2019 (2) TMI 636 - AT - Income Tax

Maintainability of appeal - monetary limit - Addition u/s. 68 on account of share capital/premium received by the assessee - CIT-A deleted the addition admitting additional evidence - Held that - The appeals of Revenue are not maintainable on account of low tax effect prescribed by CBDT Circular of 2018. Further, in the absence of any material placed on record by the Revenue to demonstrate that the issue in the present appeals are covered by exceptions provided in para 10 of the aforesaid CBDT Circular, we are of the view that the monetary limit prescribed by the instructions of the aforesaid CBDT Circular would be applicable to the present appeals of the Department. We accordingly dismiss all the appeals of Revenue without expressing any opinion on merits of the case. The grounds of the Revenue are dismissed.

Summary

Issues:
- Maintainability of appeals by Revenue based on tax effect.

Analysis:
The judgment involves multiple appeals by the Revenue against the order of the Commissioner of Income-Tax (A) for the assessment years 2004-05 to 2009-10. The main issue raised by the Revenue in these appeals was the deletion of addition made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The Revenue contended that the CIT(A) erred in admitting additional evidence and that the order was erroneous both in law and on facts. The Revenue argued that the appeals should not be dismissed based on low tax effect as per Circular No. 3/2018 issued by CBDT. The CIT(A) had passed consolidated orders for multiple assessment years, but the tax effect in each individual assessment year was below the prescribed monetary limit. The Revenue relied on a decision by the Karnataka High Court to support their contention that tax effect should be considered on a standalone basis for each assessment year. The Tribunal noted that the CBDT Circular specified that appeals could be filed only if the tax effect exceeded a certain limit for each assessment year, and dismissed all the Revenue's appeals due to the low tax effect in each individual assessment year.

The Tribunal referred to the Karnataka High Court's decision in a similar case, where it was held that the Revenue cannot file an appeal if the tax effect is below the prescribed limit for each assessment year. The Tribunal emphasized that the tax effect must be considered separately for each assessment year, even if a consolidated order was passed for multiple years. The Tribunal found no justification provided by the Revenue to deviate from the CBDT Circular's instructions. Therefore, the Tribunal concluded that the appeals by the Revenue were not maintainable due to the low tax effect in each individual assessment year. The Tribunal dismissed all the appeals of the Revenue without expressing any opinion on the merits of the case, leaving room for the Revenue to seek revival of the appeal if necessary. The judgment was pronounced on February 7, 2019.