2013 (5) TMI 558 - AT - Income Tax

Assessment proceedings What is the monetary limit for filing of appeal before ITAT - The only issue remains is that the appeal of the revenue is below the prescribed limit of tax effect in view of the Board s Instruction issued from time to time revising the monetary limits for filing of appeals by the Department before ITAT and other superior courts CBDT circular has fixed the limit of Rs. 3 lacs - Held that - Ld. DR could not point out any of the exceptions as provided in the Circular, therefore this being a tax effect case, the appeal filed by revenue is dismissed.

Summary

Issues involved:
Determining the applicability of monetary limits for filing appeals before ITAT and superior courts based on tax effect in the case.

Analysis:
The appeal by revenue pertains to an order by CIT(A) for Assessment Year 2008-09, where the tax effect is below the prescribed monetary limits for filing appeals. The issue is whether the appeal falls within the revised monetary limit set by CBDT. The CBDT instruction specifies that appeals shall not be filed where the tax effect does not exceed the monetary limit, which, in this case, is Rs. 3 lacs for filing before ITAT. The decision of the Hon'ble Delhi High Court in CIT Vs. Delhi Race Club held that appeals with tax effect less than 10 lacs are not to be entertained. The circular clarifies that the tax effect is the difference between the tax on total income assessed and the tax chargeable if income was reduced by disputed issues, excluding interest unless its chargeability is in dispute. The circular also addresses scenarios where the disputed issues span multiple assessment years and the exceptions to filing appeals based on tax effect.

The CBDT instruction emphasizes that appeals should not be filed solely based on exceeding monetary limits but on the merits of the case. It also outlines the procedure for calculating tax effect, filing appeals for multiple assessment years with common issues, and recording decisions not to file appeals due to monetary limits. The circular instructs on contesting adverse judgments on specific issues even if tax effect is below limits and provides guidelines for filing Special Leave Petition before the Supreme Court. It also clarifies that the limits do not apply to writ matters, non-quantifiable tax effects, and decisions on merits for specific cases. The instruction applies to appeals filed after February 9, 2011, with previous appeals governed by the instructions at the time of filing.

During the hearing, the Ld. DR failed to identify exceptions as per the circular, such as loss cases exceeding limits, composite orders for multiple years, pending disputes on singular issues, constitutional challenges, illegal circulars, or accepted Revenue Audit objections. As no exceptions applied and the case was solely based on tax effect, the appeal of the revenue was dismissed without delving into merits and deemed unadmitted.

In conclusion, the judgment highlights the significance of adhering to monetary limits for filing appeals based on tax effect, considering exceptions, and emphasizing decisions on merits rather than solely on exceeding limits.