2017 (8) TMI 928 - HC - Income Tax

Non-maintainability of the appeal on account of tax liability being less than ₹ 20 Lakh - audit objection acceptability by the department - Held that - It appears that the contention of the Revenue about objection has not been considered. Be that as it may. We are not entering into the debate about the effect of tax liability as there are rival contentions. As the objection of the appellant regarding audit was not considered by the Tribunal, we relegate the parties to the Tribunal. In light of the above, the impugned order is set aside. The parties are relegated before the Tribunal. It will be open for the assessee to raise all the grounds with regard to non-maintainability of the appeal on account of tax liability being less than ₹ 20 Lakh as per the Circular No.21 of 2015 dated 10th December 2015, so also it will be open for the Revenue to put forth its stand about maintainability of the appeal. The Tribunal shall consider the said rival contention and decide about the tenability of the appeal vis-a-vis the Circular of the CBDT about not prosecuting the appeals where the tax effect is less. After deciding the said issue, Tribunal may pass further appropriate orders.

Issues involved:
1. Discrepancy in tax effect calculation by the Tribunal.
2. Interpretation of Circular dated 10th December 2015 regarding audit objections and monetary limits for prosecuting appeals.
3. Consideration of objections by the Revenue.
4. Setting aside the impugned order and reassigning the case to the Tribunal for further consideration.

Analysis by issue:

1. The appellant argued that the Tribunal erred in assessing the tax effect at less than ?3 lakh when it was actually ?18,09,962. The appellant cited a Circular from December 2015, stating that appeals should be contested on merits if audit objections are accepted by the department, regardless of monetary limits. The respondent contended that the tax liability remained unaffected as per the Assessing Officer's order, and the Tribunal correctly dismissed the appeal as the department did not prosecute appeals below ?3 lakh at the time. The High Court noted the discrepancy and decided to relegate the parties to the Tribunal for further consideration.

2. The Circular dated 10th December 2015 was a crucial point of contention. The appellant highlighted the requirement to contest appeals on merits if audit objections were accepted, irrespective of monetary limits. On the other hand, the respondent emphasized that appeals below ?3 lakh were not prosecuted by the department at the relevant time. The High Court directed the Tribunal to consider both parties' arguments regarding the maintainability of the appeal based on the Circular and make a decision accordingly.

3. The High Court observed that the Revenue's objection had not been adequately considered. While refraining from delving into the debate about the tax liability effect due to conflicting contentions, the Court decided to relegate the matter back to the Tribunal for a comprehensive review. The Tribunal was instructed to address the appellant's objection regarding audit, consider the rival contentions, and determine the appeal's tenability vis-a-vis the Circular's guidelines.

4. Consequently, the High Court set aside the impugned order and remanded the case to the Tribunal for further proceedings. The Tribunal was directed to allow the assessee to raise all grounds related to the appeal's non-maintainability based on the Circular's provisions. Similarly, the Revenue was given the opportunity to present its stance on the appeal's maintainability. The Tribunal was tasked with evaluating the conflicting contentions, deciding on the appeal's tenability in light of the Circular's directives, and issuing appropriate orders thereafter. The appeal was disposed of in accordance with these directions and observations.

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