Rectification of low tax effect dismissal applied where disputed tax exceeded the monetary limit and appeal was restored.

The appeal concerned disallowance of deduction under section 80P, and the disputed tax effect was stated to exceed the monetary threshold in the CBDT circular. On that basis, the earlier dismissal of the appeal for low tax effect was treated as an apparent error amenable to rectification under section 254(2) of the Income-tax Act, 1961. The miscellaneous application was allowed, the dismissal order was recalled, and the main appeal was restored for hearing.

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Issues: Whether the Revenue's miscellaneous application seeking recall of the earlier order dismissing the appeal for low tax effect deserved to be allowed on the ground that the tax effect exceeded the monetary limit.

Analysis: The appeal related to disallowance of deduction under section 80P and the amount in dispute was stated to be Rs. 2,65,15,064/-, which exceeded the threshold of Rs. 20 lakhs referred to in the CBDT circular. On that basis, the earlier dismissal of the appeal as involving low tax effect was held to suffer from an apparent error warranting rectification under section 254(2) of the Income-tax Act, 1961.

Conclusion: The miscellaneous application was allowed and the earlier dismissal order was recalled, with the main appeal directed to be restored for hearing.

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