2022 (8) TMI 1335 - HC - Income Tax

Maintainability of appeal before High Court on low tax effect - valuation of the immovable properties of the assessee by invoking the provisions of Section 7 and schedule III of W.T.Act, at the option of the assessee - HELD THAT - When the matter was taken up for consideration, the learned counsel for the appellant / Revenue brought to the notice of this court the Circular No.17/2019 dated 08.08.2019 issued by the Central Board Direct Taxes, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). It is also submitted that the tax effect in this appeal is less than the threshold limit. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeal, wherein, the tax effect is said to be less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial questions of law for determination in an appropriate case.

Summary

Issues involved:
1. Correctness of the order passed by the Income Tax Appellate Tribunal regarding valuation of immovable properties and jewelry liability for the assessment year 1996-97.
2. Direction given to the Assessing Officer to value the immovable properties and allow a liability against jewelry without proper proof.
3. Direction to compute the value of the assessee's interest in a partnership firm without verifying the liabilities against assets.

Analysis:

1. The Tax Case Appeal was filed by the appellant challenging the order passed by the Income Tax Appellate Tribunal regarding the valuation of immovable properties and jewelry liability for the assessment year 1996-97. The substantial questions of law raised included the correctness of the Tribunal's direction to value the immovable properties by invoking specific provisions of the Wealth Tax Act, despite the Assessing Officer adopting the values declared by the assessee. The Tribunal's decision was questioned concerning the valuation of properties not disclosed by the assessee, highlighting a discrepancy in the valuation process.

2. The Tribunal's directive to the Assessing Officer to allow a liability of Rs.40 lakhs against the jewelry possessed by the assessee was also contested. The appellant argued that the assessee failed to provide sufficient proof that the liability was related to the purchase of gold jewelry, raising doubts about the legitimacy of the liability claimed against taxable wealth. This issue emphasized the importance of substantiating liabilities with appropriate evidence to justify their inclusion in the assessment.

3. Another issue raised in the appeal was the Tribunal's instruction to compute the value of the assessee's interest in a partnership firm based on specific provisions of the Wealth Tax Act. The appellant questioned the Tribunal's decision, highlighting the lack of verification regarding the liabilities shown by some firms against assets. This issue underscored the necessity of thoroughly examining the financial aspects of partnership interests to ensure accurate valuation and assessment in accordance with the applicable legal framework.

In light of the Circular issued by the Central Board of Direct Taxes setting a monetary limit for appeals, the High Court dismissed the present appeal as the tax effect was below the specified threshold. The dismissal was without costs, with the substantial questions of law left open for future determination in a suitable case. This decision reflected adherence to the prescribed guidelines for pursuing appeals based on the tax impact, ensuring efficient utilization of judicial resources while maintaining the possibility of addressing legal issues in appropriate circumstances.