2023 (7) TMI 1279 - AT - Income Tax

Condonation of filing of appeal before the ITAT - monetary limits for filing of Departmental appeals before the ITAT - appeal of the Department is time barred by 363 days - DR submitted CBDT vide Circular No.23 of 2019 dated 06.09.2019 had mandated that notwithstanding anything contained in Circular issued u/s. 268A specifying monetary limits for filing of Departmental appeals before the ITAT High Courts and SLPs/appeals before the Supreme Court appeals may be filed on merits as an exception where the Board by way of special order directs filing of appeal on merits in cases involved in organized tax evasion activity - HELD THAT - The appeal was filed on 07.02.2020. The order appealed against was received by the Department on 11.12.2018 and therefore the last date for filing the Departmental appeal before the ITAT was 09.02.2019. Circular No. 23 of the CBDT is dated 06.09.2019 and the OM is dated 16.09.2019. Therefore the Circular based on which the Department has filed this appeal was issued almost seven months after the expiry of the limitation period for filing of the appeal. Even after the issuance of the said Circular and OM the present Departmental appeal was filed on 07.02.2020 i.e. almost five months after the issuance of the said Circular. Filing of the appeal five months after the issuance of Circular has not been suitably explained by the Department. Therefore we are unable to consider the prayer of the Department to condone the delay and we dismiss the appeal as being unadmitted and being barred by limitation. Decided against department.

Summary

Issues:
The issues involved in the judgment are condonation of delay in filing the appeal by the Department and the deletion of addition of Long Term Capital Gain by the ld. CIT(A) based on lack of evidence linking the assessee to any dubious design for tax evasion.

Condonation of Delay:
The Department filed an appeal challenging the relief allowed by the ld. CIT(A) after a delay of 363 days. The Department sought condonation of delay citing Circular No.23 of 2019 and subsequent OM dated 16.09.2019, which allowed appeals to be filed on merits in cases of organized tax evasion activity. However, the Tribunal dismissed the appeal as time-barred and unadmitted, as the appeal was filed almost five months after the issuance of the Circular, without a suitable explanation for the delay.

Deletion of Addition of Long Term Capital Gain:
The assessee had earned Long Term Capital Gain on the sale of shares, which was claimed as exempt under section 10(38) of the Income Tax Act. The Assessing Officer alleged that the gain was part of a manipulative design to evade taxation and added the amount to the assessee's income under section 69A of the Act. The ld. CIT(A) noted that there was no evidence linking the assessee to any arrangement for generating bogus Long Term Capital Gain. The ld. CIT(A) observed that the Investigation Wing's report, on which the Assessing Officer relied, did not specifically implicate the assessee. Therefore, the ld. CIT(A) deleted the addition, stating that the assessee could not be held guilty of acts of third parties without specific findings against the assessee. The Department challenged this decision, but the Tribunal upheld the ld. CIT(A)'s order and dismissed the Department's appeal.