2022 (12) TMI 167 - AT - Income Tax

Maintainability of appeal on low tax effect - Reliance on CBDT Circular No. 17 of 2019 by concluding that the appeals of the department are not maintainable as the monetary limit in these appeals was less than Rs. 50,00,000/- - HELD THAT - Merely granting of stay does not mean that the prosecution launched by the Department has come to an end. The requirement of the Circular is very clear wherein as per clause (f) it has been categorically mentioned that cases where prosecution has been filed by the department and is pending in the Court , then in that eventuality this condition falls in exception to Circular No. 3 of 2018 dated 11.07.2018. Thus in our view, since assessment year 2010-11 regarding which prosecution has already been launched by the Department falls under the exception clause and thus the appeal for A.Y. 2010-11 bearing ITA No. 592/JP/2015 could not have been dismissed on account of low tax effect, therefore, in our view, the decision to dismiss the appeal of the revenue on low tax effect by ignoring the exception clause of CBDT Circular is an error which is apparent on record. Therefore, we recall the order 2019 (8) TMI 1848 - ITAT JAIPUR and restore the appeal filed by the department with a direction to the Registry to list the appeal in the regular course and notice be issued to both the parties.

Summary

Issues:
1. Recalling of the Tribunal's order based on CBDT Circular No. 17/2019 for low tax effect.
2. Exception clause in the Circular regarding prosecution pending against the assessee company and its Directors.

Issue 1: Recalling of Tribunal's Order
The Revenue filed two Miscellaneous Applications seeking the recalling of the Tribunal's order dated 21.08.2019, which dismissed the appeals based on the CBDT Circular No. 17/2019 due to low tax effect below the prescribed limit for filing appeals before the ITAT. The Tribunal had allowed the Department to file Miscellaneous Applications if the tax effect exceeded Rs. 50,00,000 or if the case fell within any exceptions of the Circular. The first application (M.A. No. 32/JP/2020) was filed for the assessment year 2010-11. The Revenue argued that prosecution sanctions were granted against the Directors and the assessee company, and thus, the case should fall under the exception clause of the Circular. The assessee contended that no prosecution was pending as of the date, and therefore, the application should be dismissed. The Tribunal, after considering the arguments and evidence, found that the prosecution launched by the Department against the assessee company for the assessment year 2010-11 fell under the exception clause of the Circular. Consequently, the Tribunal recalled the order and restored the appeal filed by the Department for the assessment year 2010-11.

Issue 2: Exception Clause in the Circular
In the second Miscellaneous Application (M.A. No. 33/JP/2020) arising from ITA No. 593/JP/2015 for the assessment year 2011-12, the Department reported that no prosecution was filed against the assessee company for that year. As a result, the case did not fall under the exception clause of the CBDT Circular. The Tribunal, based on this information, dismissed the application as the Revenue failed to demonstrate any error in the Tribunal's previous decision. Therefore, the Miscellaneous Application for the assessment year 2011-12 was dismissed. The Tribunal pronounced the order on 28/09/2022, with no costs awarded in either case.

This detailed analysis of the judgment highlights the issues surrounding the recalling of the Tribunal's order based on the CBDT Circular and the application of the exception clause concerning pending prosecutions against the assessee company and its Directors.