2022 (1) TMI 1322 - AT - Income Tax

Tribunal dismisses appeals below Rs. 50,00,000 tax effect due to increased limit

The ACIT Central Circle-1, Jalandhar Versus M/s Northern Motors Private Limited  , The ACIT Central Circle-1, Jalandhar Versus M/s ACME Forgings, And The ACIT Central Circle, Amritsar Versus Dr. Ashok Kumar Uppal Prop.

The Tribunal held that the departmental appeals before the ITAT were not maintainable due to the increase in the monetary limit for filing appeals as per ... Maintainability of appeal before ITAT - low tax effect - HELD THAT:- In the present case it is an admitted fact that the CBDT vide Circular No. 17/2019 enhanced the monetary limit to Rs. 50,00,000/- for not filing the appeal by the department before the ITAT, earlier this limit was specified at Rs. 20,00,000/- in the original Circular no. 03/2018 dt. 11/07/2018. Now vide the new Circular no. 17/2019 dt. 08/08/2019 the Tax Effect limit has been enhanced and this new Circular dt. 08/08/2019. From the contents of the aforesaid Circular it is crystal clear that the anomaly in the earlier Circular no. 3 of 2018 dt. 11/07/2018 at page 5 has been removed and the limit specified in para 3 of the earlier Circular has been enhanced. Now the CBDT simply enhanced the monitory limit and the directions given earlier vide para nos. 12 & 13 of the Circular no. 3 / 2018 dt. 11/07/2018 are still intact which is crystal clear from the language of the Circular no. 17/2019 wherein it has been mentioned that there is enhancement of monetary limit and amendment to Circular no. 3 /2018 for reducing the litigation. We therefore are of the confirmed view that the amended Circular No. 17/2019 now issued by the CBDT is also applicable to the pending appeals as has been specified in para 13 of the original Circular no. 3/2018 dt. 11/07/2018 and that the Department ought not have filed the appeals before the ITAT where the tax effect is Rs. 50 Lacs or less. - Appeal of revenue dismissed. Issues:1. Maintainability of departmental appeals in light of Circular No. 17/2019 issued by CBDT.2. Interpretation of Circular No. 17/2019 for enhancement of monetary limits for filing appeals.3. Applicability of Circular No. 17/2019 to pending appeals.4. Effect of Circular No. 17/2019 on departmental appeals with tax effect below the specified limit.Issue 1: Maintainability of departmental appeals in light of Circular No. 17/2019 issued by CBDT:The contention arose regarding the maintainability of departmental appeals before the ITAT in light of Circular No. 17/2019, which increased the monetary limit for filing appeals to Rs. 50,00,000 from Rs. 20,00,000. The argument was made that the Circular is not retrospective as it states the modification shall come into effect from the date of issue. However, the assessees argued for retrospective application, emphasizing that the Circular only modified the monetary limit earlier mentioned in Circular No. 3 of 2018.Issue 2: Interpretation of Circular No. 17/2019 for enhancement of monetary limits for filing appeals:The Tribunal examined the Circular No. 17/2019, which replaced Circular No. 3/2018 to enhance monetary limits for filing appeals before the ITAT. The Circular specified that the Assessing Officer should calculate the tax effect separately for every assessment year. Appeals could be filed only if the tax effect exceeded the monetary limit, and no appeal should be filed if the tax effect was below the limit. The Circular also addressed scenarios involving composite orders or judgments and multiple assessees.Issue 3: Applicability of Circular No. 17/2019 to pending appeals:The Tribunal analyzed the applicability of Circular No. 17/2019 to pending appeals, noting that the Circular removed the anomaly in the earlier Circular and enhanced the monetary limit. It was observed that the directions given in the original Circular No. 3/2018 were still intact, indicating the amended Circular applied to pending appeals. Reference was made to a decision by a coordinate Bench supporting the view that the Circular applied to pending appeals and not just future filings.Issue 4: Effect of Circular No. 17/2019 on departmental appeals with tax effect below the specified limit:The Tribunal concluded that the relaxation in monetary limits for departmental appeals, as per CBDT Circular dated 8th August 2019, applied to pending appeals in addition to future appeals. Consequently, both appeals filed by the Department were dismissed based on the application of the Circular to the specific tax effect limit set forth in the Circular.This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal regarding the maintainability, interpretation, applicability, and effect of Circular No. 17/2019 on departmental appeals before the ITAT.