2020 (5) TMI 705 - AT - Income Tax

Maintainability of appeal on low tax effect - Assessee contended that the appeal filed by the Department is not maintainable in view of the Circular No. 17/2019 dt. 08/08/2019 issued by CBDT wherein the monetary limit for filing the appeals by the Department before the ITAT has been increased to ₹ 50,00,000/- from ₹ 20,00,000/-. - HELD THAT - In the present case it is an admitted fact that the CBDT vide Circular No. 17/2019 enhanced the monetary limit to ₹ 50,00,000/- for not filing the appeal by the department before the ITAT, earlier this limit was specified at ₹ 20,00,000/- in the original Circular no. 03/2018 dt. 11/07/2018. As earlier Circular no. 3 of 2018 dt. 11/07/2018 at page 5 has been removed and the limit specified in para 3 of the earlier Circular has been enhanced. It is also not in dispute that the earlier Circular was applicable retrospectively to the pending appeals / cross objections and para nos. 12 13 of the original Circular no. 03/2018 dt. 11/07/2018 - the amended Circular No. 17/2019 now issued by the CBDT is also applicable to the pending appeals as has been specified in para 13 of the original Circular no. 3/2018 dt. 11/07/2018 and that the Department ought not have filed the appeals before the ITAT where the tax effect is ₹ 50 Lacs or less - we hereby hold that the relaxation in monetary limits for departmental appeals, vide CBDT circular dated 8th August 2019 (supra) shall be applicable to the pending appeals in addition to the appeals to be filed henceforth. Revenue appeal dismissed.

Summary

Issues:
Appeal maintainability based on Circular No. 17/2019 - Retrospective application of Circular - Enhanced monetary limit for filing appeals before ITAT - Interpretation of Circular provisions - Applicability to pending appeals.

Analysis:
The issue in this case revolves around the appeal filed by the Revenue against the order of the Ld. CIT(A), Shimla, H.P. The primary contention raised during the hearing was regarding the maintainability of the appeal by the Department in light of Circular No. 17/2019 issued by CBDT, which increased the monetary limit for filing appeals before the ITAT to ?50,00,000 from ?20,00,000. The Ld. Counsel for the Assessee argued for the retrospective application of the circular to pending appeals as well, while the Ld. Sr. DR contended that the circular was not retrospective but applicable only from the date of issue.

Upon considering the submissions, it was noted that the CBDT had indeed enhanced the monetary limit to ?50,00,000 through Circular No. 17/2019, replacing the earlier limit specified in Circular No. 3 of 2018. The circular detailed the revised monetary limits for filing appeals before various appellate bodies, emphasizing the need to calculate tax effect separately for each assessment year in cases involving disputed issues across multiple years.

The Tribunal analyzed the language of Circular No. 17/2019 and found that it rectified the anomaly in the earlier circular, with specific provisions for enhancing monetary limits and reducing litigation. The Tribunal held that the amended circular was applicable to pending appeals, citing a decision by another Bench supporting the retrospective application of the circular to appeals pending disposal.

The Tribunal emphasized that the relaxation in monetary limits for departmental appeals, as per the CBDT circular dated 8th August 2019, applied not only to future appeals but also to pending appeals. Consequently, the appeal filed by the Department was dismissed, affirming the retrospective application of the enhanced monetary limit as per Circular No. 17/2019.

In conclusion, the Tribunal's judgment upheld the retrospective application of the enhanced monetary limit specified in Circular No. 17/2019 to pending appeals, underscoring the need for compliance with the revised provisions for filing appeals before the ITAT.