2014 (12) TMI 526 - HC - Income Tax

Court Upholds Tribunal Decision on Tax Appeal Limits

Commissioner of Income Tax, Udaipur Versus M/s. Vidyadan Trust, Udaipur

The High Court upheld the Income Tax Appellate Tribunal's decision to dismiss the department's appeal based on monetary limits set by the CBDT under ... Admissibility of appeal of revenue – Low tax effect – Validity of Boards’s instruction – Held that:- The circular issued by the CBDT has statutory force as per the provisions of Section 268A(1) of the Act of 1961 - orders, instructions or directions issued time to time by CBDT fixing monetary limits for the purpose of regulating filing of appeal or application for reference by any Income Tax Authorities under the provisions of Chapter-XX are binding – the same has also been decided in Kandhari and Kandhari (P) Ltd. Versus ITAT and Ors. [2012 (10) TMI 389 - Rajasthan High Court] – after considering the tax effect involved, the appeal should not have been filed by the department – the order of the Tribunal is upheld as no substantial question of law arises for consideration – Decided against revenue. Issues:Appeal against Income Tax Appellate Tribunal's order regarding filing of appeal by the department based on monetary limits set by CBDT under Section 268A(1) of the Income Tax Act, 1961.Analysis:The judgment deals with an appeal against the order of the Income Tax Appellate Tribunal, Jodhpur Bench, regarding the filing of an appeal by the department based on monetary limits set by the Central Board of Direct Taxes (CBDT) under Section 268A(1) of the Income Tax Act, 1961. The respondent-assessee had appealed before the Commissioner of Income Tax (Appeals) against an assessment order passed by the Income Tax Officer, which was allowed, quashing the proceedings initiated under Section 148 of the Act and the subsequent assessment order. The appellant then appealed before the Appellate Tribunal, which dismissed the appeal citing the CBDT's instructions to the Income Tax Authorities regarding filing appeals based on tax effect. The appellant challenged this decision, arguing that the appeal should be decided on merits despite administrative instructions. The High Court, after considering the CBDT circular's statutory force under Section 268A(1) of the Act, upheld the Tribunal's decision. The Court referred to a previous case supporting the same view and concluded that based on the tax effect involved, the department should not have filed the appeal, thus finding no substantial question of law and dismissing the appeal accordingly.