Revenue's appeal dismissed as orders under Section 254(2) in miscellaneous applications not appealable under Section 260A

The HC dismissed the Revenue's appeal as not maintainable. The case involved exemption under Section 10(38) regarding LTCG/STCL on penny stocks. ITAT had dismissed Revenue's original appeal due to low tax effect below Rs. 50 lakhs per CBDT circulars. When Revenue filed a miscellaneous application after subsequent CBDT circulars, ITAT rejected it. HC held that orders passed under Section 254(2) in miscellaneous applications are not appealable under Section 260A before HC. The proper remedy against such orders is through writ petition under Article 226. HC found no substantial question of law arising from ITAT's decision.

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Issues Involved:
1. Validity of the revised return filed by the respondent-assessee.
2. Treatment of income from shares as "Income from Other Sources" versus exemption under Section 10(38) of the Income Tax Act, 1961.
3. Applicability of CBDT Circulars regarding monetary limits for filing appeals.
4. Maintainability of the present Income Tax Appeal (ITA) against the order passed in the Miscellaneous Application.

Summary:

Issue 1: Validity of the Revised Return
The respondent-assessee filed a revised return for the Assessment Year 2014-15, claiming the original return was valid as the revised return was filed under duress during a survey operation. The Assessing Officer rejected this plea, treating the income from shares as "Income from Other Sources" rather than exempting it under Section 10(38) of the Income Tax Act, 1961.

Issue 2: Treatment of Income from Shares
The Assessing Officer treated the income from shares as "Income from Other Sources," arguing that the shares were from a bogus company used for accommodation entries. The CIT (A) and ITAT, however, deleted the additions made by the Assessing Officer, citing decisions from other ITAT Benches that supported the assessee's claim for exemption under Section 10(38).

Issue 3: Applicability of CBDT Circulars
The ITAT dismissed the Revenue's appeal based on the monetary limit prescribed by CBDT Circulars. The Revenue filed a Miscellaneous Application citing a special order that exempted cases involving bogus LTCG from the monetary limit. The ITAT dismissed this application, stating that the special circulars were issued after the original order was passed and did not constitute a mistake apparent on record.

Issue 4: Maintainability of the Present ITA
The High Court held that the present ITA is not maintainable. The order passed in the Miscellaneous Application under Section 254(2) of the Income Tax Act, 1961, is not appealable under Section 260A. The Court cited various precedents, including decisions from the High Courts of Delhi, Punjab and Haryana, Jammu & Kashmir, and Rajasthan, which supported the view that such orders are not appealable and can only be challenged through a writ petition under Article 226 of the Constitution of India.

Conclusion
The High Court dismissed the appeal, stating that the order passed under Section 254(2) is not appealable under Section 260A, and the appropriate remedy would be to file a writ petition.

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