Case Note & Summary
The High Court of Judicature at Bombay, Bench at Aurangabad, heard a batch of income tax appeals filed by the Commissioner of Income Tax under Section 260A of the Income-tax Act, 1961, against orders of the Income Tax Appellate Tribunal, Pune Bench 'B'. The appeals arose from a search action conducted on 17 March 2006 on the Peety Group of Jalna, during which statements of share brokers were recorded admitting issuance of bogus broker notes and bills to ante-date purchases for members of the Peety Group, allegedly generating bogus long term capital gain and short term capital loss. The respondent-assessee, a family member of the group, initially voluntarily declared the amounts as bogus and stated willingness to pay taxes, but later retracted the statement made under Section 132(4) while filing the return. On 31 December 2007, the Assessing Officer held the claims of long term capital gain and short term capital loss as bogus and made additions under Section 69A to the assessee's taxable income. The assessee appealed to the Commissioner of Income Tax (Appeals), Aurangabad, which allowed the appeal on 24 June 2008. The Revenue appealed to the Income Tax Appellate Tribunal, which dismissed the Revenue's appeal on 28 September 2012 for assessment year 2005-06. The Revenue then filed the present appeals under Section 260A. By order dated 10 March 2014, the High Court admitted the main appeal on two substantial questions of law: whether additions under Section 69A were just and proper, and whether sale proceeds from share transactions amount to long term capital gain and short term capital gain when the assessee voluntarily admitted to pay taxes on additional income. At the hearing, the respondent's counsel raised a preliminary objection to maintainability, contending that the tax effect in these appeals was less than the monetary limit of Rs. 50 lakh prescribed under CBDT Circular No. 3/2018 dated 11 July 2018, issued under Section 268 of the Income-tax Act, and that the Revenue must withdraw the appeals. The counsel relied on paragraphs 7, 10, and 11 of the Circular, arguing that the Circular superseded Circular No. 21/2015 and was intended to control unwarranted litigation. The respondent's counsel submitted that if disputed issues arise in more than one assessment year, appeals may be filed only in those years where tax effect exceeds the limit, and that no presumption of acquiescence arises when an appeal is not filed solely due to low tax effect. The provided judgment text ends before the court's final decision on the maintainability objection or the merits of the substantive questions. Therefore, the final outcome of the appeals is not available from the extracted portion.
Headnote
A) Income Tax - Appeals to High Court - Monetary Limit for Filing Appeals - Income-tax Act, 1961, Sections 260A, 268 and CBDT Circular No. 3/2018 dated 11.07.2018 - Revenue filed appeals under Section 260A against ITAT order dismissing Revenue's appeals; respondent raised preliminary objection that tax effect in these appeals did not exceed Rs. 50 lakh prescribed by the Circular, rendering appeals not maintainable and requiring withdrawal; Court heard parties on maintainability after appeals were admitted on substantial questions of law; Held: The provided text ends before the court's ruling on the maintainability objection, so final decision is not available (Paras 6-9). B) Income Tax - Assessment of Bogus Capital Gains - Additions under Section 69A - Income-tax Act, 1961, Sections 69A, 132(4) - Search action on Peety Group revealed alleged bogus long term capital gain and short term capital loss through ante-dated broker notes and bills; assessee initially voluntarily admitted to pay taxes but retracted while filing return; Assessing Officer made additions, but CIT(A) allowed assessee's appeal and ITAT dismissed Revenue's appeal; substantial questions framed on correctness of additions and character of sale proceeds; Held: The court had not yet decided the substantive questions due to the maintainability objection (Paras 3-5). C) Income Tax - Statement under Section 132(4) - Evidentiary Value and Retraction - Income-tax Act, 1961, Section 132(4) - Assessee's statement made during search under Section 132(4) was retracted at the time of filing return; question arose whether sale proceeds amount to long term capital gain and short term capital gain when assessee had voluntarily admitted to pay taxes on additional income; Held: The evidentiary effect of retraction remained unresolved as the court first proceeded with the maintainability issue (Paras 3,5).
Issue of Consideration
Whether the appeals filed by the Revenue under Section 260A of the Income-tax Act, 1961 are maintainable when the tax effect is less than the monetary limit of Rs. 50 lakh prescribed under CBDT Circular No. 3/2018 dated 11 July 2018; whether the additions made by the Assessing Officer under Section 69A were justified; whether sale proceeds from share transactions amount to long term capital gain and short term capital gain when the assessee voluntarily admitted to pay taxes on additional income
Law Points
- CBDT Circular No. 3/2018 prescribed monetary limit of Rs.50 lakh for filing appeals before High Court
- Circular issued under Section 268 of Income Tax Act
- No presumption that department acquiesced if appeal not filed only due to tax effect below limit
- Assessee's retraction from statement under Section 132(4)
- Bogus long term capital gain and short term capital loss not allowable
- Additions under Section 69A
