DGCEI is a Law Enforcement Agency, Exempting Departmental

DGCEI is a Law Enforcement Agency, Exempting Departmental Appeals From CBDT Monetary Limits

Issue

Whether the Directorate General of Central Excise Intelligence (DGCEI) qualifies as a “law enforcement agency” under paragraph 10(e) of the CBDT Circular dated 11.07.2018 (read with Circular dated 20.08.2018), thereby exempting the Revenue’s appeal from the standard Rs. 50 lakhs low tax effect monetary limit.

Facts

The Income-tax Department filed an appeal before the Income Tax Appellate Tribunal (ITAT).
The Tribunal summarily dismissed/disposed of the Revenue’s appeal solely on the grounds of a “low tax effect.”
In doing so, the Tribunal applied the monetary threshold of Rs. 50 lakhs prescribed for filing appeals before the ITAT under the CBDT Circular dated 11.07.2018 (read with Circular dated 20.08.2018).
The Revenue challenged this dismissal, arguing that the case involved the DGCEI, which falls under the specific litigation exceptions outlined in the CBDT guidelines.

Decision

Held, yes: The Directorate General of Central Excise Intelligence (DGCEI) is explicitly recognized as a law enforcement agency.
Held, yes: Consequently, cases involving the DGCEI are protected by the exception in paragraph 10(e) of the CBDT Circular dated 11.07.2018.
The Tribunal committed a reversible error by blindly applying the Rs. 50 lakhs monetary limit to dismiss the appeal.
The impugned order of the Tribunal was set aside, and the matter was officially remanded back to the ITAT for a fresh adjudication on its merits.

Key Takeaways

Exceptions to Monetary Limits: The monetary caps established by CBDT circulars for filing departmental appeals (such as the Rs. 50 lakhs limit for the ITAT) are not absolute and do not apply to cases falling under the carved-out exceptions.
DGCEI Status: The DGCEI is legally classified as a law enforcement agency within the framework of tax litigation exceptions (Paragraph 10(e) of the Circular).
Judicial Duty of the ITAT: The Appellate Tribunal must verify if a case falls under special categories or exceptions before dismissing a Revenue appeal purely based on low tax effects.

HIGH COURT OF GUJARAT

Principal Commissioner of Income-tax

Taha Wires (P.) Ltd.^*

A.S. Supehia and Pranav Trivedi, JJ.

R/SPECIAL CIVIL APPLICATION NO. 6755 of 2022^†

APRIL 6, 2026

Karan G. Sanghani for the Petitioner. B.S. Soparkar for the Respondent.

JUDGMENT

A.S. Supehia, J.- The present petition has been filed assailing the order dated 10.02.2021 passed by the Income Tax Appellate Tribunal, Surat Bench, Surat (for short, “the Tribunal”) in MA No.24/SRT/2020 (arising out of IT(SS)A No. 226/AHD/2021), whereby the miscellaneous application filed under Section 254(2) of the Income Tax Act, 1961 (for short, “the Act”) by the Revenue, seeking rectification of the original order dated 23.08.2019 came to be rejected.

2. Learned Senior Standing Counsel Mr.Sanghani, appearing for the petitioner – department, at the outset, has submitted that the Tribunal fell in error in interpreting Clause 10(e) of the Circular dated 11.07.2018, as modified by the Circular dated 20.08.2018. It is submitted that the Tribunal has held that DGCEI i.e. the Directorate General of Central Excise Intelligence, would not fall within the ambit of “law enforcement agencies”, as mentioned in Clause 10(e) of the aforesaid circulars. It is submitted that, in fact, DGCEI is an enforcement agency and ought to be considered as one of the agencies referred to in Clause 10(e) of the said circulars. Consequently, it is submitted that the case of the Revenue would fall within the exception provided therein and the monetary limit of Rs.20 lakhs, as prescribed in the circulars, would not apply to the present case. Thus, it is urged that the impugned judgment and order be quashed and set aside.

3. Per contra, learned advocate Mr.Soparkar appearing for the respondent has submitted that, subsequent to the order dated 10.02.2021 passed by the Tribunal, the Department has issued Circular dated 15.03.2024, which has further been clarified by Circular dated 17.09.2024. It is submitted that, as per the aforesaid circulars, the enhanced monetary limits of Rs.60 lakhs for the Tribunal and Rs. 2 crores for the High Court would apply only to such cases, where the assessment is reopened on the basis of information relating to any offence alleged to have been committed under any other law, received from law enforcement or intelligence agencies referred to in Clause 10(e) of the Circular dated 11.07.2018 read with Circular dated 20.08.2018, Clause 3.1(c) of the Circular dated 15.03.2024 and the paragraph No.5 of the Circular dated 17.09.2024. Thus, it is urged that the present petition be dismissed.

4. We have heard the learned advocates appearing for the respective parties at length.

5. We have also perused the impugned order dated 10.02.2021 passed by the Tribunal. It is not in dispute that by the order dated 23.08.2019 passed in IT(SS)A No. 226/AHD/2021, the appeal came to be disposed of by the Tribunal on the ground of low tax effect, applying the monetary limit of Rs.50 lakhs prescribed for filing appeals before the Tribunal. The Tribunal placed reliance on the Circular dated 11.07.2018 read with the Circular dated 20.08.2018 and disposed of the matter accordingly. Subsequently, the Revenue filed MA No.24/SRT/2020 under Section 254(2) of the Act, placing reliance on Clause 10(e) of the Circular dated 11.07.2018 read with the Circular dated 20.08.2018. The relevant clause of the Circular is reproduced as under:

“10. ” ” “

** ** **

(e) Where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ED/DRI/SFIO/ Directorate General of GST Intelligence (DGGI).”

6. The Tribunal, by placing reliance on the order of its Coordinate Bench at Mumbai in ITO v. Amarchand P. Shah [2019] 73 ITR(T) 588 (Mumbai)/IT Appeal Nos. 818-820/Mum/2017, rejected the miscellaneous application by holding that DGCEI is not a law enforcement agency and, therefore, would not be covered by paragraph 10(e) of the Circular dated 11.07.2018 read with the Circular dated 20.08.2018. We find that the Tribunal has committed an error in recording such a finding.

7. A careful reading of Clause 10(e) of the Circular dated 11.07.2018 read with the Circular dated 20.08.2018 would indicate that it contains references to agencies such as “CBI/ED/DRI/SFIO/Director General of GST Intelligence (DGGI)”. It is not in dispute that DGCEI is also an enforcement agency. Hence, the agencies referred to in Clause 10(e) are illustrative in nature and DGCEI being a law enforcement agency, ought to be considered as one of the agencies akin to those mentioned therein.

8. Thus, the Tribunal has misinterpreted the provisions of Clause 10(e) of the Circular dated 11.07.2018 read with the Circular dated 20.08.2018 by excluding DGCEI from its ambit. On this short ground, we set aside the impugned order dated 10.02.2021 passed by the Tribunal and remand the matter to the Tribunal.

9. We direct that MA No.24/SRT/2020 shall be restored to its original file. The Tribunal shall decide the same afresh after granting full opportunity of hearing to the respective parties.

10. We clarify that all rights and contentions of the respective parties are kept open.

11. With these observations, the present writ petition stands allowed.