2019 (9) TMI 1631 - AT - Income Tax

Maintainability of appeal on low tax effect - HELD THAT - DR though stated that it is not apparent from the present appeal as to whether the case of the assessee falls into any exception to the circular but at the same time, he was not able to demonstrate the exception applicable to the assessee, therefore, his arguments has no force. We find that the tax effect in this case is less than ₹ 50 lakhs, therefore, the appeal is not maintainable and therefore, we dismiss the same. However, the parties are given the liberty to file for recalling of this order if the appeal is covered by the exceptions listed at para- 10 (scope of which stands widened vide amendment dated 20/08/2018) or para 11 of the order. Appeal of the Revenue is dismissed.

Summary

Issues:
- Appeal filed by Revenue against CIT(A) order for Assessment Year 2006-07
- Tax effect below monetary limit for filing appeals by the Department
- CBDT Circular increasing monetary limits for filing appeals before ITAT
- Assessing Officer to calculate tax effect separately for each assessment year
- Dismissal of appeal due to tax effect being less than ?50 lakhs

Analysis:
1. The appeal was filed by the Revenue against the order of the Ld. CIT(A) for Assessment Year 2006-07. It was noted that the tax effect in this case was below the monetary limit set by the CBDT for filing appeals. The CBDT Circular, dated 08/08/2019, increased the monetary limit for filing appeals before the ITAT. The Circular specified different monetary limits for filing appeals before the Appellate Tribunal, High Courts, and the Supreme Court. The Circular aimed at reducing litigation and enhancing the management of appeals in income tax cases.

2. The Assessing Officer is required to calculate the tax effect separately for every assessment year in cases where disputed issues arise in more than one assessment year. Appeals can be filed for assessment years where the tax effect exceeds the monetary limit specified in the Circular. However, no appeal shall be filed for assessment years where the tax effect is less than the specified limit. The Circular also addressed scenarios involving composite orders or judgments covering multiple assessment years and multiple assesses, emphasizing the need to deal with each assessee separately.

3. During the proceedings, the ld. DR acknowledged that it was not clear if the case of the assessee fell under any exception to the Circular. Despite this, the ld. DR failed to demonstrate any exception applicable to the assessee. As the tax effect in this case was less than ?50 lakhs, the appeal was deemed not maintainable, leading to its dismissal. However, the parties were granted the liberty to file for the recall of the order if the appeal fell under the exceptions listed in the Circular, which had been widened through an amendment.

4. Ultimately, the appeal of the Revenue was dismissed due to the tax effect being below the specified monetary limit. The order was pronounced in the open court on 24/09/2019. The judgment highlighted the importance of adhering to the revised monetary limits for filing appeals in income tax cases, as specified by the CBDT Circular, to streamline the appellate process and reduce unnecessary litigation.