2016 (11) TMI 1573 - AT - Income Tax

Monetary limit - maintainability of appeal - tax effect - Held that - Considering the main objective of such instructions that to reduce the pending litigation, where the tax effect is considerable low or small, the appeal is not maintainable. The recent instruction revising the monetary limit to ₹ 10 lakhs for filing appeal before ITAT on income tax matters, as issued vide the above Circular will apply to pending appeals also for the reason that the same is exactly identical to earlier instructions. In view of the above discussion and the latest Circular issued by the CBDT, as reproduced above, since the tax effect involved in the present appeal is below the monetary limit, therefore, we dismiss this departmental appeal in limine being not maintainable.

Summary

Issues Involved:
1. Applicability of CBDT Circular No. 21/2015 regarding the monetary limit for filing appeals.
2. Retrospective application of CBDT Circulars to pending appeals.
3. Judicial precedents supporting the non-maintainability of appeals below the specified monetary limit.

Detailed Analysis:

1. Applicability of CBDT Circular No. 21/2015:
The core issue in this appeal is the applicability of the Central Board of Direct Taxes (CBDT) Circular No. 21/2015, which sets a monetary limit for filing departmental appeals before the Income Tax Appellate Tribunal (ITAT), High Courts, and the Supreme Court. The circular, issued on December 10, 2015, specifies that appeals should not be filed if the tax effect does not exceed ?10,00,000 before the ITAT, ?20,00,000 before the High Court, and ?25,00,000 before the Supreme Court. The circular aims to reduce litigation by setting these monetary thresholds.

2. Retrospective Application of CBDT Circulars to Pending Appeals:
The judgment discusses the retrospective application of the CBDT Circular No. 21/2015 to pending appeals. It references the Hon’ble Delhi High Court's decision in CIT Vs M/s. P. S. Jain & Co., which acknowledges the practical challenges faced by the department due to increased litigation and supports the application of monetary limits to old references. Similarly, the Hon’ble Gujarat High Court in CIT v. Sureshchandra Durgaprasad Khatod (HUF) held that the instructions apply retrospectively, emphasizing the objective of reducing pending litigation with minimal tax impact.

3. Judicial Precedents Supporting Non-maintainability of Appeals Below the Specified Monetary Limit:
The judgment cites several judicial precedents that support the non-maintainability of appeals below the specified monetary limits. The Hon’ble Gujarat High Court and the Aurangabad Bench of the Bombay High Court have consistently held that CBDT instructions regarding monetary limits apply to pending cases. The courts have emphasized that the primary objective of such instructions is to reduce litigation where the tax effect is minimal. The Karnataka High Court in The Commissioner of Income-Tax vs. M/s. Ranka & Ranka also supported this view, dismissing appeals with tax effects below the monetary limit.

Conclusion:
In light of the CBDT Circular No. 21/2015 and the judicial precedents, the ITAT Indore concluded that the present appeal, having a tax effect below the prescribed monetary limit, is not maintainable. The appeal was dismissed in limine, aligning with the objective of reducing unnecessary litigation and adhering to the monetary thresholds set by the CBDT.

Judgment:
The appeal of the Revenue stands dismissed, being not maintainable due to the tax effect being below the monetary limit specified in the CBDT Circular No. 21/2015. The order was pronounced in open Court on 9th November 2016.