2013 (6) TMI 226 - HC - Income Tax

Penalty u/s 271(1)(a) - delayed filing of return beyond the limit prescribed under Section 139 (1) - Tax effect - monetary limit for filing an appeal before HC - Held that - One fails to understand how Revenue can contend that so far as new cases are concerned, circular issued by the Board is binding on them and in compliance with the said instructions, they do not file references if the tax effect is less than Rs.2 lakhs. But the same approach is not adopted with respect to the old referred cases even if the tax effect is less than Rs.2 lakhs. In our view, there is no logic behind this approach. From the perusal of the instructions issued by the Board, we find that the Board had issued directions that the appeals will be filed only in cases where the tax effect exceeds Rs.2 lakhs in the matter of High Court in appeals U/s 260A or Reference U/s 256(2). The aforesaid circular is binding on all the authorities under the Board including the appellant Commissioner of Income Tax, Jabalpur. - Decided against the revenue.

Summary

Issues:
1. Whether the Tribunal was justified in deleting the levy of penalty under section 27(1)(a) for late filing of returns.
2. Whether the Tribunal could allow the appeal without assigning reasons.
3. Whether the tax impact in the appeals falls below the monetary limit set by the Board for filing appeals.

Analysis:
1. The main issue in the judgment revolved around the Tribunal's decision to delete the penalty under section 27(1)(a) for late filing of returns. The Tribunal justified its decision based on the acceptance of the returns despite being filed beyond the prescribed limit under Section 139(1) of the Income Tax Act. The respondent argued that the tax impact in the appeals was below the monetary limit set by the Board for filing appeals, citing Board instructions from 2000. The appellant opposed this argument but could not refute the contention that appeals should only be filed where the tax effect exceeds the specified monetary limits.

2. Another significant issue was whether the Tribunal could allow the appeal without assigning reasons, merely by recording the submissions of the appellant and respondent. The respondent relied on Division Bench judgments from the Madhya Pradesh High Court to support the contention that appeals with tax effects below the monetary limit should not be filed. The judgments emphasized the binding nature of circulars issued by the Central Board of Direct Taxes and the need to reduce litigation in cases with minimal tax impact.

3. The judgment extensively discussed the monetary limits set by the Board for filing appeals, with specific thresholds for different levels of appeal. The Board's instructions from 2000 emphasized that appeals should only be filed when the tax effect exceeds the specified monetary limits. The judgment highlighted that the circulars issued by the Board were binding on all authorities, including the appellant Commissioner of Income Tax. The Division Bench rulings reiterated that appeals with tax effects below Rs.2 lakhs could not have been filed, emphasizing the importance of adhering to the Board's instructions to reduce unnecessary litigation.

In conclusion, the judgment dismissed the appeal as incompetent due to the tax impact falling below the monetary limit specified by the Board for filing appeals. The decision was based on the binding nature of the Board's instructions and the need to adhere to the prescribed monetary limits to streamline the appeal process and reduce unnecessary litigation.