2018 (7) TMI 1987 - AT - Income Tax

Monetary limit - low tax effect - maintainability of appeal - HELD THAT - Undisputedly the tax effect involved in appeal is less than the monetary limit prescribed by recent CBDT Circular for filing of appeals before the Tribunal by the Department. The CBDT vide Circular No. 3/2018 dated 11-07-2018 has raised the monetary limit of tax effect for filing of appeals by the Department before the Tribunal to Rs. 20 lakhs. The circular applies to the appeals to be filed by the Department in future as well as the appeals pending before the Tribunal. Thus in view of the above CBDT Circular the present appeal of the Revenue is liable to be dismissed on account of low tax effect.

Summary

Issues:
- Appeal filed by Revenue against CIT(A) order for AY 2009-10
- Tax effect below limit prescribed by CBDT Circular

Analysis:
1. The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2009-10. The assessee's representative argued that the appeal should be dismissed due to the low tax effect as per the recent CBDT Circular No. 3/2018, dated 11-07-2018.

2. The Department's representative acknowledged that the tax effect in the current appeal was less than Rs. 20 lakhs. The dispute revolved around the addition made by the Assessing Officer for bogus purchases, amounting to Rs. 56,33,551. The CIT(A) reduced this addition to Rs. 5,63,355, providing relief of Rs. 50,70,196 to the assessee. The Revenue contested this relief, leading to the current appeal.

3. The CBDT Circular No. 3/2018, dated 11-07-2018, raised the monetary limit for tax effect in appeals before the Tribunal to Rs. 20 lakhs. Since the tax effect in this case fell below the prescribed limit, the Revenue's appeal was deemed liable for dismissal. The circular applied to both future appeals and those pending before the Tribunal, resulting in the dismissal of the Revenue's appeal in this instance.

4. Consequently, the Tribunal dismissed the appeal of the Revenue based on the low tax effect, as per the CBDT Circular. The order was pronounced in open court on July 19, 2018.