The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that exception to the Central Board of Direct Taxes (CBDT) circular specifying monetary limit for filing appeals not applicable to cases relating to information received from the investigation wing of the department.
During the assessment proceedings of the assessee, M/s Elphinstone Paper Box, the Assessing Officer made an addition to total income alleging that the purchases made from one of the parties namely M/s Bigwin Paper Distributor Private Limited as bogus. On appeal, the CIT (A) deleted the addition, against which the revenue preferred appeal before ITAT.
The Counsel for the assessee in cross-objection raised that the issues of appeals are being covered by the tax effects Circular issued by the Central Board of Direct Taxes (CBDT) and the appeals of the Department are not maintainable because the monetary tax effect is less than 50 lakhs.
The Counsel for the revenue submitted that the information was received from the Sales Tax Authorities regarding bogus purchases i.e., from an external source and therefore appeals of the assessee fall under the exception 10(e) clause of the circular, according to which wherever information has been received from external sources, those appeals shall not be covered by the tax effects circular
Mr. Om Prakash Kant (Accountant Member) and Mr. Sandeep Singh Karhail (Judicial Member) have observed that the Investigation Wing of the Income Tax Department based on the information from the Sales Tax Authorities conducted a search/survey on M/s Bigwin Paper Distributor Private Limited’ and ‘M/s Arun Paper and Iron Traders. During the action, it was found that they were engaged in providing entries of bogus sales to the assessee, and thereafter the Investigation Wing sent the information to the AO of the assessee that the assessee was engaged in receipt of bogus purchase bills.
The Tribunal while dismissing the appeal has held that “in the case of the assessee source of information is not Sales Tax Department and information is received only from the Investigation Wing of the Department which is an internal source and not external law enforcement agencies as specified in exception 10(e)”.
Mrs. Smita Nair and Mr. Bhupendra Shah appeared on behalf of the revenue and assessee respectively.
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