2021 (9) TMI 238 - AT - Income Tax

Maintainability of appeal - low tax effect - primary ground on which the Revenue seeks to recall this order is by placing reliance on CBDT Circular No. 23/2019 dated 06/09/2019 wherein the Circular was issued in respect of long term capital gain and short term capital loss generated through penny stocks, citing the same as an exception to application of low tax effect circular - HELD THAT - We find that the Tribunal order dated 27/08/2019 contains only four paragraphs and there is no para 5 in the said order. Hence, the content in the Miscellaneous Application of the Revenue primafacie is incorrect. First of all there was no provision given in the Tribunal order to recall the order giving leeway or liberty to the Revenue to approach this Tribunal for recalling of the order. Tribunal order was passed in SMT. MANJULABEN B PATEL, 2019 (8) TMI 1753 - ITAT MUMBAI and the CBDT Circular No.23/19 was issued on 06/09/2019. Hence, on the date of passing the Tribunal order, the CBDT Circular / instruction relied upon was not in existence at all. In this view of the matter, we see no mistake on record in the order passed by this Tribunal. Accordingly, the Miscellaneous Application of the Revenue deserves to be rejected as devoid of legally sustainable merits.

Summary

Issues:
Recall of order based on CBDT Circular No. 23/2019 - Exception for long term capital gain and short term capital loss through penny stocks.

Analysis:
The judgment revolves around the recall of an order by the Revenue based on CBDT Circular No. 23/2019, citing an exception for long term capital gain and short term capital loss through penny stocks. The Revenue sought to recall the order dated 27/08/2019 passed by the Tribunal in ITA No.2945/Mum/2018 due to low tax effect under CBDT Circular No.17/2019. The Revenue relied on the new circular to argue for the recall, claiming that the case involved an organized tax evasion scam through accommodation entries, falling under the exception specified in the circular.

The Tribunal, however, found that the contentions in the Miscellaneous Application were incorrect. The Tribunal's order did not provide any provision for recalling the order or give the Revenue the liberty to approach for a recall. Moreover, the CBDT Circular No.23/19 was issued after the Tribunal's order, rendering it inapplicable at the time of the original decision. The Tribunal referred to a similar case, DCIT vs. Shree Valji Manji Gothi, where a comparable view was taken, leading to the dismissal of the Miscellaneous Application for lacking legal merit.

In conclusion, the Tribunal dismissed the Miscellaneous Application of the Revenue on 03/09/2021, as it did not find any legal grounds to recall the order based on the subsequent circular. The judgment underscores the importance of timely and applicable legal provisions in seeking a recall of orders, ensuring adherence to procedural and substantive legal requirements in tax matters.