2018 (11) TMI 1581 - AT - Income Tax

Monetary limit - maintainability of appeal - quantum involved in this case being less than Rs. 20 lacs - Held that - The amount disputed before us is below the tax effect limit prescribed by CBDT vide Circular No. 3/2018 dated 11.07.2018 for preferring appeals before tribunal by the revenue. On perusal of the Circular No. 3/2018 dated 11.07.2018 and the materials available on record Sr. DR could not point out as to how and why such a Circular is not applicable to the facts of the case. We also find that the Circular makes it very clear that the revised monetary limits shall apply retrospectively to pending appeals also. We find that the Circular is binding on the tax authorities. Hence we hold that the appeal of the revenue deserves to be dismissed in terms of low tax effect vide Circular No. 3/2018 dated 11.07.2018.

Summary

Issues:
- Appeal filed by the department against the order passed by the Ld. Commissioner of Income Tax (Appeals), Dehradun for assessment year 2010-11.
- Applicability of Circular No. 3/2018 dated 11.07.2018 issued by the Central Board of Direct Taxes prescribing the tax effect for preferring appeals before Tribunal by the revenue.
- Amendment to Para 10 of Circular No. 3 of 2018 dated 11.07.2018 regarding contesting adverse judgments on specified issues.
- Evaluation of exceptions listed in the amendment to Para 10 and decision on the appeal based on the exceptions.
- Dismissal of the appeal by the Revenue based on the CBDT's Circular No. 3 of 2018 dated 11.7.2018.

Analysis:

The appeal before the Appellate Tribunal ITAT DELHI was filed by the revenue against the order dated 30.12.2014 passed by the Ld. Commissioner of Income Tax (Appeals), Dehradun for the assessment year 2010-11. The Tribunal noted that the quantum involved in the case was below the tax effect limit set by Circular No. 3/2018 dated 11.07.2018 issued by the Central Board of Direct Taxes. The Tribunal observed that the Circular, which applies retrospectively to pending appeals, is binding on tax authorities. Consequently, the Tribunal held that the appeal by the revenue should be dismissed due to the low tax effect falling within the ambit of the Circular.

However, an amendment to Para 10 of the Circular was highlighted, specifying exceptions where adverse judgments should be contested on merits despite the tax effect being below the monetary limits. The exceptions included issues related to constitutional validity, illegal orders, undisclosed foreign income/assets, information from external sources, and pending prosecutions. Upon reviewing the records, the Tribunal found that the appeal did not fall under any of the exceptions listed in the amendment to Para 10. Therefore, the Tribunal decided to dismiss the appeal but granted the Department the liberty to seek a recall by filing a Misc. Application if the appeal fell under any of the exceptions mentioned.

In conclusion, the Tribunal, in line with the CBDT's Circular No. 3 of 2018 dated 11.7.2018, dismissed the appeal by the Revenue. The order was pronounced in open court on 26.11.2018, thereby concluding the judgment on the basis of the Circular's provisions and the exceptions outlined in the amendment to Para 10.