2014 (1) TMI 1191 - HC - Income Tax

Maintainability of Appeal - Leviability of surcharge on undisclosed income Held that - The appeal can be filed where the tax effect exceeds the limit as prescribed - Since the tax effect involved in the present appeal is only Rs.74,948/-, in view of instruction no. 2/2005, dated 24.10.2005, the appeal filed by revenue is not maintainable Decided against Revenue.

Summary

Issues:
1. Levy of surcharge on undisclosed income prior to 1.6.2002.
2. Maintainability of appeal based on monetary limits set by CBDT.

Levy of Surcharge on Undisclosed Income Prior to 1.6.2002:
The appeal was filed against an order by the Income Tax Appellate Tribunal confirming the decision that surcharge on undisclosed income cannot be levied for searches conducted before 1.6.2002. The Assessing Officer had determined undisclosed income during the block period and imposed surcharge, which was later challenged. The Commissioner of Income Tax (Appeals) held that since the search was conducted before 1.6.2002, the surcharge was not applicable as per the provisions of Section 113 of the Income Tax Act. The Tribunal upheld this decision, leading to the revenue's appeal. The High Court analyzed the timeline of the search and the insertion of the proviso to Section 113, ultimately dismissing the appeal based on the findings that the surcharge was not leviable for searches conducted prior to 1.6.2002.

Maintainability of Appeal Based on Monetary Limits:
The respondent argued that the appeal was not maintainable due to the low tax effect involved, which was below the monetary limits set by the CBDT for filing appeals before the High Court. The CBDT's instruction No. 2/2005 specified revised monetary limits for filing appeals, and the tax effect in this case was Rs. 74,948, falling below the prescribed limit. The respondent highlighted the CBDT's instructions and argued that the appeal did not meet the criteria for maintainability. The High Court, considering the monetary limits and the tax effect involved, concluded that the appeal filed by the revenue was not maintainable under the CBDT's guidelines and therefore dismissed the appeal.

In conclusion, the High Court judgment addressed the issues of surcharge on undisclosed income before 1.6.2002 and the maintainability of the appeal based on CBDT's monetary limits. The decision clarified that surcharge was not applicable for searches conducted prior to 1.6.2002 and that the appeal did not meet the monetary limits set by the CBDT, leading to the dismissal of the revenue's appeal.