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2023 (9) TMI 496 - HC - Income TaxMaintainability of appeal in High Court - low tax effect - matter arising out of the order under Section-263 - HELD THAT - When any order is passed u/s 263 of the Act, the same would also be the order under the Income Tax Act, 1961. The Circular No. 5 of 2019 do not distinguish the order passed under Section-263 or any other Section of the Act, 1961, but it refers the monetary limits prescribed in the circulars itself and if any appeal is filed, which is not a writ-matter, then the monetary limits prescribed under the circular would apply and the Department is bound by such monetary limits and accordingly, the Department cannot pursue the matter, if the monetary limit prescribed in the circular is adhered-to. Even if, we take consolidated tax effect in the appeal, it would not exceed the monetary limits prescribed in the Circular No. 17 of 2019, dated 8th August, 2019. Therefore, this appeal is dismissed due to low tax effect.
Issues Involved:
1. Maintainability of the appeal based on monetary limits prescribed by CBDT Circulars. 2. Applicability of Circular No. 17 of 2019 to appeals under Section-263 of the Income Tax Act, 1961. Summary: Issue 1: Maintainability of the appeal based on monetary limits prescribed by CBDT Circulars The learned advocate for the opponent raised preliminary objections regarding the maintainability of the appeal, arguing that the tax effect is less than the limit prescribed in the Circular No. 17 of 2019 dated 08th August, 2019. The learned Standing Counsel for the appellant countered that the circular would not apply to appeals arising from orders u/s 263 of the Income Tax Act, 1961. The court examined Circular No. 3 of 2018, which specifies monetary limits for filing tax appeals, and its subsequent amendments by Circular No. 5 of 2019 and Circular No. 17 of 2019. The relevant paragraph from Circular No. 3 of 2018, as amended, states that the monetary limits do not apply to writ matters. The court emphasized that the Department's policy is to reduce litigation and that the monetary limits prescribed in the circulars apply to all appeals, including those under Section-263, unless they are writ matters. Issue 2: Applicability of Circular No. 17 of 2019 to appeals under Section-263 of the Income Tax Act, 1961 The court noted that the Circulars do not distinguish between orders passed under different sections of the Income Tax Act, 1961, including Section-263. Therefore, the monetary limits prescribed in the circulars apply to all appeals. The court referred to a previous decision in Commissioner of Income Tax Vs. Pravinchandra S. Shah, where appeals were dismissed on the ground of low tax effect as per the monetary limits prescribed in the circulars. In conclusion, the court held that even if the consolidated tax effect in the appeal is considered, it would not exceed the monetary limits prescribed in Circular No. 17 of 2019. Consequently, the appeal was dismissed due to low tax effect.
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