Revenue's application seeking recall of order dismissed as special order exempting bogus LTCG cases not retroactive

The Tribunal dismissed the Revenue's miscellaneous application seeking recall of an order, emphasizing that the special order exempting cases involving bogus LTCG/STCL through penny stocks from monetary limits did not apply retroactively. The Tribunal held that subsequent circulars and special orders by CBDT, not part of the original record, did not warrant rectification under section 254(2) of the Income Tax Act, 1961. Consequently, the application was deemed not maintainable, leading to its dismissal.

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Issues:
1. Interpretation of CBDT circulars regarding monetary limits for filing appeals.
2. Application of special order exempting cases involving bogus LTCG/STCL through penny stocks from monetary limits.
3. Consideration of special orders issued by CBDT after the filing of appeal.
4. Rectification under section 254(2) of the Income Tax Act, 1961.

Issue 1: Interpretation of CBDT circulars regarding monetary limits for filing appeals

The case involved a miscellaneous application filed by the Revenue against an order passed by the Co-ordinate Bench. The Department argued that the Tribunal did not appreciate the findings of the Assessing Officer regarding accommodation entry and penny stock transactions. The Department sought the recall of the order based on a CBDT circular specifying exceptions to monetary limits for filing appeals. The Department contended that the appeal should be heard on merits despite the low tax effect involved.

Issue 2: Application of special order exempting cases involving bogus LTCG/STCL through penny stocks from monetary limits

The Assessee argued that the Tribunal had dismissed the appeal based on the CBDT circular dated 08.08.2019, which increased the monetary limit for maintaining appeals. The Assessee highlighted that the circular exempting penny stock cases from monetary limits was issued after the Tribunal's decision. The Assessee relied on a similar decision by the Jaipur Bench in a related case, emphasizing that the special order by CBDT did not apply to the present appeal.

Issue 3: Consideration of special orders issued by CBDT after the filing of appeal

The Tribunal referred to CBDT Circular no. 23 of 2019 and a special order dated 16.09.2019 exempting cases involving bogus LTCG/STCL through penny stocks from monetary limits. The Tribunal emphasized that the special order required for filing appeals in such cases had not been issued before the filing of the present appeal by the Revenue. The Tribunal held that the appeal was rightly dismissed based on the CBDT circular dated 08.08.2019, as the special order did not apply retroactively to pending appeals.

Issue 4: Rectification under section 254(2) of the Income Tax Act, 1961

The Tribunal concluded that the miscellaneous application filed by the Revenue was not maintainable as the CBDT circular and special order were not part of the record at the time of the original decision. The Tribunal held that the non-consideration of subsequent circulars and special orders by CBDT did not constitute a mistake apparent on the record that could be rectified under section 254(2) of the Act. Therefore, the application was dismissed.

This detailed analysis of the judgment addresses the interpretation of CBDT circulars, application of special orders, consideration of orders issued after the appeal filing, and the rectification under section 254(2) of the Income Tax Act, 1961.

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