2021 (3) TMI 1364 - HC - Income Tax

High Court dismisses tax appeal below threshold limit under Circular No. 17/2019, allowing Revenue option to file reinstatement petition. /2019

Principal Commissioner of Income Tax, Central 2, Chennai Versus M/s. Sangupathi Properties Pvt Ltd.

The High Court dismissed the tax case appeal due to the low tax effect falling below the threshold limit set by Circular No.17/2019, which increased the ... Maintainability of appeal on low tax effect - monetary limit for filing or pursuing an appeal before the High Court - correctness of ITAT's conclusion that the CIT(A) has rightly directed the Assessing Officer to delete the liability - HELD THAT:- The above appeal is not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to ₹ 1 Crore. It is further submitted that the tax effect in this case is less than the threshold limit. In the light of the said submissions, the above tax case appeal is dismissed on account of the low tax effect. The substantial questions of law framed are left open Issues: Appeal against order of ITAT regarding deletion of liability in assessment year 2014-15 due to lack of proof of identity, genuineness, and creditworthiness of persons giving land advances.Analysis:1. The appeal was admitted based on substantial questions of law regarding the correctness of ITAT's conclusion that the CIT(A) rightly directed the Assessing Officer to delete a liability of Rs. 2,76,40,000 despite lack of proof of identity, genuineness, and creditworthiness of the persons providing land advances. The first issue questions whether the ITAT's decision was correct given the circumstances. The second issue questions the correctness of ITAT's confirmation of CIT(A)'s order without adjudicating certain grounds raised by the Department.2. The learned Senior Standing Counsel for the appellant argued that the appeal is not being pursued by the Revenue due to the low tax effect, as per Circular No.17/2019 issued by the Central Board of Direct Taxes, which increased the monetary limit for filing or pursuing appeals before the High Court to Rs. 1 Crore. It was submitted that the tax effect in this case falls below the threshold limit set by the circular.3. Consequently, the tax case appeal was dismissed due to the low tax effect, with the substantial questions of law left open. However, if the tax effect exceeds the threshold limit specified in the circular, the Revenue has been granted liberty to file a petition before the Court to have the appeal reinstated for a hearing on merits. No costs were awarded in this instance.This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, and the ultimate decision rendered by the High Court based on the tax effect and the applicable circular from the Central Board of Direct Taxes.