ITAT Indore dismisses revenue's appeal due to incorrect books of account under sec. 154(3) for AY 2005-06.

The Appellate Tribunal ITAT Indore dismissed the revenue's appeal against the deletion of an addition under sec. 154(3) due to incorrectness of books of account for AY 2005-06. The disputed addition of Rs. 3,94,732/- fell below the prescribed limit of Rs. 2 lakhs for filing an appeal, leading to the dismissal without consideration of the case's merits. The concept of tax effect was clarified, emphasizing the importance of the tax effect being below the monetary limit for appeal. The decision was based on previous Tribunal cases and was pronounced on 6.10.2009.

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Issues Involved: Appeal by revenue against deletion of addition u/s 154(3) due to incorrectness of books of account.

Summary:
The Appellate Tribunal ITAT Indore heard an appeal by the revenue against the order of the ld. CIT-(A)-II, Bhopal, for the AY 2005-06, where the addition of Rs. 6,37,206/- was deleted by applying sec. 154(3) due to incorrectness of books of account. During the hearing, it was noted that there was a typographical error in the mentioned figure, which was actually Rs. 3,94,732/-. The tax effect was also below the monetary limit, leading to the suggestion of dismissing the appeal. Considering the submissions and material on file, it was found that the tax effect was below the prescribed limit for filing an appeal before the Tribunal. The Board's instructions specified the monetary limits for filing departmental appeals, and in this case, the disputed addition being Rs. 3,94,732/- fell below the limit of Rs. 2 lakhs for filing an appeal before the Tribunal. Citing previous Tribunal decisions, the appeal of the revenue was dismissed without delving into the merits of the case, based on the tax effect being below the prescribed limit.

The Board clarified the concept of tax effect as the difference between the tax on the total income assessed and the tax that would have been chargeable if the income was reduced by the amount in question. In penalty cases, the tax effect refers to the quantum of penalty deleted or reduced. The total disputed addition in this case being Rs. 3,94,732/-, and the tax effect being below Rs. 2 lakhs, the appeal of the revenue was deemed to be dismissed. The decision was supported by previous Tribunal cases, and the appeal was dismissed without further consideration of the case's merits or judicial pronouncements. The order was pronounced in the open court on 6.10.2009 in the presence of both sides' representatives.

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