2021 (7) TMI 1287 - HC - Income Tax

Maintainability of appeal - low tax effect - review petitioners submits that this Court on the basis of Circular No.3/2018 dated 20.8.2018 and Circular dated 8.8.2019 opined that monetary limit was enhanced up to ₹ 1 Crore in respect of the High Court - review is prayed for in the teeth of Para 10(e) of the Circular dated 20.8.2018, which reads as where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ED/DRI/ SFIO / Directorate General of GST Intelligence (DGGI) - HELD THAT - As observed by the assessing officer i.e. ACIT, Indore that the search and seizure operation was conducted by the Indore Tax Department and DG, Central Excise Intelligence, Indore which concluded that respondent is associated with Signet Group of Indore and was involved in organized activities of tax evasion, which led ultimately the addition made by the AO. Thus, Clause 10(e) aforesaid is attracted. On more than one occasion, the Bench put a question to Ms. Mandlik when this scrutiny report was prepared and whether any such material in this regard is produced to show that such report falls within the ambit of Para-10(e) but no response is received by the Bench. Despite repeated query, learned counsel for the petitioners has not chosen to answer as to how the aforesaid falls within the ambit of review jurisdiction. This is trite that the power of review is limited. Unless it is shown that there exists an error apparent on the record or any other ingredients which are in consonance with Order 47 Rule 1 CPC, interference in review jurisdiction cannot be made. Unfortunately no argument is advanced to bring the present matter within the ambit of principles analogous to Order 47 Rule 1 CPC. In absence thereof, the question of exercising the review jurisdiction does not arise. Review petitions fail and are hereby dismissed.

Summary

Issues:
1. Interpretation of Circulars related to monetary limits for appeals in High Court.
2. Application of Para 10(e) of Circular dated 20.8.2018.
3. Scope of review jurisdiction in tax evasion cases.

Analysis:
1. The judgment dealt with the interpretation of Circulars related to monetary limits for appeals in the High Court. The Court noted that a clarificatory circular issued on 6.9.2019 allowed the Department to file an appeal on merits in cases involving organized tax evasion activity, irrespective of valuation. The appellant was permitted to withdraw the appeal based on this clarification, as the monetary limit was enhanced up to ?1 Crore for the High Court.

2. The application of Para 10(e) of the Circular dated 20.8.2018 was a crucial issue in the review petition. The counsel for the review petitioners argued that the addition made by the Assessing Officer was based on information from external sources like law enforcement agencies, indicating organized tax evasion activity. The Court observed that despite repeated queries, no satisfactory response was provided to demonstrate how the matter fell within the ambit of review jurisdiction under Clause 10(e).

3. The Court emphasized the limited scope of review jurisdiction in tax evasion cases. It highlighted that the power of review is restricted to cases where there is an error apparent on the record or other grounds specified under Order 47 Rule 1 of the Civil Procedure Code. In this case, since no arguments were presented to establish any such grounds for review, the Court concluded that the review petitions lacked merit and were dismissed. The judgment underscored the importance of demonstrating specific legal grounds for invoking the review jurisdiction in such matters.