Revenue audit objection exception under CBDT circular justified recall of a low-tax-effect dismissal and restoration of the appeal.

CBDT Circular No. 3 of 2018, as amended by Circular No. 17 of 2019, carves out an exception to the monetary-limit bar where an assessment is made in conformity with an accepted revenue audit objection. Here, the record showed that the audit objection had been accepted and the assessment order reflected that objection by disallowing interest expenditure. On that basis, the prior dismissal of the revenue appeal for low tax effect could not be sustained. The miscellaneous application was therefore allowed, the earlier order was recalled, and the appeal was restored to its original number and stage.

---

---

Issues: Whether the revenue's appeal, earlier dismissed on the basis of low tax effect under CBDT Circular No. 3 of 2018 as amended by Circular No. 17 of 2019, fell within the exception where the assessment was made on the basis of a revenue audit objection.

Analysis: Clause 10(c) of the CBDT circular excludes from the monetary-limit bar cases where a revenue audit objection has been accepted by the Department. The record showed that the audit objection had been accepted and the assessment order was passed in conformity with the audit objection, resulting in disallowance of interest expenditure. On that basis, the earlier dismissal for low tax effect could not stand.

Conclusion: The exception in paragraph 10(c) applied, and the revenue's miscellaneous application was allowed; the earlier order was recalled and the appeal was restored to its original number and stage.

---