2022 (1) TMI 1474 - AT - Income Tax

Maintainability of appeal on low tax effect - HELD THAT - It is noted that in this appeal the tax effect is below monetary limits of Rs.50 lakhs as prescribed under the CBDT circular No.3/2018 dated 8th August 2019. As relying on Dinesh Madhavlal Patel 2019 (8) TMI 752 - ITAT AHMEDABAD deserves to be dismissed.

Summary

Issues Involved:

1. Maintainability of the Revenue's appeal in light of the CBDT circular No.3/2018 and its amendment dated 8th August 2019.
2. Applicability of the CBDT circular's monetary limits to pending appeals.
3. Dismissal of cross objections by the assessee as infructuous due to the dismissal of the Revenue's appeal.

Detailed Analysis:

1. Maintainability of the Revenue's Appeal:

The primary issue in this case was the maintainability of the Revenue's appeal against the order of the CIT(A)-3, Bhopal for the assessment year 2018-19. The counsel for the respondent argued that the appeal was not maintainable due to the CBDT's circular No.3/2018 and its subsequent amendment dated 8th August 2019. This circular set a monetary threshold for appeals, stating that appeals should not be filed if the tax effect is below Rs. 50 lakhs. The Tribunal noted that the tax effect in the present appeal was below this threshold, and therefore, the appeal was dismissed in limine, without examining the merits of the case. This decision aligns with the precedent set by the Tribunal in the case of ITO Vs. Dinesh Madhavlal Patel, where similar appeals were dismissed due to the monetary limits prescribed by the CBDT circular.

2. Applicability of the CBDT Circular's Monetary Limits to Pending Appeals:

A significant point of contention was whether the CBDT circular dated 8th August 2019 applied retrospectively to pending appeals. The Tribunal concluded that the circular should indeed apply to pending appeals, as it was not a standalone circular but a modification of the earlier circular No.3/2018. The Tribunal reasoned that the circular aimed to reduce litigation by setting higher monetary thresholds for appeals and should be applied to pending cases to achieve its purpose. This interpretation was supported by the fact that paragraph 13 of the earlier circular, which allowed for retrospective application, remained intact. The Tribunal emphasized that the circular's intent was to manage litigation effectively and provide relief to taxpayers by avoiding unnecessary appeals.

3. Dismissal of Cross Objections by the Assessee:

The cross objections filed by the assessee were dismissed as infructuous. Since the Revenue's appeal was dismissed due to the non-maintainability under the CBDT circular, the cross objections, which merely supported the CIT(A)'s order, were rendered moot. The Tribunal noted that these cross objections arose solely as a result of the Revenue's appeal and had no independent basis once the appeal was dismissed.

Conclusion:

In conclusion, the Tribunal dismissed the Revenue's appeal as non-maintainable due to the CBDT circular's monetary limits and applied the circular retrospectively to pending appeals. The cross objections by the assessee were also dismissed as infructuous. The judgment reflects a pragmatic approach to reducing tax litigation and signifies the government's trust in appellate forums, thereby expediting the finality of the appellate process.