Gujarat High Court
The Principal Commissioner Of Income ... vs Dhwani Jateen Gupta on 3 January, 2022
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/TAXAP/2/2022 ORDER DATED: 03/01/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 2 of 2022
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THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL),
AHMEDABAD
Versus
DHWANI JATEEN GUPTA
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Appearance:
M R BHATT & CO.(5953) for the Appellant(s) No. 1
MR RUTUL P DESAI(6498) for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 03/01/2022
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. The present Tax Appeal at the instance of the Revenue was filed with an application seeking condonation of delay of 17 days. We have passed an order today itself condoning the delay of 17 days. Ordinarily, we would have asked the Registry to notify the main matter i.e. the present Tax Appeal for admission after its due registration. However, as the question of law as proposed by the Revenue is no longer res integra, we decided to take up the main appeal also for hearing today itself.
2. This Appeal is at the instance of the Revenue and is directed against the order dated 14.08.2019 passed by the Income Tax Appellate Tribunal, 'A' Bench, Ahmedabad in the IT(SS)A No.194/AHD/2019 for the A.Y. 2013-14. The Revenue has proposed the following question of law for the Page 1 of 4 Downloaded on : Wed Jan 12 16:21:50 IST 2022 C/TAXAP/2/2022 ORDER DATED: 03/01/2022 consideration of this Court:
"Whether the Appellate Tribunal is justified in law and on facts in disposing the appeal of the revenue on account of low tax effect without deciding the appeal on merits even when the issue under appeal was claim of bogus LTCG on penny stock for which no monetary limits were applicable?"
3. We have heard Mr. M.R. Bhatt, the learned Senior Counsel appearing for the Revenue and Mr. Manish J. Shah, the learned counsel appearing for the assessee.
4. It appears from the materials on record that the Appeal filed by the Revenue before the Tribunal came to be dismissed on the ground of low tax effect.
5. Mr. Bhatt, the learned Senior Counsel would submit that after the dismissal of the appeal by the Tribunal, the CBDT issued a Circular No.23 of 2019 dated 06.09.2019 along with an Office Memorandum No.279 dated 16.09.2019 providing that the cases involving Organized Tax Evasion Scam to bogus Long Term Capital Gain/ Short Term Capital Loss on penny stocks would not be subjected to monetary limits prescribed for filing appeals. On the date when the Tribunal dismissed the appeal on the ground of low tax effect, indisputably, the CBDT Circular No.23 of 2019 dated 06.09.2019 was not in force. However, Mr. Bhatt, very fairly pointed out that the argument of the Revenue that such circular should be applied with retrospective effect came to be negatived by a Coordinate Bench of this Court in the case of Principal Commissioner of Income-tax (Central), Ahmedabad vs. Anand Natwarlal Sharda reported in 2021 (281) Taxmann 300 (Gujarat) . This Court took Page 2 of 4 Downloaded on : Wed Jan 12 16:21:50 IST 2022 C/TAXAP/2/2022 ORDER DATED: 03/01/2022 the view that there is nothing to suggest in the Circular/Office Memorandum referred to above that the same would have a retrospective effect.
6. On the contrary from the language employed in the said Circular dated 06.09.2019, the Coordinate Bench noted that the appeals may be filed on merits as an exception to the other Circulars issued earlier. We quote the relevant observations made by the Coordinate Bench:
7. From the bare reading of the Circular dated 06.09.2019, it appears that the CBDT had decided that notwithstanding anything contained in any Circular issued under Section 268A specifying monetary limits for filing of departmental appeals before the Income Tax Appellate Tribunal (ITAT), High Courts and SLPs/ Appeals before the Supreme Court, appeals may be filed on merits as the exception to the said Circular, where the Board by way of special order direct filing of appeals on merits in cases involved in organized tax evasion activity. The Office Memorandum dated 16.09.2019 was issued pursuant to the said circular dated 06.09.2019 stating inter alia that by virtue of the powers of CBDT under Section 268A of the Income Tax Act, the monetary limits fixed for filing appeals before ITAT/High Court and SLPs/Appeals before Supreme Court shall not lie in case of assessees claiming bogus LTCG/STCL through penny stocks and appeals/ SLPs in such cases appeals shall be filed on merits. There is nothing to suggest in the said Circular/ Office Memorandum that they shall have retrospective effect. On the contrary, from the language employed in the said Circular dated 06.09.2019, it clearly transpires that the appeals may be filed on merits as an exception to the other Circulars issued earlier, where the Board by way of special order direct filing of Appeals on merits in the cases involved in organized tax evasion activity. Therefore, by virtue of the said Circular dated 06.09.2019, the appeals could be filed on merits, irrespective of the monetary limits fixed in earlier cases, if the Board passes special order for filing appeals in cases involving tax evasion activity. The said Circular speaks about the Appeals that may be filed with the special order of the Board in future, and hence could not be construed to have retrospective effect. The Tribunal interpreting the said Circular/ Office Memorandum in the impugned order has rightly observed that in respect of each case or category of cases whether an appeal should be filed in view of the Circular dated 06.09.2019 or not shall be decided by the Board by way of special order, and thus a specific requirement of issuance of special order 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 along with the Office Memorandum dated 16.09.2019, in respect of Page 3 of 4 Downloaded on : Wed Jan 12 16:21:50 IST 2022 C/TAXAP/2/2022 ORDER DATED: 03/01/2022 the appeals to be filed pursuant to such special orders of CBDT and shall apply 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 by the revenue on merits."
7. Our attention has been drawn by Mr. Shah, the learned counsel to one another order passed by a Coordinate Bench dated 13.07.2021 in the Special Civil Application No.9968 of 2021. The same reads thus:
"1. The petition is filed by the petitioner - The Principal Commissioner of Income Tax (Central), Ahmedabad, seeking direction for quashing and setting aside the order dated 09.09.2020, passed by the Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad in M.A. No.405/AHD/2019 in IT(SS)A No.194/AHD/2019, Annexure 'A' to the petition.
2. It may be noted that this bench had an occasion to deal with the common order dated 09.09.2020 (which is impugned in the present petition), passed by the Income Tax Appellate Tribunal, in Special Civil Application No. 7520 of 2021 and the Court has dismissed the said petition by passing the detailed order on 24.06.2021.
3. In order to avoid duplication of the order, the present petition is dismissed in terms of the said order dated 24.06.2021 passed in Special Civil Application No. 7520 of 2021. This petition stands dismissed accordingly."
8. The order referred to above passed in the Special Civil Application No.9968 of 2021 is in the case of the very same assessee, who is before us.
9. In view of the aforesaid, this appeal fails and is hereby dismissed.
(J. B. PARDIWALA, J) (NISHA M. THAKORE,J) NEHA Page 4 of 4 Downloaded on : Wed Jan 12 16:21:50 IST 2022