2019 (3) TMI 1967 - AT - Income Tax

Maintainability of appeal - low tax effect - HELD THAT - Revenue is in appeal against the order of CIT (Appeal) in deleting the addition made by the AO to the returned income being a non genuine speculative loss. Prima-facie, the tax effect involved in appeal is less than the monetary limit prescribed by the recent CBDT Circular for filing of appeals before the Tribunal by the Department. CBDT vide Circular No. 3/2018, dated 11-07-2018 has raised the monetary limit of tax effect for filing of appeals by the Department before the Tribunal to ₹ 20 lakhs. Circular applies to the appeals to be filed by the Department in future as well as the appeals pending before the Tribunal. Without going into merit of the issues raised in the appeal, in view of the CBDT Circular the present appeal of the Revenue is dismissed on account of low tax effect. We clarify here that the Revenue shall be at liberty to approach the Tribunal for restoration of appeal, with the requisite material to show that the appeal is protected by the exceptions mentioned in Para 10 of the Circular - Appeal of the Revenue is dismissed.

Summary

Issues:
- Appeal filed by Revenue against order of Commissioner of Income Tax for assessment year 2007-08.
- Dismissal of appeal based on low tax effect in accordance with CBDT Circular No. 3/2018.
- Possibility for Revenue to restore appeal if exceptions mentioned in Circular are met.

Analysis:
1. The appeal before the Appellate Tribunal ITAT Nagpur was initiated by the Revenue against the decision of the Commissioner of Income Tax (Appeals) for the assessment year 2007-08. The issue at hand was the addition of a certain amount to the returned income, which the Revenue contested as a non-genuine speculative loss.

2. During the proceedings, the representative of the assessee pointed out that the appeal by the Revenue should be dismissed due to the low tax effect, citing the recent CBDT Circular No. 3/2018. It was acknowledged by the Department's representative that the tax effect in this particular appeal was indeed less than ?20 lakhs.

3. The Tribunal carefully considered the submissions made by both parties and reviewed the available material. It was noted that the tax effect in the appeal fell below the monetary threshold set by the CBDT Circular for filing appeals before the Tribunal, which was increased to ?20 lakhs. Consequently, without delving into the merits of the case, the Tribunal dismissed the Revenue's appeal on the grounds of low tax effect as per the Circular.

4. However, the Tribunal clarified that the Revenue retained the option to approach the Tribunal for reinstatement of the appeal if they could demonstrate that their case fell within the exceptions outlined in Paragraph 10 of the Circular. This provision allowed for the possibility of restoring the appeal under specific circumstances specified in the Circular.

5. In conclusion, the Tribunal officially dismissed the appeal of the Revenue, citing the low tax effect as the primary reason for the dismissal. The order was pronounced in an open court session on a specified date. The judgment exemplified the application of the CBDT Circular in determining the viability of appeals based on the monetary limit of the tax effect involved.