2015 (12) TMI 967 - AT - Income Tax

Maintainability of appeal - monetary limit - Held that - We need to take note of a very pragmatic initiative, taken by the Central Board of Direct Taxes last week, for reducing litigation in direct taxes. Vide circular no. 21/ 2015 dated 10th December 2015, the Central Board of Direct Taxes has, inter alia, announced that, subject to certain exceptions- which are not relevant in the present context, henceforth, no departmental appeals will be filed against relief given by the CIT(A), before this Tribunal, unless the tax effect, excluding interest, exceeds ₹ 10,00,000. What is even more important is that not only that such a taxpayer friendly measure will be implemented in all future tax litigation, even the pending appeals, wherever the tax involved in the appeals does not exceed ₹ 10,00,000, shall not be pressed or withdrawn. In effect thus, irrespective of the year to which the departmental appeal before the Tribunal pertains, as long as such an appeal is pending before the Tribunal, this will be a legal nullity. While we have checked and rechecked each case individually and we are satisfied that in none of these cases tax effect involved is not more than ₹ 10,00,000, we accept that human errors are possible and no such error should be allowed to prejudice legitimate interests of the revenue. The liberty is, therefore, specifically granted to the Assessing Officers to approach this Tribunal in case there are any cases, inadvertently included in this bunch of appeals, wherein the tax effect, in terms of the CBDT circular (supra), exceeds ₹ 10,00,000, so that the related appeals can be recalled for adjudication on merits. Thus we deem it fit and proper to dismiss all these appeals as non maintainable.

Summary

Issues Involved:
1. Correctness of relief granted by the Commissioners (Appeals) regarding penalty under section 271(1)(c) of the Income Tax Act.
2. Application of CBDT circular no. 21/2015 regarding monetary limits for filing departmental appeals.
3. Retrospective application of the CBDT circular.
4. Legitimacy of cross objections filed by the assessee.

Detailed Analysis:

1. Correctness of Relief Granted by Commissioners (Appeals):
The primary issue in these departmental appeals is the correctness of the relief granted to taxpayers by the Commissioners (Appeals). Specifically, in the lead case, the question is whether the CIT(A) was justified in deleting the penalty of Rs. 7,43,060 imposed on the assessee under section 271(1)(c) of the Income Tax Act for the assessment year 1994-95. The Tribunal noted that the tax effect involved in all these appeals does not exceed Rs. 10,00,000, making them subject to the provisions of the CBDT circular no. 21/2015.

2. Application of CBDT Circular No. 21/2015:
The Central Board of Direct Taxes (CBDT) issued circular no. 21/2015 on 10th December 2015, which aims to reduce litigation in direct taxes by setting monetary limits for filing departmental appeals. According to this circular, no departmental appeals will be filed before the Tribunal if the tax effect does not exceed Rs. 10,00,000, excluding interest. This measure applies retrospectively to pending appeals. The Tribunal proposed to dismiss all appeals as non-maintainable under this circular, subject to conditions safeguarding the revenue authorities' interests.

3. Retrospective Application of the CBDT Circular:
The CBDT circular applies retrospectively to pending appeals and those to be filed henceforth in High Courts/Tribunals. The Tribunal emphasized that appeals below the specified tax limits should be withdrawn or not pressed. The Tribunal proposed to dismiss all these appeals as non-maintainable, with the liberty granted to the revenue authorities to approach the Tribunal for reinstatement if any appeals are found to exceed the monetary limit upon verification.

4. Legitimacy of Cross Objections Filed by the Assessee:
In seven cases, the assessees filed cross objections as a result of the revenue's appeals. However, the right to file a cross objection arises only when the appeal filed by the other party is admitted. Since the appeals were held to be non-maintainable, the cross objections also ceased to hold good in law. The Tribunal dismissed all cross objections as infructuous, noting that they merely supported the conclusions arrived at by the CIT(A) and did not raise any substantive grounds requiring adjudication.

Conclusion:
The Tribunal dismissed all 251 appeals and 7 cross objections as non-maintainable, emphasizing the retrospective application of the CBDT circular and the monetary limits for filing appeals. The Tribunal granted liberty to the revenue authorities to seek reinstatement of appeals if any cases were found to exceed the monetary limit upon verification. The decision was pronounced in the open court on 15th December 2015.