2015 (7) TMI 439 - AT - Income Tax

Rejecting the books of account - Maintainability of appeal - Monetary limit - Held that - Board s instruction or directions issued to the income-tax authorities are binding on those authorities therefore the department ought not to have filed the appeal in view of the above said provisions mentioned in section 268A of the Act since the tax effect in the instant case is less than the amount prescribed for not filing the appeal. - It is noticed that the CBDT has issued Instruction No.5 of 2014 dated 10.07.2014 by which the CBDT has revised the monetary limit to 4, 00, 000/- for filing the appeal before the Tribunal. - in view of the CBDT Instruction No.5 of 2014 dated 10.07.2014 and also the provisions of Section 268A of Income Tax Act 1961 we are of the view that the Revenue should not have filed the instant appeal before the Tribunal - Decided against Revenue.

Summary

Issues:
- Appeal against order allowing appeal and rejecting Assessing Officer's action on low gross profit addition
- Tax effect below prescribed limit for filing appeal
- Applicability of Section 268A of Income Tax Act, 1961
- CBDT Instruction No.5 of 2014 dated 10.07.2014
- Precedent judgments supporting non-filing of appeal

Analysis:
The appeal before the ITAT DELHI was against the order of the Ld. CIT(A)-III, New Delhi, where the Department challenged the decision allowing the appeal of the assessee and rejecting the Assessing Officer's action of adding a sum on account of low gross profit. The Department contended that the CIT(A) erred in not appreciating the significant decrease in gross profit percentage from the preceding year. During the hearing, it was highlighted that the tax effect in the appeal was less than the prescribed limit of &8377; 4,00,000, as per circular issued by the CBDT and Section 268A of the Income Tax Act, 1961.

The provisions of Section 268A, inserted by the Finance Act, 2008, empower the Board to issue orders fixing monetary limits for filing appeals by income-tax authorities. It was noted that the CBDT had revised the monetary limit to &8377; 4,00,000 for filing appeals before the Tribunal through Instruction No.5 of 2014. The Tribunal emphasized that the Board's instructions are binding on income-tax authorities, and as the tax effect in the present case was below the prescribed amount, the appeal should not have been filed by the Revenue.

Citing decisions from the Hon'ble Punjab & Haryana High Court and the Hon'ble Delhi High Court, the Tribunal reiterated that circulars issued by the CBDT, including Instruction No.5 of 2014, are also applicable to pending cases. Relying on these precedents, the Tribunal held that the CBDT's instructions regarding the monetary limit for not filing an appeal before the ITAT should be adhered to, leading to the dismissal of the Revenue's appeal without delving into the merits of the case.

In conclusion, the Tribunal dismissed the Revenue's appeal, emphasizing the importance of complying with the monetary limits set by the CBDT and Section 268A of the Income Tax Act, 1961, thereby upholding the principle that appeals should not be pursued when the tax effect falls below the prescribed threshold.