TaxTMI 
TaxTMI 
2019 (8) TMI 1402
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng to low tax effect . The learned counsel for the assessee has placed on record computation of tax effect in these appeals which in these there appeals comes to less than Rs. 20 lacs each of the appeal. The Ld. DR rebutted the contentions of the assessee's counsel and submitted that these three appeals filed by Revenue relates to additions made in the hand of the assessee based on information received from Investigation Wing, Mumbai in pursuance of searches conducted by Revenue u/s 132 on Mr Bhanwarlal Jain group and it is claimed that DGIT(Inv.), Mumbai is an 'external source' who is an 'law enforcement agency' who has forwarded information to learned Assessing Officer( "AO") based on which additions were made to the income of the assessee and hence these appeals are covered by exception in para 10(e) of CBDT circular No. 3/2018 dated 11.07.2018 which was later modified vide F.No.279/Misc 142/2007-ITJ-(Pt) dated 20.08.2018, wherein scope of exceptions were widened by amending circular dated 11.07.2018 and hence these three appeals cannot be disposed of as low tax effect appeals . The learned DR requested that apart from oral arguments as advanced before the Bench, the Revenue may....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hereunder:- Circular No. 3/2018 F No 279/Misc. 142/2007-ITJ (Pt) Government of India Ministry of Finance Department of Revenue Central Board Direct Taxes New Delhi the 11th July, 2018 Subject: Revision of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court- measures for reducing litigation-Reg. Reference is invited to Board's Circular No. 21 of 2015 dated 10.12.2015 wherein monetary limits and other conditions for filing departmental appeals (in Income-tax matters) before Income Tax Appellate Tribunal, High Courts and SLPs/ appeals before Supreme Court were specified. 2. In supersession of the above Circular, it has been decided by the Board that departmental appeals may be filed on merits before Income Tax Appellate Tribunal and High Courts and SLPs/ appeals before Supreme Court keeping in view the monetary limits and conditions specified below. 3. Henceforth, appeals/ SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder: S. No. Appeals/ SLPs in Income-tax matters Monet....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t prescribed. In case where a composite order/ judgement involves more than one asscssee, each assessee shall be dealt with separately. 6. Further, where income is computed under the provisions of section 115JB or section 115JC, for the purposes of determination of 'tax effect', tax on the total income assessed shall be computed as per the following formula- (A - B) + (C - D) where, A = the total income assessed as per the provisions other than the provisions contained in section 115JB or section 115JC (herein called general provisions); B = the total income that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of the disputed issues under general provisions; C = the total income assessed as per the provisions contained in section 115JB or section 115JC; D = the total income that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section 115JC was reduced by the amount of disputed issues under the said provisions: However, where the amount of disputed issues is considered both under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as filed or not filed in respect of any case." 9 As the evidence of not filing appeal due to this Circular may have to be produced in courts, the judicial folders in the office of Pr.CsIT/ CsIT must be maintained in a systemic manner for easy retrieval. 10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: (a) Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign assets/ bank accounts. 11. The monetary limits specified in para 3 above shall not apply to writ matters and Direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevant provisions of statute and rules. Further, in cases where the tax effect is no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g on irsofficersonline.gov.in. 11. [email protected] for uploading on NJRS. 12. Hindi Cell for translation. 13. Guard file. Director (ITJ) CBDT, New Delhi" 2.4 The ld. Counsel for the assessee submitted that as per CBDT Circular No. 3/2018, F. No. 279/Misc.142/2007-ITJ (Pt) dated 11th July, 2018 issued by Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India as further modified on 20.08.2018, no appeal shall be filed by the Revenue in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3 of the circular . Para 3 of the Circular No. 3/2018 S No. Appeals in Income tax matters Monetary Limit (in Rs) 1 Before Appellate Tribunal 20,00,000/- 2 Before High Court 50,00,000/- 3 Before Supreme Court 10,000,000/- 2.5 In the said circular vide para 13, it is stipulated that this instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in Hon'ble High Courts/Tribunals. Thus, it is stipulated in said circular that pending appeals below the specified tax limits may be withdrawn/....