2018 (8) TMI 514 - AT - Income Tax

Maintainability of appeal - appeal within the limit prescribed by CBDT Circular No.21/2015 - Held that - These instructions are applicable to the pending appeals also and as per clause 13, there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than ₹ 20,00,000/-. These instructions are operative retrospectively to the pending appeals. Keeping in view the CBDT Circular No. 3 of 2018 dated 11.07.2018 and also the provisions of Section 268A of Income Tax Act, 1961, we are of the view that the Revenue should have withdrawn the instant appeals filed before the Tribunal. All the appeals of the Revenue are dismissed. As the appeal of the revenue in the case of M/s Sound Craft is dismissed, Cross Objection becomes infructuous and is dismissed as such.

Summary

Issues:
- Challenge to orders of the Commissioner of Income-tax (Appeals) by the Revenue.
- Applicability of monetary limits for filing appeals before the Income Tax Appellate Tribunal.
- Interpretation of Circular No. 3 of 2018 issued by the CBDT.
- Calculation of tax effect and its impact on filing appeals.
- Applicability of instructions to pending appeals.
- Obligation of the Revenue to withdraw appeals based on monetary limits.

Analysis:

The judgment involves multiple issues, primarily focusing on the applicability of monetary limits for filing appeals before the Income Tax Appellate Tribunal (ITAT). The Revenue challenged orders of the Commissioner of Income-tax (Appeals) in various appeals, with the tax effect being less than ? 20,00,000. The CBDT Circular No. 3 of 2018 revised the monetary limit for filing appeals before the Tribunal to ? 20,00,000. The Circular emphasized that appeals should not be filed solely based on exceeding the monetary limits, but on the merits of the case.

The judgment delves into the legal framework, highlighting Section 268A of the Income Tax Act, 1961, inserted with retrospective effect. This section empowers the Board to issue instructions fixing monetary limits for filing appeals, which are binding on income tax authorities. The Circular specified detailed guidelines for determining the tax effect, including scenarios involving interest disputes, penalty orders, and computation under specific provisions like section 115JB or section 115JC.

Furthermore, the judgment clarifies that the Circular applies to pending appeals, directing the Revenue to withdraw or not press appeals where the tax effect is below ? 20,00,000. The Tribunal emphasized the obligation of the Revenue to comply with the Circular and Section 268A, leading to the dismissal of all Revenue appeals due to the tax effect falling below the prescribed limit. Consequently, the Cross Objection filed by the assessee became infructuous and was dismissed accordingly.

In conclusion, the judgment underscores the significance of adhering to monetary limits for filing appeals before the ITAT, as outlined in the CBDT Circular and supported by the statutory provisions. The decision reflects a strict interpretation of the guidelines, emphasizing the need for the Revenue to withdraw appeals falling below the specified tax effect threshold, thereby promoting efficiency and reducing unnecessary litigation.