2020 (1) TMI 1415 - AT - Income Tax

Maintainability of appeal by revenue - low tax effect - HELD THAT - Undisputedly, the tax effect involved in this appeal is less than the monetary limit prescribed by the recent CBDT Circular No.17/2019 F.No.279/Misc.142/2007-ITJ (Pt) dated 08 th August, 2019 read with Circular No.3 of 2018 dated 11.07.2018 for filing of appeals before the Tribunal by the Department. The CBDT vide circular dated 08-08-2019 (supra) has amended Para 3 of Circular No.3 of 2018 dated 11-07-2018 thereby enhancing monetary limit of tax effect from ₹ 20 Lakhs to ₹ 50 Lakhs for filing of appeals by the Department before the Tribunal. Thus, without going into merit of the issues raised in the appeal, in view of the CBDT Circular (supra) the present appeal of the Revenue is dismissed on account of low tax effect. Appeal of the Revenue is dismissed.

Summary

Issues:
Appeal filed by Revenue against CIT(A) order for AY 2010-11; Dismissal of appeal due to low tax effect as per CBDT Circular; Possibility of restoration of appeal by Revenue.

Analysis:
The judgment pertains to an appeal filed by the Revenue against the order of the CIT(A) for the assessment year 2010-11. Despite the absence of representation from the assessee, the appeal was considered based on the available record and the arguments presented by the ld. DR for the Revenue. The Revenue's appeal raised grounds challenging the CIT(A)'s decision to delete certain additions, with the tax effect on these additions being less than ?50 lakhs. The ld. DR for the Revenue acknowledged that the tax effect in this appeal was indeed below the prescribed limit.

The Tribunal noted that as per the CBDT Circulars, the tax effect involved in the appeal was below the monetary threshold set for filing appeals before the Tribunal by the Department. The Circular dated 08-08-2019 increased the monetary limit from ?20 lakhs to ?50 lakhs. Consequently, irrespective of the merits of the issues raised in the appeal, it was dismissed due to the low tax effect falling below the stipulated threshold.

Moreover, the judgment clarified that the Revenue had the option to seek restoration of the appeal by providing material demonstrating that it falls within the exceptions outlined in the Circulars. However, in this case, since the additions in the appeal were linked to bogus purchases based on information from the Sales Tax Department, they did not qualify for the exceptions specified in the Circular. As a result, the appeal of the Revenue was ultimately dismissed by the Tribunal.

In conclusion, the judgment highlights the significance of adhering to the prescribed tax effect limits for filing appeals before the Tribunal, as per the CBDT Circulars. It also underscores the possibility for the Revenue to pursue restoration of an appeal under specific circumstances, subject to meeting the exceptions outlined in the Circulars.