CBDT low tax-effect limit bars departmental appeal; Investigation Wing information does not trigger the external law-enforcement exception.

CBDT monetary-limit circulars governing departmental appeals before the ITAT are binding on the Revenue, so an appeal below the prescribed tax effect is not maintainable. The exception for additions based on information from external law-enforcement agencies applies only where the material comes from agencies such as CBI, ED, DRI, SFIO or DGGI; information from the Income Tax Investigation Wing does not qualify as external source material for this purpose. On that basis, the exception was not available and the departmental appeal was treated as not maintainable.

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Issues: Whether the departmental appeal was liable to be dismissed as not maintainable on account of low tax effect, and whether the exception for additions based on information from external law enforcement agencies applied.

Analysis: The tax effect involved was below the monetary limit prescribed by the CBDT for departmental appeals before the Tribunal. The applicable circular enhancing the monetary limit was binding on the Revenue. The exception relied upon by the Department applies only where the addition is based on information received from external law enforcement agencies such as CBI, ED, DRI, SFIO or DGGI. Information from the Investigation Wing of the Income Tax Department does not fall within that category and is not an external source for this purpose.

Conclusion: The exception was not attracted and the departmental appeal was not maintainable because the tax effect was below the prescribed monetary limit.

Ratio Decidendi: CBDT monetary-limit circulars are binding on the Revenue, and the exception for additions based on external law-enforcement information does not extend to information originating from the Income Tax Investigation Wing.

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