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TMI Blog2024 (12) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... BDT Circulars no. 17/2019 will not apply as penalty has been levied on observation of Audit Objection, which falls under exception 10(c) as laid down by the Board in Circular No. 3/2018 dated 11.07.2018 as amended by Board's letter dated 20.08.2019. 3. The appellant craves leave to add, alter, modify, delete amend any of the grounds with prior permission of the Hon'ble CIT, as per the circumstances of the case. 4. The appellant prays to file any of the addition evidence, with the permission of Ld. Pr. CIT-1, Nashik appropriate to the grounds taken in appeal." 3. The assessee has raised the following grounds of appeal in cross objection :- "1. The penalty order u/s 271E dated 12.03.2022 may be declared as null and void in law, in as much as, in the asst. order passed u/s 143(3) for A.Y.2016-17, the A.O. had not recorded any satisfaction regarding initiation of penalty proceedings u/s 271E and therefore, the penalty order u/s 271E in the instant case is not sustainable in view of the law laid down by Hon'ble Supreme Court in case of Jai Laxmi Rice Mills [379 ITR 521]. 2. The penalty order u/s 271E dated 12.03.2022 may be declared as null and void in law, in as mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by the assessee levied penalty of Rs. 48,64,586/- u/s 271E of the Act on 12.03.2022 on account of violation of provisions of section 269T of the Act. 7. On appeal, the Ld. CIT(A) after considering the evidences / documents available on record, submissions of the assessee, judicial precedents on the issue and factual matrix of the case, deleted the penalty imposed u/s 271E of the Act observing that there is no contravention of section 269T of the Act as no loan has been repaid otherwise than by an account payee cheque. 8. Dissatisfied the Revenue is in appeal before the Tribunal and all the grounds of appeal relate thereto. 9. At the outset, the Ld. AR submitted that the appeal is not maintainable on account of low tax effect, however, the Ld. DR opposed the same submitting that the monetary limit of CBDT Circular No. 17 of 2019 will not apply as the penalty has been levied on observation of audit objection, which falls under the exception in para 10(c) as laid down by the CBDT in Circular No. 3/2018 dated 11.07.2018 as amended by Board's letter dated 20.08.2019. The Ld. DR argued that para 5 of Circular No. 09/2024 is given retrospective effect only to the enhanced mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Sales/Commercial Taxes or GST Department, or d. Where the case is one in which prosecution has been filed by the Department in the relevant case and the trial is pending in any Court or conviction order has been passed and the same has not been compounded, or e. Where strictures/adverse comments have been passed and/or cost has been levied against the Department of Revenue, CBDT or their officers, or f. Where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under sections 10(23C), 12A/ 12AA/12AB of the Act, order passed u/s 263 of the Act etc. The reference to cases involving sections referred here, where it is not possible to quantify tax effect or tax effect is not involved, is for the purpose of illustration only. g. Where addition relates to undisclosed foreign income/undisclosed foreign assets (including financial assets)/undisclosed foreign bank account, or h. Cases involving organized tax evasion including cases of bogus capital gain/loss through penny stocks and cases of accommodation entries, or i. Where mandated by a Court's directions, or j. Writ matters, or k. Matters related to wealth ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 5/2024 and the enhanced monetary limit in Circular No. 9/2024 are applicable to the pending appeals before the Tribunal, wherein the exception clause on audit objection has been removed. The audit objection clause as an exception is not applicable to the present appeal by virtue of the revised exceptions provided in the latest Circular No. 5/2024 dated 15.03.2024 read with Circular No. 9/2024 dated 17.09.2024. 14. We have perused the decision of the Hon'ble Rajasthan High Court (supra) wherein the appeals filed by the Revenue are dismissed as not maintainable in view of the Circular No. 9/2024 under the similar set of facts and are inclined to agree with the assessee's contention. In this case the Hon'ble High Court considered the issue as to "whether after issuance of Circular No. 9 of 2024 dated 17.09.2024, the exceptions of Circular 3 of 2018 are applicable to pending appeals" and observed as under : "9. For dealing the issue, it would be pertinent to look into the language of the previous circulars. In Instruction No. 5 of 2008 dated 15.05.2008, Instructions No. 3 of 2011 dated 09.02.2011 and No. 5 of 2014 dated 10.07.2014, Para 11 in all three instructions was that these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Circular is quoted below:- "This issues under section 268A of the Act and shall come into effect from the date of issue of this Circular. This Circular will apply to SLPs/appeals to be filed henceforth before the SC/HCs/Tribunals." 15. By Circular 9 of 2024 dated 17.09.2024, monetary limits specified in Circular 5 of 2024 were enhanced. The exceptions in Para 3.1 & 3.2 of Circular No.5 of 2024 were retained. 16. Para 5 of Circular 9 of 2024 is reproduced:- "The modifications shall come into effect from the date of issue of this Circular. This Circular will apply to SLPs/appeals to be filed henceforth in SC/HCs/Tribunal. It shall also apply to the SLPs/appeals pending before Supreme Court/High Courts/Tribunal, which may accordingly be withdrawn." Para 5 made this circular applicable to the appeals to be filed thereafter and also to the appeals pending before the Supreme Court, High Court and the Tribunal. 17. Circular 9 of 2024 albeit, enhanced the monetary limits but retained the exceptions in Para 3.1 & 3.2 of Circular 5 of 2024. From perusal of Para 5 of Circular 9 of 2024, it is evident that the circular shall apply to the appeals to be filed henceforth and also to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the considered view that the CBDT Circular dated 15-5-2008 would be very much applicable to the pending cases requiring department to withdraw cases wherein the tax effect is less than the prescribed monetary limits. 12. At this juncture, it will also be relevant to mention that it was necessary for the CBDT to put a caveat, while issuing instructions vide its Circular dated 5-6-2007, that the Appeals involving substantial question of law of recurring nature should not be withdrawn since provision like section 268A of the Income-tax Act was absent. Now, in view of insertion of the provision of section 268A by the Finance Act, 2008 with effect from 1- 4- 1999 in the Income-tax Act, 1961, no prejudice could be caused to the revenue even if the cases involving legal issues of recurring nature are withdrawn, since the newly inserted provision takes care of the adverse eventuality which could have been put against the revenue. The section 268A of the Act, reads as under :-- "268A. Filing of appeal or application for reference by income-tax authority.- (1) The Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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