2017 (10) TMI 728 - HC - Income Tax

Maintainability of appeal - addition on account of unexplained cash - Revenue relies on the fact that these Tax Appeals arising out of a common judgment of the Tribunal concerning the same assessee for different assessment years and in one such case the tax amount is higher than the minimum limit - Held that - As perusing the circular dated 10.12.2015 of CBDT it provides Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. We gather that the question which the Revenue wishes to pursue in this Tax Appeal does not arise in any of the Tax Appeals. In view of the above, this Tax Appeal would not be maintainable

Summary

Issues:
1. Whether the ITAT was correct in upholding the decision of the CIT(A) in deleting the addition of ?34,11,155 made by the AO on account of unexplained cash.
2. Whether the Tax Appeal is maintainable considering the tax effect involved and the CBDT circular dated 10.12.2015.

Analysis:
1. The High Court considered the substantial question of law regarding the correctness of the ITAT's decision in deleting the addition of ?34,11,155 made by the AO. The Court noted that the tax effect involved in this case was less than ?20 lakhs, which is the minimum tax effect prescribed for filing an appeal by the Revenue before the High Court as per the CBDT circular dated 10.12.2015. The Revenue argued that since the appeals arose from a common judgment of the Tribunal concerning the same assessee for different assessment years, and one case had a tax amount higher than the minimum limit, they decided to pursue the appeal. However, the Court referred to the CBDT circular, which mandates that appeals can only be filed for assessment years where the tax effect exceeds the monetary limit specified. Since the disputed issue in this Tax Appeal did not meet the prescribed tax effect limit, the Court held that the appeal was not maintainable and disposed of it accordingly.

2. The CBDT circular dated 10.12.2015 outlines the criteria for filing appeals based on the tax effect in each assessment year for every assessee. It specifies that if the tax effect in a particular assessment year is below the monetary limit, no appeal shall be filed for that year. However, in cases involving a composite order or judgment with common issues across multiple assessment years, appeals must be filed for all relevant years where the tax effect exceeds the limit, even if it is below the limit in some years. Each assessee in a composite order involving multiple assesses shall be dealt with separately. In the present case, since the tax effect did not meet the prescribed limit for the relevant assessment year, the Court found the Tax Appeal to be non-maintainable based on the CBDT circular's provisions.