2019 (4) TMI 1316 - HC - Income Tax

Monetary limit - levy penalty u/s. 271AAA - HELD THAT - When these matters are taken up for hearing, learned Standing Counsel for the Department brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.3/2018, dated 11.7.2018, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed ₹ 50.00 lakhs. In the instant case, the tax effect is said to be less than the monetary limit imposed and, therefore, the Appeals filed by the Revenue are dismissed, as not pressed, keeping open the substantial questions of law for determination in appropriate cases.

Summary

Issues:
1. Challenge to the correctness of the order passed by the Income Tax Appellate Tribunal.
2. Ambiguity in the Tribunal's order regarding the levy of penalties under different sections.
3. Consideration of the Revenue's appeal for levy of penalty under section 271(1)(c) of the Act.

Issue 1: Challenge to the Tribunal's Order
The Tax Case Appeals were filed by the Revenue to challenge the order passed by the Income Tax Appellate Tribunal, questioning the correctness of the decision. The substantial questions of law raised included the Tribunal's ruling on directing the Assessing Officer to levy penalty under section 271AAA, the sustainability of the order, and the comparison with the penalty under section 271(1)(c).

Issue 2: Ambiguity in Tribunal's Order
The Tribunal's order was criticized for its ambiguity in the levy of penalties under different sections. It was noted that the Tribunal's decision appeared contradictory by suggesting the levy of penalty under section 271(1)(c) on one hand while indicating that penalty under section 271AAA was not applicable on the other hand, leading to confusion and lack of clarity in the judgment.

Issue 3: Consideration of Revenue's Appeal
During the hearing, the Department's Standing Counsel highlighted a Circular instruction by the Central Board of Direct Taxes setting a monetary limit for filing/pursuing appeals before the High Court. As the tax effect in this case fell below the specified limit, the Appeals filed by the Revenue were dismissed as not pressed. However, the substantial questions of law were kept open for determination in suitable cases, without imposing any costs, and the connected application was closed.

This judgment by the Madras High Court addressed various issues concerning the challenge to the Tribunal's order, the ambiguity in the levy of penalties, and the consideration of the Revenue's appeal based on the monetary limit set by the Central Board of Direct Taxes. The decision highlighted the need for clarity and consistency in legal judgments while adhering to the prescribed guidelines and limits for filing appeals.