2020 (1) TMI 1587 - AT - Income Tax

Maintainability of appeal on low tax effect - CIT-A deleted that addition on on money receipts and unexplained cash credit - HELD THAT - As this appeal of the Revenue is no longer maintainable in view of the CBDT Circular No. 17 of 2019 dated 08.08.2019. The mandatory limit for cases in which Revenue can challenge the relief granted by the CIT(A) now stands enhanced to Rs.50 lakhs. This concession granted by the Central Board of Direct Taxes (CBDT) is retrospective in effect inasmuch as it applies to all pending appeals as well. In view of the above position, the appeal of the Revenue is no longer maintainable and is dismissed as such. As made clear that on re-verification at the end of the AO if it comes out that the tax effect of more than Rs.50 lakhs is being involved in the appeal or the appeal falls within the exemption clause of the Circular, then the Revenue will be at liberty to file Miscellaneous Application to recall the Tribunal order. The application should be filed within time limit prescribed in the Act. Appeal of the Revenue is dismissed due to low tax effect.

Summary

Issues:
Challenge to order dated 28th February 2011 for assessment year 1993-94 regarding 'on money' receipts and unexplained cash credit. Appeal dismissed due to low tax effect under CBDT Circular No. 17 of 2019.

Analysis:
The Appellate Tribunal ITAT Ahmedabad addressed the appeal challenging the correctness of an order dated 28th February 2011 for the assessment year 1993-94. The Assessing Officer disputed the order of the CIT(A) regarding 'on money' receipts and unexplained cash credit. The Assessing Officer contended that the CIT(A) erred in partially deleting the addition of Rs.25,33,817 on account of 'on money' receipts and in deleting the addition of Rs.16,48,770 on account of unexplained cash credit.

During the hearing, the counsel for the assessee argued that the appeal by the Revenue should be dismissed due to the low tax effect, citing the CBDT Circular No. 17 of 2019. The circular increased the monetary limits for filing appeals by the Revenue before the Tribunal from Rs.20 lakhs to Rs.50 lakhs. The Departmental Representative acknowledged that the tax effect in the present appeal was below the limit set by the CBDT Circular.

After considering the arguments and the legal position, the Tribunal found that the appeal by the Revenue was no longer maintainable due to the enhanced limit of Rs.50 lakhs set by the CBDT Circular. The Tribunal highlighted that the circular's provisions were retrospective and applied to pending appeals as well. Consequently, the appeal by the Revenue was dismissed based on the low tax effect falling below the prescribed limit.

However, the Tribunal clarified that if upon re-verification by the Assessing Officer, it is discovered that the tax effect exceeds Rs.50 lakhs or falls within the exemption clause of the Circular, the Revenue could file a Miscellaneous Application within the prescribed time limit to recall the Tribunal's order.

In conclusion, the appeal of the Revenue was dismissed due to the low tax effect, in accordance with the CBDT Circular No. 17 of 2019, which raised the limit for challenging relief granted by the CIT(A) to Rs.50 lakhs and applied retrospectively to pending appeals.