Revenue's rectification application under section 154 dismissed for bogus LTCG claims through penny stock transactions

ITAT Cuttack dismissed revenue's rectification application under section 154 seeking recall of tribunal order that dismissed appeal based on monetary limits regarding bogus LTCG/STCL claims through penny stock transactions. Revenue argued CBDT circulars dated 6.9.2019 and 16.9.2019 were not considered, but tribunal found these circulars were issued before the original order dated 26.9.2019, indicating they were available for consideration. Since no mistake apparent on record existed, the miscellaneous application was dismissed.

---

---

Issues:
1. Recall of ITAT order based on CBDT Circular No. 23 of 2019.
2. Decision on merits in cases involving alleged bogus LTCG/STCL through penny stocks.
3. Application of CBDT Circulars on tax effect limits for filing appeals.
4. Interpretation of special orders for filing appeals on merits in organized tax evasion cases.

Issue 1: Recall of ITAT order based on CBDT Circular No. 23 of 2019
The Appellant sought to recall the ITAT order dated 26.9.2019 in ITA No. 205/CTK/2019, citing CBDT Circular No. 23 of 2019 dated 6.9.2019. The Appellant claimed that the order was dismissed based on monetary limits and not on merits, requesting a fresh consideration based on the circular's provisions.

Issue 2: Decision on merits in cases involving alleged bogus LTCG/STCL through penny stocks
The Appellant argued that the ITAT order did not address the case on merits but solely on monetary limits. The Respondent contended that in cases involving penny stocks, decisions should be made on merits, not solely based on tax effect limits. The ITAT considered the arguments and referred to similar decisions by other benches regarding the issue.

Issue 3: Application of CBDT Circulars on tax effect limits for filing appeals
The ITAT analyzed CBDT Circular No. 23 of 2019 and the subsequent special order dated 16.9.2019 exempting cases involving bogus LTCG/STCL through penny stocks from monetary limits specified for filing appeals. The ITAT emphasized the need for a special order by the CBDT to file appeals in such cases, post the special order's issuance date.

Issue 4: Interpretation of special orders for filing appeals on merits in organized tax evasion cases
The ITAT clarified that the special order by the CBDT dated 16.9.2019 allowed appeals in cases involving organized tax evasion activity through penny stocks to be filed on merits, exempting them from monetary limits. The ITAT emphasized that the special order applied to appeals filed after 16.9.2019 and not retroactively to pending appeals filed before the special order's issuance.

In conclusion, the ITAT dismissed the Miscellaneous Applications filed by the Revenue, as the appeals were not filed pursuant to the special order of the CBDT dated 16.9.2019. The ITAT held that the CBDT Circulars should be read in conjunction with the special order for filing appeals on merits in cases involving bogus LTCG/STCL through penny stocks. The ITAT's decision was based on the specific requirements outlined in the circulars and the timing of the appeals filed in relation to the issuance of the special order.

---