2021 (1) TMI 121 - AT - Income Tax

Tribunal upholds dismissal of Department's petitions, citing lack of legal grounds. CBDT Circular limits appeals.

The Tribunal dismissed the Department's miscellaneous petitions, affirming that the appeals did not challenge the constitutional validity of the Income ... Rectification of mistake u/s 254 - Scope of assessment u/s 153 A/ 153C - HELD THAT:- In the present case, originally, the issue was decided by the Tribunal by dismissing the appeals of the Revenue on the reason that the addition in pursuance to notice issued u/s. 153A of the I.T. Act can be made only if incriminating material is found and seized in case where there is also abatement of regular assessment proceedings Revenue has not at all raised the constitutional validity of the assessment proceedings u/s. 153A of the I.T. Act or provisions of other sections namely, 139, 142, 148, 151 and 153 of the I.T. Act before the Tribunal in the first round of litigation.This Tribunal is not a competent authority to decide the constitutional validity of any provisions of the Income Tax Act and it cannot be said that the Department’s case falls under the exceptions provided in CBDT Circular No.3/2018 dated 11/07/2018. Hence, in our humble opinion, there is no mistake apparent from record in the order of the Tribunal dated 26/06/2019 so as to recall the order u/s. 254(2) of the I.T. Act. Issues Involved:1. Recall of the Tribunal's common order dated 26/06/2019.2. Validity of assessments under Section 153A of the Income Tax Act.3. Applicability of CBDT Circular No. 3/2018 regarding monetary limits for filing appeals.4. Whether the issue involves the constitutional validity of the provisions of the Income Tax Act.Detailed Analysis:Issue 1: Recall of the Tribunal's Common Order Dated 26/06/2019The Department filed miscellaneous appeals seeking the recall of the Tribunal's common order dated 26/06/2019. The Tribunal had initially dismissed the Department's appeals based on the CBDT Circular No. 3/2018, which prescribes monetary limits for filing appeals. The Department argued that the Tribunal should reconsider its decision due to the constitutional validity issues concerning Section 153A of the Income Tax Act.Issue 2: Validity of Assessments Under Section 153A of the Income Tax ActFollowing a search under Section 132, the Assessing Officer issued notices under Section 153A for the assessment years 2002-03 to 2007-08. The assessees filed returns, and the assessments were completed. The CIT(A) allowed the appeals, leading to the Department filing appeals before the Tribunal, which were dismissed. The High Court remanded 21 cases back to the Tribunal for fresh consideration, emphasizing that any material unearthed during the search or statements made during the search are valuable pieces of evidence for invoking Section 153A.Issue 3: Applicability of CBDT Circular No. 3/2018 Regarding Monetary Limits for Filing AppealsThe Tribunal referred to Section 268A of the Income Tax Act and CBDT Circular No. 3/2018, which sets monetary limits for filing appeals. The Circular applies retrospectively, and the Tribunal found that the tax effect in the present appeals was less than Rs. 20 lakhs. The Tribunal dismissed the Department's appeals, noting that the cases did not fall under any exceptions to the Circular, such as challenges to the constitutional validity of the Act or Rules.Issue 4: Whether the Issue Involves the Constitutional Validity of the Provisions of the Income Tax ActThe Department contended that the appeals involved the constitutional validity of Section 153A, arguing that the Tribunal's interpretation placed an artificial restriction on the Section. However, the Tribunal found no evidence that the constitutional validity was challenged at any stage of the appeal. The Tribunal also noted that it is not competent to decide on the constitutional validity of any provisions of the Income Tax Act. Therefore, the Tribunal concluded that there was no mistake apparent from the record in its original order and dismissed the Department's miscellaneous petitions.ConclusionThe Tribunal dismissed the Department's miscellaneous petitions, holding that the appeals did not involve any challenge to the constitutional validity of the provisions of the Income Tax Act. The Tribunal reaffirmed its reliance on CBDT Circular No. 3/2018, which prescribes monetary limits for filing appeals, and found no merit in the Department's claims. The Tribunal's decision was based on the lack of incriminating material for the assessment years in question and the absence of any substantial legal grounds to recall its previous order.