2013 (11) TMI 1434 - HC - Income Tax

Tax Effect - Held that - Under section 268A of the Act which has been inserted with retrospective effect from 1.4.1999 the Board has power to issue circular regarding fixing monetary limit and no appeal can be filed by the Revenue - The circular dated 27th March, 2000 issued by the Board has thus been issued in exercise of powers conferred under section 268A of the Act and has binding effect on all the authorities. As the tax in dispute is less than rupees two lakh the Revenue was not entitled to file appeal before the Tribunal. The appeal neither involves any question which had a far reaching effect nor was of recurring in nature - The circular dated 27th March, 2000 issued by the Central Board of the Direct Taxes was binding upon the Department and, therefore, the appeal preferred by it against the order of the Commissioner of Income Tax (Appeals) dated 4th November, 2008 wherein tax effect was less than rupees two lac ought not to have been filed

Summary

Issues:
- Appeal filed under Section 260-A of the Income Tax Act against the order dated 30th January, 2009 passed by the Income Tax Appellate Tribunal, Lucknow Bench "B" Lucknow.
- Dismissal of the appeal by the Tribunal on the ground of tax effect being below Rs. 2 lakh.
- Validity and applicability of the circular dated 27th March, 2000 issued by the Central Board of Direct Taxes regarding monetary limits for filing appeals.

Analysis:

The appeal before the High Court was filed against the order of the Income Tax Appellate Tribunal, Lucknow Bench "B" Lucknow. The substantial question of law raised was whether the Tribunal was correct in dismissing the appeal filed by the Department due to the tax effect being below Rs. 2 lakh, without considering the merits of the case and the previous judgment of the High Court. The facts of the case involved the assessee receiving share application money during the financial year 1999-2000, which had escaped assessment. The Commissioner of Income Tax (Appeals) had allowed the appeal and deleted the addition of Rs. 5,23,000/-.

The Tribunal dismissed the appeal as unadmitted based on the circular dated 27th March, 2000, which set monetary limits for filing appeals. The High Court analyzed Section 268A of the Income Tax Act, which empowers the Board to issue circulars regarding monetary limits for appeals. The circular dated 27th March, 2000, issued by the Central Board of Direct Taxes, fixed the monetary limit for filing appeals, including Rs. 2,00,000 for appeals under Section 260A. The High Court emphasized that the circular had a binding effect on all authorities, and the Revenue was not entitled to file an appeal before the Tribunal if the tax in dispute was less than Rs. 2 lakh.

The High Court further examined the conditions under which the monetary limits for filing appeals could be exceeded, as outlined in the circular. These conditions included cases where Revenue audit objections were accepted, adverse orders on Board's orders or circulars, prosecution proceedings against the assessee, or constitutional validity challenges. None of these conditions applied in the present case, leading the High Court to conclude that the circular was binding on the Department. Consequently, the appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) was not valid, and the High Court upheld the Tribunal's decision to dismiss the appeal. The appeal was ultimately dismissed by the High Court.