaid CBDT Circular, he may approach the Tribunal in accordance with the appellate provisions of law.
6. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 28.06.2023.
