2021 (8) TMI 895 - AT - Income Tax

Appeal dismissed due to tax threshold limit. Source of information crucial for appeal eligibility.

Income Tax Officer 6 (2) (1), Mumbai Versus M/s Captain Properties and Investments Pvt. Ltd.

The appeal by the revenue against an assessment order for the year 2010-11 was deemed not maintainable due to the tax effect falling below the threshold ... Maintainability of appeal - Monetary limit - Low tax effect - DR submitted that the appeal is protected under the exception provided in paragraph 10(e) of Circular No. 3/2018 dated 11.07.2018 as amended by the Central Board of Direct Taxes vide letter dated 20.08.2018 - HELD THAT:- We have not found any reference to information received from any of the external sources as mentioned in paragraph 10(e) of circular dated 20.08.2018. Even, in course of hearing, learned Departmental Representative was unable to demonstrate that any information from external sources as per paragraph 10(e) of circular noted above was received by the AO. It is to be concluded that the only information available with the AO was the information received from DGIT (Inv.). In case of ITO vs. Late Amarchand P. Shah [2019 (8) TMI 1402 - ITAT MUMBAI] the Tribunal has held that DGIT (Inv.) since works under the CBDT, could not be called an external source. The aforesaid decision has been followed in a number of decisions of the Tribunal as cited by the learned Authorized Representative. As per the ratio laid down in the decisions referred to above, information received from DGIT (Inv.) is not of the nature as referred to in paragraph 10(e) of CBDT Circular dated 20.08.2018. That being the case, the present appeal of the department will not be protected under the exception provided therein. Since, aforesaid decisions are by various Division Benches of the Tribunal, they are binding precedents. Accordingly, respectfully following the aforesaid decisions cited by the learned Authorised Representative, we hold that the instant appeal of the revenue is not protected by paragraph 10(e) of CBDT circular dated 20.08.2018. Hence, would not be maintainable in view of the CBDT circular No. 17/2019 dated 08.08.2019. Accordingly,dismiss the appeal. Issues:1. Maintainability of the appeal due to low tax effect.2. Interpretation of Circular No. 17/2019 and Circular No. 3/2018.3. Exception under paragraph 10(e) of Circular No. 3/2018.4. Information received from external sources for reopening assessment.5. Precedents regarding information from DGIT (Inv.) as an external source.Issue 1 - Maintainability of the appeal due to low tax effect:The appeal by the revenue was against an order for the assessment year 2010-11. The Authorized Representative of the assessee contended that the appeal was not maintainable due to low tax effect, citing various decisions. The total addition made by the Assessing Officer (AO) was &8377;9,45,000, which was deleted by the Commissioner (Appeals), resulting in a tax effect below the threshold limit of &8377;50 lakh for filing an appeal before the Tribunal as per Circular No. 17/2019. The revenue argued that the appeal fell under an exception provided in Circular No. 3/2018 and should be decided on merits.Issue 2 - Interpretation of Circular No. 17/2019 and Circular No. 3/2018:The Tribunal considered the tax effect and the applicability of Circular No. 17/2019, which set the threshold limit for filing an appeal. The revenue claimed protection under the exceptions in Circular No. 3/2018, arguing that the appeal should be decided on merits despite the tax effect being below the limit.Issue 3 - Exception under paragraph 10(e) of Circular No. 3/2018:The revenue contended that the appeal was protected under paragraph 10(e) of Circular No. 3/2018 due to the nature of information received from external sources. However, it was crucial to determine if the information received by the AO qualified as per the specified criteria in the circular.Issue 4 - Information received from external sources for reopening assessment:The AO stated that the assessment was reopened based on information from the office of DGIT (Inv.), Mumbai. The Tribunal examined whether this information qualified as being from external sources as per the circular's provisions, emphasizing the importance of the source of information in determining the appeal's maintainability.Issue 5 - Precedents regarding information from DGIT (Inv.) as an external source:The Tribunal referred to precedents where it was established that information from DGIT (Inv.) did not constitute information from external sources as specified in the circular. The decisions highlighted that DGIT (Inv.) did not qualify as an external source, leading to the conclusion that the appeal by the revenue was not protected under the exception provided in the circular. As a result, the Tribunal dismissed the appeal by the revenue.The judgment emphasized the importance of the source of information in determining the maintainability of an appeal and highlighted the significance of adhering to the specified criteria outlined in the circulars to decide on the merits of an appeal.