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2014 (10) TMI 316 - AT - Income TaxMaintainability of appeal Tax effect less than ₹ 4 lacs - Whether the appeal of revenue, which is below the prescribed limit of tax effect in view of the Board s Instruction No.5/2014 issued on 10.07.2014 revising the monetary limits for filing of appeals by the Department before ITAT is maintainable or not Held that - As decided in CIT Vs M/s. P. S. Jain & Co. 2010 (8) TMI 702 - Delhi High Court - the Board has rightly taken a decision not to file references if the tax effect less than the amount prescribed - The same policy for old matters needs to be adopted by the Department also in The Commissioner of Income Tax v. Smt. Vijaya V. Kavekar 2013 (2) TMI 451 - Bombay High Court the applicability of circular was considered and the monetary limit was increased and appeals were to be filed only in cases where the tax effect exceeded ₹ 4 Lacs - no appeals would be filed in the cases involving tax effect less than ₹ 4 Lacs notwithstanding the issue being of recurring nature - the prevailing instructions fixing the monetary limit for the tax effect would hold good even for pending cases revenue could not point out any of the exceptions - this being a low tax effect case, the appeal cannot be admitted Decided against revenue.
Issues Involved:
1. Maintainability of the appeal based on the prescribed monetary limits for tax effect. Detailed Analysis: Maintainability of the Appeal Based on Prescribed Monetary Limits: Background and Representation: - The appeal was filed by the revenue against the order of the learned Commissioner of Income-tax (Appeals), Durgapur, for the assessment year 2008-09. - The revenue's assessed income for the assessee was Rs. 14,85,690/- with a tax demand of Rs. 4,94,640/-. - The appellant was represented by Shri Ravi Jain, learned CIT/DR, while no one appeared on behalf of the respondent (assessee). Primary Issue: - The critical issue was whether the appeal of the revenue, which is below the prescribed limit of tax effect as per CBDT Instruction No. 5/2014 issued on 10.07.2014, is maintainable. Arguments and Contentions: - The learned CIT/DR argued that the instruction should apply prospectively to appeals filed on or after 10.07.2014, not to those filed before this date. - The Tribunal considered the rival contentions and reviewed the facts and circumstances. Judicial Precedents: 1. Delhi High Court in CIT Vs M/s. P. S. Jain & Co.: - The court emphasized the need to reduce the burden on the Department and the judiciary by not pursuing appeals with minimal tax effect. - The Board's decision to not file references if the tax effect is less than Rs. 2 lakhs was deemed applicable to old matters as well. 2. Gujarat High Court in CIT v. Sureshchandra Durgaprasad Khatod (HUF): - The court concluded that Instruction No. 3/2011 applies to pending cases, even though it was specified for appeals filed on or after February 2011. - The court highlighted the objective of reducing pending litigation with minimal tax effect. 3. Bombay High Court in Commissioner of Income Tax vs. Smt. Vijaya V. Kavekar: - The court interpreted CBDT Instruction No. 5 of 2008, emphasizing that appeals should not be filed if the tax effect is less than Rs. 4 lakhs, even for recurring issues. 4. Karnataka High Court in The Commissioner of Income-Tax vs. M/s. Ranka & Ranka: - The court held that Instruction No. 3/11 applies to pending appeals and dismissed the appeal on the ground of monetary limit. CBDT Instruction No. 5/2014: - The instruction raised the monetary limit for filing appeals before ITAT to Rs. 4 lakhs. - It clarified that appeals should not be filed merely because the tax effect exceeds the monetary limits; decisions should be based on the merits of the case. - The instruction applies to appeals filed on or after 10th July 2014, but the Tribunal noted that similar instructions had been applied retrospectively by various High Courts. Exceptions to the Instruction: - The Tribunal queried the learned DR about any exceptions that might apply, such as: - Loss cases with tax effect exceeding the limit. - Composite orders for multiple assessment years with cumulative tax effect exceeding the limit. - Cases involving constitutional validity challenges. - Cases where Board's orders, notifications, or circulars were held illegal or ultra vires. - Revenue Audit Objections accepted by the Department. Conclusion: - The learned DR could not point out any applicable exceptions. - The Tribunal concluded that the appeal, being a low tax effect case, is not maintainable and dismissed it in limine without addressing the merits. Final Order: - The appeal of the Revenue was dismissed. - The order was pronounced in the open court on 10/09/2014. Summary: The Tribunal dismissed the revenue's appeal due to the tax effect being below the prescribed monetary limit of Rs. 4 lakhs as per CBDT Instruction No. 5/2014. The decision was supported by various judicial precedents emphasizing the need to reduce litigation with minimal tax effect. The learned DR could not identify any exceptions to the instruction, leading to the dismissal of the appeal without examining its merits.
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