2014 (8) TMI 384 - AT - Income Tax

Tax effect below prescribed limit - monetary limit for filing an appeal - Held that -As per CBDT Instruction no.3 of 2011, dated 9th February 2011, the appeal before the Tribunal can be filed by the Revenue, when the tax effect exceeds the monitory limit of ₹ 3,00,000. - The appeal has been filed after 9th February 2011 - in the latest instruction, the CBDT has raised the limit of tax effect for filing of appeal before the Tribunal at ₹ 4 lakhs following the decision in CIT v/s Madhukar K. Inamdar (HUF) 2009 (7) TMI 145 - BOMBAY HIGH COURT - circulars are applicable on pending appeals also thus, the tax effect is less than ₹ 3 lakhs, therefore, the appeal of the revenue is dismissed as non maintainable Decided against Revenue.

Summary

Issues:
- Challenge to impugned order dated 28th December 2010 for assessment year 2007-08 under section 144 of the Income Tax Act, 1961.
- Tax effect below the monetary limit for filing appeal before the Appellate Tribunal.

Analysis:
The appeal before the Appellate Tribunal was filed by the Revenue challenging the order passed by the Commissioner (Appeals) for the assessment year 2007-08 under section 144 of the Income Tax Act, 1961. The Revenue raised the issue of the tax effect being below the monetary limit for filing an appeal before the Tribunal. The Income Tax Officer provided details of the tax effect, which was calculated to be below Rs. 3 lakhs, specifically amounting to Rs. 2,88,750. The CBDT Instruction no. 3 of 2011, dated 9th February 2011, states that appeals before the Tribunal can be filed by the Revenue when the tax effect exceeds Rs. 3,00,000. However, a subsequent circular raised this limit to Rs. 4 lakhs. The Hon'ble Bombay High Court in a previous case held that such circulars are applicable to pending appeals as well. The circular emphasized that the Revenue should not file appeals for cases where the tax effect is less than the prescribed monetary limits, even if the issue is of a recurring nature. It directed the Department to withdraw cases not meeting the monetary limit criteria unless the question of law involved is of a recurring nature requiring settlement by a higher court.

The Tribunal, after considering the instructions and the tax effect in the present case being less than Rs. 3 lakhs, dismissed the Revenue's appeal as non-maintainable. The Tribunal's decision was based on the fact that the tax effect did not meet the prescribed monetary limit for filing an appeal before the Appellate Tribunal. Consequently, the Revenue's appeal was dismissed by the Tribunal due to the non-maintainability of the appeal as per the prevailing monetary limit criteria. The order was pronounced in the open court on 24th July 2014, thereby concluding the matter in favor of the respondent due to the insufficient tax effect for maintaining the appeal.