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2019 (7) TMI 230 - HC - Income TaxLow tax effect - Revision u/s 263 - undisclosed investment in shops - undisclosed income by way of receipt of cash donations - earlier also this appeal was dismissed on the ground of low tax effect and restored pursuant to MA filed by revenue - HELD THAT - Mr. Bhatt the learned senior standing counsel appearing for the revenue clarifies that Circular No.21/2015 dated 10th December 2015 at the relevant point of time was applicable only to the fresh appeals. In such circumstances the revenue had to prefer a miscellaneous civil application for restoring this appeal to its original file. Mr. Bhatt further clarifies that later the revenue issued a fresh circular No. 3/2018 dated 11.07.20148 clarifying that it would apply even to the pending appeals. This appeal would be covered by the above referred circular. In such circumstances Mr. Bhatt the learned senior counsel prays that the revenue would not be pressing this appeal. The appeal stands disposed of accordingly.
Issues Involved:
1. Quashing of orders passed by CIT under Section 263 regarding undisclosed investment and income. 2. Applicability of revised monetary limits for filing departmental appeals. 3. Restoration of the tax appeal based on a circular. 4. Clarifications regarding the application of circulars on pending appeals. Analysis: Issue 1: Quashing of CIT Orders The tax appeal was admitted based on two substantial questions of law regarding the quashing of orders passed by the CIT under Section 263. The Appellate Tribunal had quashed the orders related to undisclosed investment in shops and undisclosed income from cash donations. However, the appeal was disposed of due to revised monetary limits set by the Central Board of Direct Taxes, preventing the appeal from being entertained. The revenue later filed a Misc. Civil Application to restore the appeal, which was granted. The circulars issued by the revenue clarified the applicability of monetary limits to pending appeals, leading to the appeal being disposed of as the monetary limit was below the threshold. Issue 2: Revised Monetary Limits The Central Board of Direct Taxes revised the monetary limits for filing appeals before different authorities. The circular specified that appeals should not be filed solely based on exceeding the monetary limits but should be decided on the merits of the case. The definition of "tax effect" was provided to determine the applicability of the limits, including considerations for interest, penalties, and composite orders involving multiple assessment years. The circular also addressed the calculation of tax effect for cases falling under specific provisions like section 115JB or 115JC. Issue 3: Restoration of Tax Appeal The revenue's plea to restore the tax appeal was granted, highlighting the procedural aspect of restoring an appeal based on the circular's clarifications. The learned counsel clarified the necessity of filing a miscellaneous civil application due to the circular's initial application to fresh appeals only. Subsequent circulars extended the application to pending appeals, necessitating the restoration of the appeal in question. Issue 4: Clarifications on Circular Application The circulars issued by the revenue aimed to streamline the filing of appeals based on monetary limits and tax effects. The circular provided detailed guidelines on the calculation of tax effect, assessment year considerations, and exceptions to the monetary limits for specific issues. It emphasized the importance of recording reasons for not filing appeals based on monetary limits and ensuring that decisions not to appeal do not imply acceptance of disputed issues. The circular also addressed the applicability of limits to cross objections, references, and retrospective application to pending appeals. In conclusion, the judgment highlighted the impact of revised monetary limits on tax appeals, the procedural aspects of restoring appeals based on circular clarifications, and the detailed guidelines provided for determining the tax effect under the specified limits.
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