DCIT Vs Chhabi Electricals Pvt. Ltd. (ITAT Pune)
The Revenue filed a Miscellaneous Application under Section 254(2) of the Income Tax Act, 1961, seeking recall of the Tribunal’s order dated 19.07.2018 in ITA No. 588/PUN/2016 for AY 2009-10, by which the Revenue’s appeal had been dismissed on the ground of low tax effect.
The Department submitted that reassessment proceedings had been initiated based on information received from the Sales Tax Department, Government of Maharashtra. It contended that the case fell within the exception in Para 10(e) of CBDT Circular No. 3 of 2018 dated 11.07.2018, as amended by CBDT Letter F.No. 279/Mise.142/2007-ITJ(Pt) dated 20.08.2018. According to the Revenue, the exception covered additions based on information received from external sources in the nature of law-enforcement agencies and therefore the monetary limit for departmental appeals would not apply.
The assessee submitted that the tax effect was below the CBDT-prescribed monetary limit and that information received from the Maharashtra State Sales Tax Department did not fall within the exception specified in Para 10(e).
The Tribunal examined Para 10(e), which referred to external sources in the nature of law-enforcement agencies such as CBI, ED, DRI, SFIO and Directorate General of GST Intelligence (DGGI). It observed that the enforcement agencies referred to in the Circular were Central enforcement agencies and that the Circular did not mention enforcement agencies or departments of State Governments, including the Sales Tax Department.
Since the reassessment proceedings were initiated on information received from the Maharashtra State Sales Tax Department, the Tribunal held that the exception under Para 10(e) of CBDT Circular No. 3 of 2018 did not cover the present case. Accordingly, the monetary limit fixed by the CBDT for departmental appeals applied.
The Tribunal found no merit in the Revenue’s contention and dismissed the Miscellaneous Application seeking recall of the earlier Tribunal order.
FULL TEXT OF THE ORDER OF ITAT PUNE
This Miscellaneous Application has been filed by the Revenue u/s.254(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act) with a prayer to recall the order of Tribunal dated 19.07.2018 in ITA No.588/PUN/2016 for the assessment year 2009-10.
2. Shri Rajesh Gawali representing the Department submitted that the Tribunal vide order dated 19.07.2018 has dismissed the appeal of Revenue on ground of low tax effect. The re-assessment proceedings in the case of assessee were initiated on the basis of information received from Sales Tax Department, Govt. of Maharashtra. Thus, the case of assessee falls within the exception specified at Para 10(e) of the CBDT Circular No. 3 of 2018 dated 11.07.2018 and further amended by CBDT Letter F.No 279/Mise.142/2007-ITJ(Pt) dated 20.08.2018. As per amended Para 10 of CBDT Circular the monetary limit for filing appeals by the Department would not 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) etc. Since, in the present case information was received from Sales Tax Department, Govt. of Maharashtra, the appeal of Revenue falls within the exception. Thus, outside the parameters of monetary limit fixed for filing appeals by Department.
3. On the other hand, Shri C.H. Naniwadekar appearing on behalf of assessee submitted that the CBDT Circular specifies the monetary limits for filing appeal by Revenue and in the present appeal tax effect is less than the limit fixed by CBDT. He further contended that in the present case, information was received from Sales Tax Department, Govt. of Maharashtra which does not fall within the exceptions mentioned in Para 10 of the said Circular.
4. We have heard the submissions made by representatives of rival sides. The Miscellaneous Application has been filed by Revenue to recall the order of Tribunal in ITA No.588/PUN/2016 (supra.) on the ground that CBDT Circular No.3 of 2018 dated 11.07.2018 does not apply in the instant case as it is covered under exception (e) mentioned in Para 10 of the CBDT Circular as amended by Board letter F No 279/Mise.142/2007-ITJ(Pt) dated 20.08.2018.
Before proceeding further, it would be relevant to reproduce the relevant Clause on which the Department is relying for recalling the order of Tribunal and the same reads as under:
“10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect :
(a) xxxxxx
(b) xxxxxx
(c) xxxxxx
(d) xxxxxx
(e) 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).
(f) xxxxxx”
Clause (e) in Para 10 of CBDT Circular specifies that the circular does not apply where information is received from enforcement Agencies such as CBI, ED, DRI, SFIO, Directorate General of GST Intelligence (DGGI) etc. It is evident from Circular that the enforcement agencies referred are Central enforcement agencies. There is no mention of enforcement Agencies/Department of the State Government such as Sales Tax Department.
5. In the instant case, re-assessment proceedings were initiated on the basis of information received from Maharashtra State Sales Tax Department. Thus, we are of considered view that the exception mentioned in Para 10 (e) of the CBDT Circular No. 3 of 2018 (supra.) does not cover information received from State Sales Tax Department. Hence, the monetary limit as fixed by CBDT to file appeals by the Department would apply in the facts of the present case. We do not find any merit in the contentions of the Revenue. The Miscellaneous Application filed by the Revenue seeking recalling of the Tribunal order is dismissed, accordingly.
6. In the result, Miscellaneous Application filed by the Revenue is dismissed.
Order pronounced on Monday, the 3rd day of June, 2019.
