2018 (9) TMI 2073 - AT - Income Tax

Maintainability of appeal on low tax effect against CIT - A Order - addition of guest fees, hire of rooms and hire charges in respect of club lawns and disallowance u/s.57(iii) - CIT- A deleted the addition - HELD THAT - Revenue is not maintainable in view of the recent CBDT Circular No.3/2018 in F.No.279/Misc.142/2007-ITJ (Pt) dated 11th July, 2018, vide which it has been decided by the Board that no departmental appeals should be filed before the Tribunal if the tax effect by virtue of the Commissioner of Income-tax (Appeals) s order is below ₹ 20 Lacs. The Board has provided exemptions at clause (10) of the Instructions wherein it has been provided that these instructions will not be applicable, where the Constitutional validity of the provisions of an Act/Rule is under challenge or where Board s order, notification, instruction or circular has been held to be illegal or where Revenue Audit objection in the case has been accepted by the Department or where the addition relates to undisclosed foreign assets/bank accounts etc. We find that the present case does not fall within the exemption clause and the tax effect is less than ₹ 20 Lacs. Therefore, the present appeal is not maintainable and hence dismissed.

Summary

Issues:
- Appeal by Revenue against order dated 5th January, 2015 for the assessment year 2011-12.
- Deletion of addition of guest fees, hire charges, and hire of rooms.
- Deletion of disallowance u/s.57(iii) of the Act.
- Maintainability of Revenue's appeal based on tax effect.

Analysis:
The judgment pertains to an appeal filed by the Revenue and a Cross Objection filed by the assessee against the order dated 5th January, 2015 for the assessment year 2011-12. The Revenue raised grounds of appeal regarding the deletion of additions totaling to &8377; 49,96,194 and &8377; 4,24,621. The assessee contended that the appeal should be dismissed due to low tax effect as per a CBDT Circular. The Departmental Representative acknowledged the tax effect being below the prescribed limit. The Tribunal noted the recent CBDT Circular No.3/2018, which states that no departmental appeals should be filed if the tax effect is below &8377; 20 Lacs. Exceptions were provided for certain circumstances, which did not apply in this case. Consequently, the Tribunal found the appeal to be not maintainable and dismissed it.

Regarding the Cross Objection filed by the assessee, since the appeal by the Revenue was deemed non-maintainable, the foundation for the Cross Objection also ceased to be valid. Therefore, the Cross Objection was dismissed as not pressed. Ultimately, both the appeal by the Revenue and the Cross Objection by the assessee were dismissed by the Tribunal. The judgment was pronounced on 28th September, 2018.