2018 (8) TMI 2014 - AT - Income Tax

Maintainability of appeal - low tax effect - whether the appeal effect is below the monetary limit or not and whether it is covered by para 8 ( c ) of the CBDT Circular No. 21/2015 dt. 10-12-2015 - HELD THAT - CIT/CIT should examine the revenue audit objection carefully before filing of second appeal in the Tribunal involving the revenue audit objection - appeal shall not be filed if the order of first appellate authority is justified either in law or facts. It also clarifies that the reasons may have to be recorded for not filing the appeal by the Pr. CIT/CIT. We find that in the present case the ld. DR by statement of facts annexed with Form No. 36 pointed out that the CIT concerned examined the appeal carefully and suggested to file appeal even though the revenue effect is lower than the prescribed monetary limit. According to him, it was prompted by audit objection on the issue of excess claim of depreciation and the CIT- A erroneously deleted the same. This decision of the CIT-A has not been accepted by the revenue and as such preferred an appeal before this Tribunal by accepting the said revenue audit objection. The ld. AR brought to our notice during the course of arguments that the CIT-A deleted the addition made on account of excess depreciation by placing reliance on the decision of Hon ble High Court of Bombay in the case of S. C. Thakur Bros. 2009 (1) TMI 20 - BOMBAY HIGH COURT Therefore, in our opinion the present appeal should be only on merits, if the appellant revenue is not justified either in law or in facts. Thus, the arguments as advanced by the ld. DR fails and are rejected with reference to the submission that the issue arose on audit objection We find the issue raised by the revenue is below tax effect, which does not exceed the prescribed monetary limit as per above mentioned CBDT Circulars. Thus, ground no. 1 raised by the revenue is dismissed.

Summary

Issues:
- Challenge to deletion of disallowance on account of excess depreciation below tax effect limit as per CBDT Circular.

Analysis:
1. The appeal by the Revenue challenged the deletion of disallowance on account of excess depreciation for the AY 2009-10, below the tax effect limit as prescribed by CBDT Instruction 21/2015. The Appellant argued that the issue was prompted by an audit objection and was covered by exception (c) to para 8 of the Circular.

2. The Respondent contended that the appeal was filed mechanically without proper examination of the case on merits, contrary to CBDT Circulars. They referred to Circular No. 05/2017 and a Co-ordinate Bench order emphasizing that appeals should not be filed routinely based on revenue audit objections.

3. The Tribunal examined the Circulars and Instructions provided by the CBDT. It was noted that appeals should only be filed on merits, even in cases mentioned in para-8 of Circular 21/2015. The Tribunal also highlighted the importance of carefully scrutinizing appeals involving revenue audit objections as per Instruction No. 7/2017.

4. Referring to a Co-ordinate Bench order, the Tribunal emphasized that appeals should not be filed routinely based on audit objections if the tax effect is below the specified limit. The Tribunal concluded that the issue raised by the Revenue was below the tax effect limit and dismissed the appeal.

5. The Tribunal's decision was based on the principles outlined in the Circulars and Instructions provided by the CBDT, emphasizing the need to file appeals only on merits and not routinely based on audit objections. The appeal was dismissed in line with these guidelines.

This detailed analysis of the judgment highlights the key arguments, interpretations of the Circulars, and the Tribunal's decision based on the CBDT guidelines and relevant case law.