2014 (1) TMI 1261 - AT - Income Tax

Cancellation of Penalty u/s 271(1)(c) of the Act Held that - The appeal was filed in contravention of limit cannot be sustained Relying upon ACIT Vs. Satish Chand Jain 2006 (8) TMI 329 - ITAT DELHI - the tax effect involved in the appeal filed by the Revenue being less than the limit as prescribed in the board circular, the same is not maintainable - the appeals filed by the Revenue prior to the Circular also be covered by the monetary limit of the Circular Decided against Revenue.

Summary

Issues:
1. Appeal against cancellation of levy u/s.271(1)(c) on doubtful debts and travelling expenses.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai involved the cancellation of levy under section 271(1)(c) of the Income Tax Act on account of doubtful debts and travelling expenses for the assessment year 2004-05. The main contention raised by the Revenue was that the CIT(A) erred in cancelling the levy without the assessee providing proof of such expenses. The Tribunal considered the arguments presented by both parties.

The counsel for the assessee submitted a chart displaying the disallowed amounts for travelling expenses and doubtful debts. It was highlighted that the total tax for the year amounted to Rs. 1,98,063, and the penalty imposed by the Assessing Officer equaled the tax amount. Reference was made to the CBDT instruction no. 3 of 2011, which set a limit for filing appeals before the Tribunal based on the tax amount.

Upon review, the Tribunal acknowledged the chart submitted and examined the CIT(A)'s order. The Tribunal agreed with the argument put forth by the assessee's counsel. It was noted that the appeal exceeded the limit set by the CBDT instruction no. 3 of 2011. The Tribunal cited the decision in ACIT Vs. Satish Chand Jain and the judgment of the Bombay High Court in CIT vs. Camco Colour Co. to support its stance that appeals with tax effects below the prescribed limit are not maintainable.

In line with the circular of 2011 and previous judicial decisions, the Tribunal referred to the case of CIT Vs. Madhukar K. Inamdar (HUF) to emphasize that even appeals filed before the circular are subject to the monetary limit specified. Consequently, the Tribunal concluded that the appeal could not be considered on its merits due to the tax effect being less than Rs. 3 lakhs. Therefore, the appeal filed by the Revenue was dismissed.

In conclusion, the Tribunal pronounced the order on May 25, 2012, dismissing the appeal filed by the Revenue. The decision was based on the monetary limit set by the CBDT instruction and supported by relevant legal precedents, ultimately leading to the dismissal of the appeal.