2021 (2) TMI 1377 - AT - Income Tax

Maintainability of revenue appeal on low tax effect - Revenue preferring appeal before the Tribunal, if the tax effect is less than Rs.50 lakhs - HELD THAT - CBDT vide Circular dated 20th August, 2019 (F. No. 279/19-93/2018-ITJ), has clarified that it will apply to all pending appeals. Thus, in view of the aforesaid circular, the appeal of the Revenue is dismissed as non-maintainable as the tax effect involved in the appeal is below Rs.50 lakhs. However, it is made clear that the Department is at liberty to file Miscellaneous Application for recalling of the order, if the tax effect is found to be more than the prescribed limit of Rs.50,00,000/- or any of the conditions etc., as available in the amendment carried out in para 10 of Circular No. 3/2018, dated 20.08.2018, is made out. Appeal of the Revenue is dismissed.

Summary

Issues:
1. Applicability of Circular No. 17/2019 dated 08.08.2019 regarding the monetary limit for filing appeals before the Income Tax Appellate Tribunal.
2. Impact of the circular on pending appeals with tax effect below Rs.50 lakhs.
3. Provision for the Department to file a Miscellaneous Application in case of tax effect exceeding the prescribed limit.

Analysis:
The judgment pertains to an appeal by the Revenue against an order passed by the Commissioner of Income-tax (Appeals)-43, New Delhi, for assessment year 2012-13. The learned Sr. DR highlighted Circular No. 17/2019 dated 08th August, 2019, issued by the CBDT, which raised the monetary limit for filing appeals before the ITAT from Rs.20 lakhs to Rs.50 lakhs. The circular aimed at managing litigation effectively. It was clarified that the enhanced limit would apply to all pending appeals, as per Circular dated 20th August, 2019. Consequently, the appeal of the Revenue was dismissed as non-maintainable due to the tax effect being below Rs.50 lakhs.

The judgment emphasized that the circular did not supersede the earlier Circular No. 3/2018 dated 11.7.2018 but amended the monetary limits and provided clarification on the application of paragraph 5 of the previous circular. It was noted that all conditions mentioned in the earlier circular would apply mutatis mutandis, including to pending appeals. The Department was granted the liberty to file a Miscellaneous Application for recalling the order if the tax effect exceeded Rs.50 lakhs or if any conditions specified in the circular were met.

In conclusion, the judgment dismissed the Revenue's appeal in line with the CBDT circular, underscoring the importance of adhering to the revised monetary limit for filing appeals before the ITAT. It highlighted the significance of the circular in streamlining the appeal process and managing litigation efficiently, ensuring compliance with the prescribed tax effect threshold for maintaining appeals before the Tribunal.