2019 (4) TMI 1901 - AT - Income Tax

Maintainability of appeal - low tax effect - Miscellaneous Application of Revenue that there is an accepted audit objection and therefore, the appeal is to be decided on merit as per clause 8(c) of the CBDT Circular No.21/2015 dated 10/12/2015 - HELD THAT - We are of the view that undisputedly the tax effect involved in the appeal filed by the Revenue is less than ₹ 10 lakhs and the appeal of the Revenue was dismissed following the instruction of the CBDT vide Circular No.21/2015 dated 10/12/2015. As relying on CONCORD PHARMACEUTICALS 2008 (8) TMI 344 - GUJARAT HIGH COURT if the appeal filed by the Revenue is on low tax effect and the Revenue has not raised the objections before the Tribunal either in the appeal memo or at the time of hearing of appeal, raising a specific contention that the particular appeal is covered by an exception, such appeal is liable to be dismissed on low tax effect. In the appeal under consideration, the Revenue has not raised any objection before the Tribunal either in the appeal memo, or at the time of hearing of appeal, raising a specific contention that this appeal is covered by an exception. Therefore, we find no apparent mistake in the order of the Tribunal dated 21/4/2017. Thus, finding no merit in the Miscellaneous Application filed by the Revenue, the same is dismissed.

Summary

Issues:
1. Dismissal of Revenue's appeal by Tribunal on low tax effect.
2. Contention regarding accepted audit objection.
3. Application of CBDT Circular No.21/2015.
4. Reference to the decision of Hon'ble Gujarat High Court.

Analysis:
1. The Revenue filed a Miscellaneous Application against the Tribunal's order dismissing its appeal due to the tax effect being below ?10 lakh. The Revenue argued that despite an accepted audit objection, the appeal should have been heard on merit. The Tribunal dismissed the appeal following CBDT instructions.

2. The assessee's representative contended that the Revenue's claim of falling under an exception in the CBDT Circular cannot be accepted as it was not raised during the hearing. The representative cited the 'CIT vs. Concord Pharmaceuticals' case from the Gujarat High Court in support.

3. Upon examination, the Tribunal found that the tax effect in the Revenue's appeal was indeed less than ?10 lakhs, leading to its dismissal as per the CBDT Circular. The Revenue raised a ground of an accepted audit objection, seeking a merit-based decision. The Tribunal referred to the Gujarat High Court's decision regarding objections raised during the appeal process.

4. The Gujarat High Court's decision emphasized that objections must be raised during the appeal process for consideration. If objections are not raised and the appeal is dismissed based on low tax effect, the Department cannot seek a second chance. The Tribunal must consider relevant parameters while applying circulars to case facts.

5. As the Revenue did not raise objections during the appeal process regarding falling under an exception, the Tribunal found no apparent mistake in its order. The Miscellaneous Application by the Revenue was dismissed based on the lack of merit in light of the Gujarat High Court's decision.

6. The Tribunal, in line with the ITAT Rules, dismissed the Miscellaneous Application, upholding the initial order's decision to dismiss the Revenue's appeal due to low tax effect.

This detailed analysis covers the issues raised in the judgment, highlighting the Tribunal's decision, arguments from both sides, the application of relevant circulars, and the reference to a significant decision from the Gujarat High Court.