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of GST Intelligence" We are afraid that contentions of learned DR cannot be accepted because para 10(e) clearly stipulates that additions should be based on information received from 'external sources' in the nature of 'law enforcement agencies' such as CBI/ED / DRI/SFIO/Directorate General of GST Intelligences(DGGI) and as could be seen from para 10(e) that the thrust in this exception is that additions should be based on information received from 'external sources' and secondly these external sources should be in the nature of 'law enforcement agencies' . These two conditions are necessarily and mandatorily required to be fulfilled to be covered under exception. Since, these exceptions take away the benefit granted by Revenue to the tax-payers by way of withdrawal of pending appeals with low tax effect, the onus is on the Revenue to show that taxpayer's case is covered by these exceptions and the taxpayer is not entitled to seek protection granted by CBDT circular. Further, these exceptions are penal in nature as it seeks to withdraw the benefit granted by Revenue to tax-payers , it is to be strictly construed. Thus, it is for Revenue to demonstrate that additions were made b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of CBDT circular dated 11.07.2018 as modified on 20.08.2018 as this information is received from sources which are from sources 'internal' to Income-tax Department. The interpretation placed by learned DR that CBDT meant in the aforesaid circulars as to all information received by AO from sources which are outside of the 'assessment unit' to be taken as 'external source' cannot be accepted as such interpretation is too wider and could not have been intended by CBDT. Moreover, as we have seen above that in para 10(e) , none of the agencies listed therein work under the aegis of Income-Tax Department, while Directorate of Income-tax(investigation) works under the aegis of Investigation Division of CBDT who is its controlling authority and hence could not be called as an 'external source'. The policy of non filing of appeal by Revenue in low tax effect matter is part of litigation policy followed by Revenue wherein keeping in view low tax effect in its appeal , the Revenue choose not to persue its appeal further with higher forums keeping in view cost benefit analysis. The Revenue has chosen to free its resources by not persuing un-important and routine low tax effect appeals and inst....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2. Kindly refer to the subject cited above and the Circular under reference. In this regard, it is submitted that, the undersigned was on rotation duty as Sr. DR today in Court No. 6 (ITAT A bench) before Your honour's in the matters under reference. 3. In the above referred case, there is common issue of addition u/s 68 of the Income- tax Act, 1961 (the Act). The additions for the different assessment years are as under. - A. Y. Addition u/s 68 of the Act (in Rs.) Rs. 31,67,671 Rs. 42,40,030 2007-08 2008-09 2010-11 Rs. 53,55,000 In the present case, the additions were made by the assessing officer on the basis of the information provided by the Directorate of Income-tax (Investigation) emanating from the evidences and statements recorded during the course of a Search and survey action as per the provisions of section 132 of the Act, in the cases of known entry operator Sh. Bhanwarlal Jain. During the course of the search action various evidence were found which clearly depicted that various companies and entities being operated and controlled by Sh. Bhanwarlal Jain were not doing any meaningful business and were onl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ived from external source, The external source is of the nature of law enforcement agencies, ➤ and, some such agencies are listed as CBI/ED/DRI/DGGI. 5.1. Directorate of Income-tax (Investigation) is also a law enforcement agency which is mandated with the responsibility of conducting demonstrative search and survey action u/s 132 and 133A of the Act, with a view of creating credible deterrence against tax avoidance. The following is noteworthy here.. The Directorate of Income-tax [Investigation) is all together an external agency as far as the assessment unit of the department is concerned. The information received from The Directorate of Income-tax (Investigation) is all together an information received from external sources in the nature of law enforcement agencies, as for as the assessment unit of the department are concerned. fivery! Document 3 6. ➤ Many a times, the explicitly mentioned agencies like CBI/ED/DRI/DGGI etc. share the relevant information to the Directorate of Income-tax (Investigation) and after consideration, Directorate takes necessary action in the form of search and survey actions. The main ca....