2019 (8) TMI 1753 - AT - Income Tax

Maintainability of appeal - low tax effect - Addition u/s 68 - bogus loan arranged through a proven shell company controlled and operated by an entry provider - HELD THAT - Vide the Circular 17 of 2019 dated 08.08.2019 CBDT has enhanced the monetary limit for filing appeals before the ITAT from the existing limit of ₹ 20 lacs to ₹ 50 lacs. Since, the tax effect in the present appeal is less than ₹ 50 lacs, this appeal is not maintainable. Hence, we dismiss the appeal filed by the Revenue as not maintainable/withdrawn. In the result, appeal filed by the revenue for assessment year 2008-2009 is dismissed.

Summary

Issues:
1. Justification of deleting the addition of ?1,00,00,000 made by the Assessing Officer u/s 68 of the IT Act, 1961.
2. Maintainability of the appeal based on the tax effect and Circular No. 17 of 2019 issued by CBDT.

Issue 1: Justification of Deletion of Addition:
The appeal was filed by the revenue against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2008-09. The main issue raised was whether the CIT (A) was justified in deleting the addition of ?1,00,00,000 made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The revenue contended that the loan was a bogus one arranged through a shell company controlled by an entry provider, and the CIT (A) had accepted the superficial submission of the assessee without verifying the creditworthiness of the lender and the genuineness of the transaction. However, during the final hearing, the respondent/assessee did not appear. The Departmental Representative pointed out that the tax effect of the relief granted by the CIT (A) was below ?50 lakhs as per Circular No. 17 of 2019 issued by CBDT. Consequently, the appeal was deemed not maintainable due to the tax effect being less than ?50 lakhs.

Issue 2: Maintainability of the Appeal:
The Tribunal considered the Circular issued by CBDT which enhanced the monetary limit for filing appeals before the ITAT from ?20 lakhs to ?50 lakhs. As the tax effect in the present appeal was below ?50 lakhs, it was concluded that the appeal filed by the revenue was not maintainable. Therefore, the Tribunal dismissed the appeal on the grounds of maintainability. The decision was based on the fact that the tax effect did not meet the threshold set by the CBDT in Circular No. 17 of 2019. Consequently, the appeal filed by the revenue for the assessment year 2008-2009 was dismissed.

In conclusion, the judgment by the Appellate Tribunal ITAT Mumbai primarily focused on the justification of deleting the addition made by the Assessing Officer under section 68 of the IT Act, 1961, and the maintainability of the appeal based on the tax effect and the Circular issued by CBDT. The Tribunal dismissed the appeal filed by the revenue for the assessment year 2008-2009 on the grounds of maintainability due to the tax effect being below the threshold set by CBDT.