2021 (3) TMI 1362 - HC - Income Tax

Maintainability of appeal on low tax effect - monetary limit for filing or pursuing an appeal before the High Court - correctness of ITAT's conclusion that the CIT(A) has rightly directed the Assessing Officer to delete the liability - HELD THAT - The above appeal is not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to ₹ 1 Crore. It is further submitted that the tax effect in this case is less than the threshold limit. In the light of the said submissions, the above tax case appeal is dismissed on account of the low tax effect. The substantial questions of law framed are left open

Summary

Issues:
1. Appeal against the order of the Income Tax Appellate Tribunal for the assessment year 2014-15.
2. Substantial questions of law regarding deletion of liability and confirmation of the order by the ITAT.
3. Dismissal of the appeal by the High Court due to low tax effect.

Analysis:
1. The appeal was filed by the Revenue against the order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 2014-15. The substantial questions of law raised in the appeal pertained to the deletion of liability amounting to ?2,25,15,000 by the CIT(A) and the confirmation of this order by the ITAT. The primary contention was the failure of the assessee to prove the identity, genuineness, and creditworthiness of the individuals who provided land advances, even during the appellate proceedings.

2. During the hearing, the Senior Standing Counsel for the appellant-Revenue informed the Court that the appeal was not being pursued by the Revenue due to the low tax effect involved in the case. Referring to Circular No.17/2019 issued by the Central Board of Direct Taxes, which increased the monetary limit for filing or pursuing appeals before the High Court to ?1 Crore, it was stated that the tax effect in this particular case fell below the threshold limit. Consequently, the appeal was dismissed on the grounds of low tax effect, and the substantial questions of law remained unresolved. However, the Court granted liberty to the Revenue to file a petition if the tax effect exceeded the threshold limit, seeking restoration of the appeal for a hearing on merits.

3. In summary, the High Court of Madras dismissed the appeal filed by the Revenue against the ITAT order for the assessment year 2014-15 due to the low tax effect, as per the provisions of Circular No.17/2019 issued by the CBDT. The Court left the substantial questions of law open for future consideration if the tax effect exceeded the prescribed threshold limit, allowing the Revenue the opportunity to seek restoration of the appeal for a detailed hearing on merits.