2023 (11) TMI 1001 - HC - Income Tax

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

Principal Commissioner of Income Tax-1, Bhubaneswar Versus Sekhar Kumar Mohapatra

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 ... Maintainability of appeal before HC - Exemption u/s 10(38) - Tax evasion activities through bogus LTCG/STCL on penny stocks - ITAT dismissed the appeal of the Revenue on the ground that tax effect does not exceed the monetary limit, i.e. tax effect of Rs. 50 lakhs as per Circular No.3/2018 dated 20.08.2018 and Circular No.17/2019 dated 08.08.2019 -HELD THAT:- Coming to the merits of the case and on perusal of the orders passed by the Assessing Officer, CIT (A) and the ITAT, this Court finds that the claim for the benefit under Section 10 (38) of the Act had not been considered in its proper perspective and the ITAT is justified in accepting the plea of the respondent-assessee. Therefore, the ITAT has rightly denied to interfere with the same. CBDT circular that permitted to the assessee to file revised returns if he omitted to make a claim, was also not noticed by the Assessing Officer. Therefore, the ITAT has not committed any error in concurring with the view of CIT (A) by dismissing the revenue’s appeal. As such, no substantial question of law arises from the impugned order passed by the ITAT so as to call for interference by this Court. Apart from the same, the present ITA is not maintainable in view of the fact that the Miscellaneous Application was filed by the Revenue on 11.11.2019 basing on the Circular dated 06.09.2019 and 16.09.2019 for consideration of the case on merit. ITAT dismissed the Miscellaneous Application of the Revenue on the ground that original appeals were dismissed by the ITAT on 26.09.2019 on account of low tax effect and the CBDT issued special Circular No.23/2019 dated 06.09.2019 and special order dated 16.09.2019 before passing the order by the Tribunal. Whether against the order passed in the Miscellaneous Application the present ITA is maintainable before this Court or not? - There is no dispute that M.A for the Assessment Year 2014-15, which was disposed of by the ITAT [2019 (9) TMI 1714 - ITAT CUTTACK]on account of low tax effect. Certainly, the order passed in ITA[2019 (9) TMI 1714 - ITAT CUTTACK] is appealable, but as against the order [2022 (3) TMI 1562 - ITAT CUTTACK] passed in the Miscellaneous Application filed in the ITA, which was disposed of the present appeal does not lie before this Court. Even if ITAT had granted liberty for filing Miscellaneous Application, after withdrawal of the monetary limit pursuant to CBDT Circular, but that ipso facto cannot make the said order appealable. An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. The order dated 30.03.2022, which is under consideration, has been passed in Miscellaneous Application filed under Section 254 of the Income Tax Act, 1961. This Court in the case of M/s. Radha-Govindo [2019 (4) TMI 2131 - ORISSA HIGH COURT] did not entertain the ITA and dismissed the same as withdrawn with liberty for the appellant to challenge the order of rejection of review by way of filing a writ petition. Therefore, there is no iota of doubt that the order passed under Section 254 (2) of the Income Tax Act, 1961 cannot be construed to be an order within the meaning of Section 260A to make it appealable before this Court. Rather, the order passed under Section 254 (2) is not appealable one and the remedy is available by invoking Article 226 of the Constitution of India. 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 ReturnThe 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 SharesThe 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 CircularsThe 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 ITAThe 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.ConclusionThe 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.