2019 (8) TMI 752 - AT - Income Tax

Maintainability of appeal - low tax effect - concession extended by the CBDT applicability - HELD THAT - Relaxation in monetary limits for departmental appeals, vide CBDT circular dated 8th August 2019 (supra) shall be applicable to the pending appeals in addition to the appeals to be filed henceforth. DR then submits liberty may kindly be given to point out, upon necessary further verifications, and to seek recall the dismissal of appeals and restoration of the appeals in the cases (i) in which it can be demonstrated that the appeals are covered by the exceptions, and (ii) which are inadvertently included in this bunch of appeals, wherein the tax effect, in terms of the CBDT circular (supra), exceeds ₹ 50,00,000. None opposes this prayer; we accept the same. We make it clear that the appellants shall be at liberty to point out the cases which are wrongly included in the appeals so summarily dismissed, either owing to wrong computation of tax effect or owning to such cases being covered by the permissible exceptions- or for any other reason, and we will take appropriate remedial steps in this regard. All the appeals stand dismissed as withdrawn. As the appeals filed by the Revenue are found to be non-maintainable and as all the related cross-objections of the assessee arise only as a result of those appeals and merely support the order of the CIT(A), the cross objections filed by the assessee are also dismissed as infructuous. Ordered, accordingly.

Issues Involved:
1. Applicability of CBDT circular dated 8th August 2019 on pending appeals.
2. Monetary limits for filing appeals by the Income Tax Department.
3. Retrospective application of the CBDT circular.
4. Correctness of relief granted to taxpayers by the Commissioners of Income Tax (Appeals).

Detailed Analysis:

Applicability of CBDT Circular Dated 8th August 2019 on Pending Appeals:
The judgment addresses the issue of whether the CBDT circular dated 8th August 2019 applies to pending appeals. The Tribunal held that the concession extended by the CBDT circular is applicable not only to future appeals but also to those pending for disposal. The circular is not standalone and must be read in conjunction with the earlier CBDT circular no. 3 of 2018. The Tribunal emphasized that the intent of the circular is to reduce litigation and provide relief, and thus, it should apply retrospectively to pending appeals as well.

Monetary Limits for Filing Appeals by the Income Tax Department:
The judgment discusses the enhancement of monetary limits for filing appeals by the Income Tax Department. The CBDT circular dated 8th August 2019 increased the monetary thresholds for filing appeals to ?50,00,000 before the Appellate Tribunal, ?1,00,00,000 before the High Court, and ?2,00,00,000 before the Supreme Court. This substantial increase aims to reduce the number of appeals and expedite the resolution of tax disputes. The Tribunal noted that this policy decision signifies the government's trust in the decisions of appellate forums and aims to cut down the time taken for the finality of the appellate process.

Retrospective Application of the CBDT Circular:
The Tribunal addressed the argument regarding the retrospective application of the CBDT circular. The Departmental Representative pointed out that the circular states it shall come into effect from the date of issue, suggesting prospective application. However, representatives for the taxpayers argued for retrospective application, citing the circular's intent to reduce litigation. The Tribunal agreed with the taxpayers, holding that the circular should apply retrospectively to pending appeals, as it only modifies the monetary limits and follows the approach of the earlier circular, which applied retrospectively.

Correctness of Relief Granted to Taxpayers by the Commissioners of Income Tax (Appeals):
The Tribunal reviewed the correctness of the relief granted to taxpayers by the Commissioners of Income Tax (Appeals). The appeals filed by various Assessing Officers questioned the relief granted, but given the monetary limits set by the CBDT circular, the Tribunal dismissed these appeals as withdrawn. The related cross objections, which supported the orders passed by the Commissioner (Appeals), were also dismissed as infructuous. The Tribunal emphasized that the government's policy decision to not file appeals in cases with tax effects below the specified limits is a pragmatic and taxpayer-friendly approach.

Additional Considerations:
The Tribunal granted liberty to the Departmental Representative to seek recall and restoration of appeals in cases where it can be demonstrated that the appeals are covered by exceptions or where tax effects exceed ?50,00,000 due to incorrect computation. This ensures that any errors in the dismissal of appeals can be rectified.

Conclusion:
In conclusion, the Tribunal dismissed all the appeals as withdrawn and the related cross objections as infructuous, in light of the CBDT circular dated 8th August 2019. The judgment underscores the government's effort to reduce litigation and expedite the resolution of tax disputes by significantly increasing the monetary limits for filing appeals. The Tribunal's decision to apply the circular retrospectively to pending appeals aligns with the circular's intent to provide relief and reduce the burden of prolonged litigation on taxpayers.

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