2020 (4) TMI 188 - AT - Income Tax

Maintainability of appeal - low tax effect - Penalty u/s 271(1)(c) on non-disclosure of receipts from M/s. Hindustan Unilever Ltd., and unsecured loan added u/s 68 - HELD THAT - The Hon'ble Supreme Court in the case of The Commissioner of Income Tax-5,New Delhi Vs. Keshav Power Ltd., in SLP No.21497/2019 dated 16.08.2019 2019 (8) TMI 811 - SC ORDER has applied the Circular No.17/2019 dated 08.08.2019 and has dismissed the appeal holding as since the tax effect involved in the matter is less than ₹ 2 crores, going by the latest circular issued by the CBDT, we see no reason to interfere in this matter. The Special Leave Petition is dismissed, leaving all the questions of law open - Thus appeal filed by the Revenue is found to be non-maintainable and hence, dismissed..

Summary

Issues:
1. Deletion of penalty under section 271(1)(c) for non-disclosure of receipts and unsecured loan.
2. Maintainability of appeal based on CBDT Circular No.17/2019.
3. Application of CBDT circulars and judicial precedents in determining tax effect thresholds for appeals.
4. Liberty to seek recall of appeal dismissal for cases exceeding threshold limits.

Analysis:
1. The appeal involved a challenge by the revenue against the CIT(A)'s order deleting the penalty under section 271(1)(c) for non-disclosure of receipts and an unsecured loan. The revenue contended that the deletion of penalty was unjustified.

2. The Assessing Officer pointed out that the tax effect in the appeal was below ?50 lakhs, invoking the CBDT Circular No.17/2019. This circular relaxed the policy for not filing appeals against decisions favoring taxpayers where the tax involved is below specified limits, leading to the argument that the appeal was not maintainable.

3. The Tribunal referred to the CBDT circular and emphasized that it enhanced monetary limits and replaced certain paragraphs of the previous circular. Additionally, the Tribunal cited a Supreme Court judgment in a similar context where an appeal was dismissed based on the tax effect being below a certain threshold as per the circular.

4. The revenue sought liberty to demonstrate exceptions and seek recall of the appeal dismissal for cases inadvertently included where the tax effect exceeded the prescribed limit. The Tribunal granted the liberty to point out such cases for further verification and remedial action.

In conclusion, the Tribunal, following the principles laid down by the Supreme Court and considering the CBDT circular, found the revenue's appeal non-maintainable due to the tax effect falling below the threshold limit. The appeal was dismissed accordingly, with the Tribunal providing the revenue the opportunity to rectify any cases wrongly included in the dismissed appeal.