2020 (1) TMI 1416 - AT - Income Tax

Maintainability of appeal by revenue - low tax effect t - 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.

Summary

Issues:
Dismissal of appeal by Revenue due to low tax effect under CBDT Circular No.17/2019.

Analysis:
The appeal before the Appellate Tribunal ITAT Pune was filed by the Revenue against the order of the CIT(A)-8, Pune for the assessment year 2009-10. Despite the service of notice, no one appeared to represent the assessee during the proceedings. The Revenue's appeal challenged the findings of the CIT(A) regarding the deletions made. However, it was noted that the tax effect of the additions in question was less than ?50 lakhs, falling below the threshold set by the CBDT Circular No.17/2019. The Revenue accepted this fact during the hearing.

The Tribunal observed that the tax effect in the present appeal was below the monetary limit specified by the CBDT Circular, which had been revised to ?50 lakhs from the earlier ?20 lakhs. Consequently, without delving into the merits of the issues raised, the appeal by the Revenue was dismissed solely on the grounds of low tax effect as per the Circular's provisions. The Tribunal highlighted the amendment made by the CBDT in the Circular dated 08-08-2019, increasing the monetary limit for filing appeals by the Department.

The Tribunal clarified that the Revenue could seek restoration of the appeal by providing necessary material to demonstrate that the appeal fell within the exceptions outlined in the Circular dated 11-07-2018 and its subsequent amendment. However, in this case, since the additions were related to bogus purchases based on information from the Sales Tax Department, the appeal did not qualify for the exceptions specified in the Circular. Consequently, the appeal of the Revenue was dismissed by the Tribunal.

In conclusion, the Tribunal decided to dismiss the Revenue's appeal due to the low tax effect falling below the threshold set by the CBDT Circular No.17/2019. The order was pronounced in an open court on the 30th day of January 2020.