2015 (5) TMI 672 - AT - Income Tax

Appeal Dismissed Due to Tax Limit; CBDT Circular Not Applicable

Income Tax Officer, Ward-36 (3), Kolkata Versus M/s. Santo Stores

The Tribunal dismissed the appeal filed by the Revenue as it was found not maintainable due to the tax effect being below the prescribed limit of Rs. 4 ... Prescribed monetary limits for filing of appeal before ITAT - Whether, this appeal of revenue, which is below the prescribed limit of tax effect in view of the Board’s Instruction No.5/2014 issued on 10.07.2014 revising the monetary limits for filing of appeals by the Department before ITAT is maintainable or not? - Held that:- On query from the Bench, the Ld. DR could not point out any of the exceptions as provided in the Circular as that this is a loss case having tax effect more than the prescribed limit, which should be taken into account,or that this is a composite order for many assessment years where tax effect will be more than the prescribed limit as per para 5 of above instructions, or that this is a case, where, in the case of revenue, where constitutional validity of the provision of the Act or I.T. Rules 1962 are under challenge,or that Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or that Revenue Audit Objection in the case has been accepted by the Department and the same is under challenge. The Ld. DR could not point out any of the exceptions as provided above. Accordingly, this being a low tax effect case, the appeal of the revenue dismissed in limine without going into merits. - Decided against revenue Issues Involved:1. Maintainability of the appeal due to tax effect being below the prescribed monetary limits.2. Applicability of recent CBDT instructions to pending appeals.Detailed Analysis:1. Maintainability of the Appeal Due to Tax Effect Being Below the Prescribed Monetary Limits:The core issue in this appeal is whether it is maintainable given that the tax effect is below the prescribed monetary limits set by the Central Board of Direct Taxes (CBDT). The appeal pertains to the assessment year 2007-08, and the tax effect involved is less than Rs. 4 lakhs, which is below the threshold specified in Instruction No. 5 of 2014 issued by the CBDT on July 10, 2014.The Tribunal noted that the hon'ble Delhi High Court in CIT v. P. S. Jain and Co. [2011] 335 ITR 591 (Delhi) emphasized that the monetary limits set by the CBDT should be applied to old references as well, to reduce the burden on the Department and the courts. Similarly, the hon'ble Gujarat High Court in CIT v. Sureshchandra Durgaprasad Khatod (HUF) [2014] 363 ITR 556 (Guj) held that the instructions fixing monetary limits for filing appeals are applicable to pending cases to reduce litigation with minimal tax effect.2. Applicability of Recent CBDT Instructions to Pending Appeals:The Tribunal examined whether Instruction No. 5 of 2014, which revises the monetary limits for filing appeals, applies to appeals filed before its issuance. The learned Departmental representative argued that the instruction is prospective, applying only to appeals filed on or after July 10, 2014. However, the Tribunal referred to multiple High Court decisions, including the Gujarat High Court in CIT v. Sureshchandra Durgaprasad Khatod (HUF), which concluded that such instructions should apply retrospectively to pending cases as well.The Tribunal highlighted that the main objective of these instructions is to reduce the pending litigation where the tax effect is considerably low. The Tribunal also noted that the CBDT's instructions have consistently been interpreted to apply to pending cases to achieve this objective.Conclusion:Upon reviewing the facts and the relevant judicial precedents, the Tribunal concluded that the appeal filed by the Revenue is not maintainable due to the tax effect being below the prescribed limit of Rs. 4 lakhs. The Tribunal dismissed the appeal in limine without delving into the merits of the case, as none of the exceptions outlined in the CBDT's circular were applicable.Judgment:The appeal filed by the Revenue is dismissed. The order was pronounced in the open court on January 6, 2015.