2019 (5) TMI 1676 - AT - Income Tax

Restoration of appeal which was dismissed on the ground of Monetary limits for filing of appeals by the Department - HELD THAT - Although the tax effect was less however the matter under dispute was covered by exception provided in para 10(e) of the said circular read with clarification issued by CBDT on 20/08/2018. Case was reopened pursuant to receipt of information from Sales Tax Department Maharashtra that the assessee made alleged bogus purchases from certain entities and therefore such cases fall within the exception provided under the circular. Liberty was already provided under the order to the revenue to seek recall upon pointing out any exceptions. AR could not controvert the same. Upon perusal we find force in the argument of Ld. DR since the scope of exception as given in circular No. 03/2018 dated 11/07/2018 has been widened vide clarification F. No 279/Misc. 142/2007-ITJ (Pt) dated 20/08/2018 amending para 10 of the said circular - we are inclined to recall the order with respect to the captioned assessee only without disturbing the order for rest. We order so. The revenue s appeal stands restored to its original status.

Summary

Issues:
1. Application for recall of the Tribunal's order based on the tax effect falling below the threshold limit.
2. Interpretation of the exception provided in Circular No. 03/2018 dated 11/07/2018 regarding the widening scope of exceptions for filing appeals.
3. Reopening of the case based on information received from external sources about alleged bogus purchases by the assessee.
4. Decision to recall the order only with respect to the captioned assessee and restoration of the revenue's appeal status.

Analysis:
1. The revenue filed an application seeking the recall of the Tribunal's order dated 03/08/2018 concerning the assessee due to the tax effect falling below the threshold limit of ?20 Lacs as per CBDT circular No. 03/2018. The Tribunal had dismissed the revenue's appeal based on this threshold. However, the Authorized Departmental Representative argued that the matter fell within an exception provided in para 10(e) of the circular, supported by a clarification issued by CBDT on 20/08/2018. The case was reopened based on information from the Sales Tax Department about alleged bogus purchases by the assessee, falling under the exception provided in the circular.

2. The Tribunal found merit in the argument presented by the Authorized Departmental Representative, as the scope of the exception in the circular had been widened through a clarification issued by CBDT. The amendment to para 10 of Circular No. 3 of 2018 dated 11.07.2018 expanded the circumstances under which appeals should be contested on merits, even if the tax effect is below the specified limits. The amendment listed specific scenarios, including cases where additions are based on information received from external sources like law enforcement agencies, which applied to the present case of alleged inflated purchases by the assessee.

3. The Tribunal, upon reviewing the factual matrix, concluded that the assessee's case was reopened due to information received from external sources indicating the practice of inflating purchases through accommodation entries. Consequently, the Tribunal decided to recall the order only concerning the captioned assessee, without affecting the order for the rest. The revenue's appeal was restored to its original status, and the registry was instructed to schedule the appeal before the regular bench for further proceedings.

4. The application for recall was allowed by the Tribunal in alignment with the decision to recall the order specifically for the captioned assessee, based on the widened scope of exceptions outlined in the circular and the circumstances of the case involving alleged bogus purchases and information from external sources. The order was pronounced in the open court on 03rd May 2019.