2020 (9) TMI 19 - AT - Income Tax

Maintainability of appeal - low tax effect - bogus purchases Addition - Addition deleted by CIT-A partly - HELD THAT - Tribunal has taken a consistent view that the information received from Investigation Wing of the Department does not fall in the category of the information received from external source being law enforcement agencies such as CBI/ED/DRI/SFIO/DGGI etc. as provided in the exception clause (e) of para 10 of the Circular No. 3/2018. Accordingly, the appeal of the revenue is not maintainable being the monetary limit is not exceeding as prescribed in the Circular No. 3/2018. Appeal of the revenue is dismissed.

Summary

Issues:
1. Justification of restricting addition of bogus purchases
2. Deletion of additions based on corroborative information from Investigation Wing

Analysis:
1. The appeal by the revenue challenged the order restricting the addition of ?2,32,500 to ?50,000 for bogus purchases disallowed by the Assessing Officer (AO). The issue revolved around whether the ld. CIT (A) was justified in making this restriction following a decision on bogus purchases by the Hon'ble Supreme Court. The Tribunal noted that the tax effect in the appeal was low, and the ld. D/R argued that the case fell under an exception in Circular No. 3/2018 due to information from the Investigation Wing, Mumbai. However, the Tribunal found that the case did not meet the exception criteria, leading to the dismissal of the revenue's appeal.

2. The second issue involved the deletion of additions based on corroborative information from the Investigation Wing. The Tribunal examined whether this case fell within the exception provided in para 10(e) of Circular No. 3/2018. Referring to previous Tribunal orders, the Tribunal established that information from the Investigation Wing did not qualify as external source information from law enforcement agencies specified in the exception clause. Therefore, the Tribunal concluded that the revenue's appeal was not maintainable due to not exceeding the monetary limit as prescribed in the Circular, resulting in the dismissal of the appeal.

In summary, the Tribunal dismissed the revenue's appeal on both issues, emphasizing that the information from the Investigation Wing did not meet the criteria for the exception outlined in Circular No. 3/2018. The judgment highlighted the importance of adhering to the prescribed monetary limits and criteria for maintaining appeals, ultimately upholding the decision to restrict the addition of bogus purchases and delete additions based on information from the Investigation Wing.