2022 (7) TMI 1337 - HC - Income Tax

Maintainability of appeal against ITAT order - low tax effect - addition of bogus LTCG - penny stock purchases - Tribunal had dismissed the appeal filed by the revenue by noting the fact that the appeal is less than the monetary limit of Rs.50 lakhs fixed by the CBDT - HELD THAT - Exception to penny stock cases from the stipulation of monetary limit would be indeed operable from 16.09.2019 that is only in the cases where appeal was filed on or after 16.09.2019. Revenue would submit that though in the instant case the appeal before the tribunal was filed in the year 2019, as on the date when the circular was issued to take effect from 16.9.2019, the appeal was pending before the tribunal. As submitted that in the case of Rakesh Kumar Khemuka, the department had given specific instruction. In our considered view, the department having taken a decision and a circular having been issued on 6.9.2019 followed by official memorandum of 16.9.2019 taking a decision that the stipulation of monetary limit would be operable from 16.9.2019, it is of no significance as to whether the appeal was pending on the said date and whether the tribunal was hearing the matter. This is so because the cut off date fixed under the circular is that it will apply to cases where appeals are filed on or before 16.9.2019. In the instant case, admittedly, the appeal has been filed much prior to the said date. For the above reason, we find that the order passed by the learned tribunal dismissing the appeal does not call for any interference

Summary

Issues:
1. Interpretation of CBDT Circular No.23/2019 dated 6.9.2019
2. Applicability of monetary limit in appeals filed before and after 16.9.2019

Interpretation of CBDT Circular No.23/2019 dated 6.9.2019:
The High Court heard arguments regarding the CBDT Circular No.23/2019 dated 6.9.2019 and its impact on appeals. The Court considered precedents from other High Courts and the Supreme Court regarding the Circular and its prospective application. The Court noted that the Circular, along with the Office Memorandum dated 16th September, 2019, should be read together and have only a prospective effect. The Court emphasized that the Circular's applicability is crucial and should be analyzed in light of previous legal decisions. The Court directed the Commissioner of Income tax to provide necessary assistance to the standing Counsel for the Department to understand the implications of the Circular fully.

Applicability of monetary limit in appeals filed before and after 16.9.2019:
The Court examined the issue of whether the monetary limit should be applicable to appeals filed before or after 16.9.2019. The Department argued that the exception to the monetary limit for penny stock cases would only be operable from 16.9.2019 if the appeal was filed on or after that date. The appellant contended that even though the appeal was filed in 2019, as the Circular was issued to take effect from 16.9.2019, it should apply. However, the Court held that the Circular's cut-off date was clear, and it would only apply to cases where appeals were filed on or after 16.9.2019. As the appeal in question was filed before this date, the Court found no grounds to interfere with the Tribunal's decision to dismiss the appeal. Consequently, the appeal by the revenue was dismissed, and the substantial questions of law raised were deemed not relevant for consideration.

This detailed analysis of the judgment from the High Court of Calcutta highlights the key issues surrounding the interpretation of the CBDT Circular and the applicability of monetary limits in appeals filed before and after 16.9.2019. The Court's thorough examination and application of legal principles provide clarity on the matter, ensuring a fair and just decision in the case.