2021 (10) TMI 462 - HC - Income Tax

Maintainability of appeal - low tax effect - recalling of the order 2019 (10) TMI 1465 - GUJARAT HIGH COURT passed by this Court while disposing of the Tax Appeal as not pressed on the ground that the tax effect involved in the Tax Appeal was below the prescribed monetary limit of ₹ 1 Cr. as per the CBDT Circular No.17 of 2019 dated 08.08.2019 - reopen the assessment of the respondent based on the audit objections raised at the relevant point of time - HELD THAT - While noticing that the Assessment Order passed under Section 143 (3) read with Section 148 of the I.T. Act has already been decided by this Court in 2019 (10) TMI 1001 - GUJARAT HIGH COURT the notice had been issued under Section 263 (1) of the I.T. Act on 17.10.2013 for the same assessment year seeking the dis-allowance of the incremental subsidy from exemption available under Section 10 B of the I.T. Act. On the part of the respondent, we could notice the objections essentially since the recall of the order dated 01.10.2019 passed by this Court if is if has arisen due to audit objections, the same ought to be placed on the record and without placing that material on record, no order of recall can be sought. So as not to curtail the rights of the parties in raising all the contentions including that of the audit objections, more particularly, when raised keeping in mind the decision of the Bombay High Court M/S. NAWANY CONSTRUCTION CO. PVT. LTD. 2018 (9) TMI 800 - BOMBAY HIGH COURT we have chosen to examine the material which has been placed before us and on satisfying ourselves on this issue, we are of the opinion that the request of the department to permit the recall of the 2019 (10) TMI 1465 - GUJARAT HIGH COURT should be allowed. In the decision of Nawany Construction Private Limited Supra there was an attempt to get over the binding circular without placing any material before the Court, which is not the case here. Therefore, without further elaborating on this aspect so as not to curtail the rights of the parties while recalling the order, we permit the Tax Appeal to be revived and to be placed before the Bench as per the roster.

Summary

Issues:
1. Recall of order dated 01.10.2019 in Tax Appeal No.465 of 2019 based on tax effect below prescribed limit.
2. Exceptional clause (c) of Para 10 of Amended Circular of Board No.03 of 2018 dated 20.08.2018 as modified by Circular No.17 of 2019 dated 08.08.2019.
3. Reopening of assessment based on audit objections.
4. Interpretation of audit objections as grounds for recall of order.
5. Compliance with circulars and legal precedents in recalling orders.

Issue 1:
The application sought the recalling of the order dated 01.10.2019 in Tax Appeal No.465 of 2019 due to the tax effect being below the prescribed monetary limit of ?1 Cr. as per the CBDT Circular No.17 of 2019 dated 08.08.2019.

Issue 2:
The Revenue contended that the matter fell under exceptional clause (c) of Para 10 of the Amended Circular of Board No.03 of 2018 as modified by Circular No.17 of 2019. The application aimed to recall the order and revive the tax appeal, seeking to condone any filing delay and requesting further reliefs in the interest of justice.

Issue 3:
The respondent opposed the recall, stating that the reopening of assessment was based on audit objections and subsequent reassessment under Section 148 of the Income Tax Act. The respondent argued that the audit objections did not pertain to the present Tax Appeal arising from a notice under Section 263 of the Act, emphasizing the need for material evidence to recall the order.

Issue 4:
The Court deliberated on whether the audit objections could serve as grounds for recalling the order, emphasizing the necessity of placing relevant material on record. The respondent cited a Bombay High Court decision highlighting the insufficiency of mere reliance on circulars without supporting evidence.

Issue 5:
After hearing both parties, the Court noted the previous judgment upholding the order of the ITAT related to the assessment under Section 143(3) of the Income Tax Act. Considering the arguments and legal precedents, the Court allowed the recall of the order dated 01.10.2019 in Tax Appeal No.465 of 2019, ensuring the rights of the parties to raise contentions, and directed the revival of the tax appeal before the appropriate bench.

This detailed analysis of the judgment from the Gujarat High Court provides insights into the issues surrounding the recall of an order in a tax appeal, the application of circulars and legal precedents, and the importance of supporting evidence in legal proceedings.