2020 (6) TMI 465 - AT - Income Tax

Maintainability of appeal - low tax effect - HELD THAT - Vide CBDT circular No.17/2019 in F.No.279/Misc.142/2007-ITJ(Pt) dated 8th August, 2019, the Income Tax department has further liberalized its policy for not filing appeals against the decisions of the appellate authorities in favour of the taxpayers, wherein tax involved is below certain threshold limits, and announced its policy decision not to file, or press, the appeals, before this Tribunal, against the appellate orders favourable to the assessee in the cases in which overall tax effect, excluding interest except when interest itself is in dispute, is ₹ 50,00,000 or less. In view of the above factual background and the concession by this CBDT circular, this appeal must be dismissed as withdrawn. This circular, only enhances the monetary limits and gives further relaxation. The old circular, beyond any dispute or controversy, categorically applied to the pending appeals as on the date of issuance of circular.The circular dated 8th August 2019 is not a standalone circular. It is to be read in conjunction with the CBDT circular No. 3/2018 (and subsequent amendment thereto), and all it does is to replace paragraph nos. 3 and 5 of the said circular. Appellant shall be at liberty to point out the case so summarily dismissed, either owing to wrong computation of tax effect or owning to such case being covered by the permissible exceptions- or for any other reason, and we will take appropriate remedial steps in this regard.

Summary

Issues:
- Correctness of relief granted to taxpayers by CIT (Appeals)-16, Chennai
- Tax effect not exceeding ?50,00,000
- CBDT circular No.17/2019 liberalizing policy for not filing appeals
- Applicability of circular dated 8th August 2019
- Monetary limits for filing appeals in income-tax cases
- Separate orders for each assessment year vs. composite orders
- Effect of circular on pending appeals
- Application of circular to SLPs/appeals/cross objections/references
- Supreme Court judgment in SLP No.21497/2019
- Liberty granted to Assessing Officer for further verifications
- Merits in submissions of Departmental Representative
- Non-maintainability of the appeal by Revenue

Analysis:
The judgment pertains to an appeal filed by the Revenue challenging the relief granted to taxpayers by CIT (Appeals)-16, Chennai, where the tax effect does not exceed ?50,00,000. The Income Tax department, through CBDT circular No.17/2019, liberalized its policy for not filing appeals against decisions favoring taxpayers below certain threshold limits. The circular dated 8th August 2019 enhanced monetary limits for filing appeals in income-tax cases, specifying limits for Appellate Tribunal, High Court, and Supreme Court. Additionally, the circular addressed scenarios involving separate orders for each assessment year versus composite orders for multiple years.

The circular was to be read in conjunction with circular No. 3/2018, replacing specific paragraphs. It was clarified that the circular applied to pending appeals as of its issuance date. The judgment referenced the Hon'ble Supreme Court's decision in SLP No.21497/2019, where the court dismissed an appeal due to the tax effect being below ?2 crores, in line with the CBDT circular. The Departmental Representative sought liberty to verify and recall appeals falling under exceptions, a request granted by the Tribunal.

Considering the principles laid down by the Supreme Court, the Tribunal found the Revenue's appeal non-maintainable. The judgment emphasized the liberty granted to the Assessing Officer for further verifications, particularly regarding payments to non-residents and reimbursement of freight charges. Ultimately, the appeal filed by the Revenue was dismissed, aligning with the CBDT circular's intent to limit appeals based on tax effect thresholds.

The judgment highlights the significance of adhering to monetary limits for filing appeals, the applicability of circulars to pending cases, and the discretion of authorities to verify and recall appeals falling under exceptions. It underscores the need for strict adherence to policy directives and legal thresholds in determining the maintainability of appeals in income-tax cases.