Low tax effect limits Revenue audit objection appeals unless merits justify filing under CBDT guidance.

A Revenue appeal with tax effect below the prescribed monetary limit was held not maintainable. Although CBDT Circular No. 21/2015 permits appeals involving Revenue audit objections, Circular No. 5/2017 and Instruction No. 7/2017 require scrutiny on merits before filing, and disallow mechanical appeals where the first appellate order is justified in law or on facts. Applying that approach, the Tribunal found no basis to challenge the deletion of excess depreciation and rejected the Revenue audit objection.

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Issues: Whether the Revenue's appeal was maintainable in view of the low tax effect and the CBDT instructions governing appeals arising from Revenue audit objections.

Analysis: The appeal involved a tax effect below the prescribed monetary limit. Although paragraph 8(c) of CBDT Circular No. 21/2015 permits contesting adverse decisions concerning Revenue audit objections, CBDT Circular No. 5/2017 clarified that such appeals are not to be filed mechanically and must be preferred only on merits. CBDT Instruction No. 7/2017 further required careful scrutiny by the Pr. CIT/CIT and stated that an appeal should not be preferred if the first appellate order is justified in law or on facts. On the facts, the Tribunal found no justification to accept the Revenue's objection to the deletion of excess depreciation.

Conclusion: The Revenue's objection based on Revenue audit was rejected and the appeal was held to be not maintainable on the ground of low tax effect.

Ratio Decidendi: Even where a case involves a Revenue audit objection, an appeal must be filed only after scrutiny on merits and not as a matter of routine when the tax effect is below the prescribed monetary limit.

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