2018 (8) TMI 1545 - AT - Income Tax

Monetary limit - maintainability of appeal - Held that - the amended circular is not applicable to the facts of the present case rather it is covered by the original circular No. 3/18 dated 11. 07. 2018, vide which the CBDT has revised the monetary limit to ₹ 20,00,000/- for not filing the appeal before the Tribunal - From Clause 12 & 13 of the above said circular it is clear that these instructions are applicable to the pending appeals also and as per clause 13, there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than ₹ 20,00,000/-. These instructions are operative retrospectively to the pending appeals. Keeping in view the CBDT Circular No. 3 of 2018 dated 11. 07. 2018, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal.

Summary

Issues:
- Maintainability of appeal by the department based on Circular No. 3/2018
- Applicability of amended circular regarding tax effect for filing appeals
- Interpretation of CBDT Circular No. 3/18 dated 11.07.2018
- Effect of Circular on pending appeals before ITAT
- Dismissal of Cross Objections by the assessee

Maintainability of Appeal:
The department's appeal for the Asstt. Year 2007-08 and Cross Objections by the assessee for the Asstt. Years 2006-07 & 2007-08 were challenged. The assessee contended that the appeal by the department was not maintainable due to Circular No. 3/2018 issued by CBDT, which raised the monetary limit for tax effect for filing appeals before the ITAT to ?20 lakhs. However, the department argued that the circular did not impose a blanket bar on filing appeals and provided exceptions for cases like undisclosed foreign income/assets or cases with pending prosecution.

Applicability of Amended Circular:
The amended circular was discussed, emphasizing exceptions to the monetary limits for filing appeals, such as cases involving undisclosed foreign income/assets or information from law enforcement agencies. The Tribunal noted that the amended circular did not apply to the present case, as it was covered by the original Circular No. 3/18 dated 11.07.2018, which set the monetary limit at ?20,00,000 for not filing appeals before the Tribunal.

Interpretation of CBDT Circular:
The Tribunal interpreted the CBDT Circular, specifying that appeals should not be filed solely based on exceeding the monetary limits but on the merits of the case. It outlined the calculation of tax effect, including provisions for interest disputes and penalties. The Circular also detailed the procedure for calculating tax effect for multiple assessment years and composite orders involving common issues.

Effect on Pending Appeals:
The Tribunal highlighted that the Circular applied retrospectively to pending appeals, instructing the department to withdraw or not press appeals before the ITAT where the tax effect was less than ?20,00,000. It emphasized that the Circular's instructions were applicable to ongoing appeals, including those below the specified tax limits.

Dismissal of Cross Objections:
Regarding the Cross Objections filed by the assessee, which supported the CIT(A)'s order without seeking specific relief, the Tribunal deemed them infructuous and dismissed them. Consequently, both the department's appeal and the assessee's Cross Objections were dismissed based on the CBDT Circular's guidelines.

Conclusion:
The Tribunal concluded that the Revenue should not have filed the appeal before the Tribunal based on the CBDT Circular. The Cross Objections filed by the assessee were considered infructuous and dismissed. The decision was pronounced on 23/08/2018, aligning with the Circular's retrospective applicability to pending appeals and emphasizing the need to adhere to the specified tax limits for filing appeals.