2016 (1) TMI 989 - AT - Income Tax

Monetary limit - appeal filing before the ITAT - Held that - It is noticed that the CBDT has issued Circular No.21 of 2015 dated 10.12.2015, vide which it has revised the monetary limit to ₹ 10,00,000/- for not filing the appeal before the Tribunal. From Clause 10 of the above circular it is clear that these instructions are applicable to the pending appeals also and there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than ₹ 10,00,000/-. These instructions are operative retrospectively to the pending appeals. Keeping in view the CBDT Circular No.21 of 2015 dated 10.12.2015 and also the provisions of Section 268A of Income Tax Act, 1961, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal.

Summary

Issues:
Appeal against order of CIT(A) - Tax effect less than prescribed limit for filing appeals - Applicability of Section 268A of Income Tax Act - CBDT Circular No.21 of 2015 - Withdrawal of appeals with tax effect below limit.

Analysis:
The appeals by the department were directed against the order of CIT(A)-I, New Delhi. The counsel for the assessee pointed out that the tax effect in each appeal was less than Rs. 10,00,000, questioning the validity of filing such appeals based on the circular issued by the CBDT and Section 268A of the Income Tax Act, 1961. The department did not dispute the tax effect being below the limit. Section 268A, inserted with retrospective effect, empowers the Board to issue monetary limits for regulating appeals. The Board's instructions are binding on income-tax authorities, preventing appeals below the specified limit.

The CBDT Circular No.21 of 2015 revised the monetary limit for not filing appeals before the Tribunal to Rs. 10,00,000. It clarified that appeals should be decided on merits, not solely based on exceeding the monetary limit. The circular defined "tax effect" and specified how it should be calculated for filing appeals. It mandated separate calculation for each assessment year's disputed issues. The circular also addressed scenarios of composite orders involving multiple assessment years or assesses.

The circular's applicability to pending appeals was emphasized, instructing the department to withdraw or not press appeals with tax effect below Rs. 10,00,000. Considering the circular and Section 268A, the Tribunal held that the Revenue should not have filed the instant appeal. Therefore, without delving into the case's merits, the appeals by the department were dismissed. The judgment highlighted the importance of adhering to monetary limits for filing appeals and the significance of CBDT instructions in determining the validity of appeals, ultimately leading to the dismissal of the department's appeals.