2012 (8) TMI 1104 - AT - Income Tax

Penalty levied u/s 18(1)(c)- monetary limits - maintainability of appeal - Held that - When it is clearly mentioned in Instruction No.3/2011 that for matters relating to direct tax other than income-tax, relevant provisions of statute and rules will continue to apply, it would by implication means that earlier instructions insofar as it related to matters other than income-tax would continue to apply. By virtue of Instruction No.5/2007 dated 16.7.2007, the monetary limit for filing of appeals before this Tribunal was increased ₹ 1 lakh. By virtue of Instruction No.1979 dated 27.3.2000, the monetary limits mentioned applied also to wealth-tax, gift-tax and Estate Duty matters. In our opinion, when these instructions are read together, despite the supersession effected by Instruction No.3/2011 dated 9.2.2011 of earlier Instruction No.5/2008 dated 15.5.2008 and supersession of instructions mentioned at para 5 above by us, through Instruction No.5/2008 dated 15.5.2008, the earlier instructions insofar as it applied to wealth-tax, gift-tax and Estate Duty matter would continue in force. For taking the view that the Instruction No.5/2008 as also Instruction No.3/2011 will apply to wealth-tax matter also. In this view of the matter, we are of the opinion that the appeal filed by the Revenue is not maintainable due to low tax effect.

Summary

Issues:
Appeal maintainability under low tax effect; Applicability of CBDT Instructions to wealth-tax matters; Monetary limits for filing appeals in direct tax matters; Applicability of monetary limits to penalty appeals.

Analysis:
The appeal and cross-objection were filed against an order by the Commissioner of Income Tax (Appeals). The Revenue appealed a penalty of only Rs. 13,874 under the Wealth Tax Act, 1957. The question arose whether the appeal was maintainable due to the low tax effect. The Revenue argued that CBDT Instruction No.3/2011 applied only to income-tax matters, not wealth-tax matters. The circular specified that monetary limits did not apply to direct tax matters other than income-tax. The Tribunal examined previous instructions superseded by CBDT Instruction No.5/2008 and concluded that earlier instructions regarding wealth-tax matters remained in force. The Tribunal referred to a decision by the Kerala High Court supporting the application of instructions to wealth-tax matters.

Regarding the monetary limits for filing appeals in direct tax matters, the Tribunal held that the earlier instructions continued to apply to wealth-tax matters despite the supersession by CBDT Instruction No.3/2011. The Tribunal emphasized that the monetary limits for filing appeals were increased to Rs. 1 lakh by Instruction No.5/2007 and applied to wealth-tax, gift-tax, and Estate Duty matters. The Tribunal dismissed the Revenue's appeal due to the low tax effect and the cross-objection filed by the assessee as infructuous.

The Tribunal clarified that in penalty appeals, the tax effect would mean the quantum of penalty deleted or reduced. Therefore, the Tribunal concluded that the Revenue's appeal was not maintainable due to the low tax effect. The order was pronounced, dismissing the Revenue's appeal and the cross-objection filed by the assessee.