Revenue Audit Exception allows recall of low tax appeal dismissal for fresh merits hearing when audit objection was accepted.

Where a departmental revenue audit objection was accepted, a prior appellate dismissal based on a low tax appeal policy was treated as a mistake apparent on record and recalled, directing fresh hearing on merits. The governing CBDT circulars set monetary limits for Revenue appeals but carve out an exception where an accepted revenue audit objection yields an adverse appellate outcome; omission to consider that exception in the appellate order justified recall and remand for determination by the appropriate Bench.

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Issues: Whether the appellate order dated 20.11.2019 in ITA No. 319/Alld/2018 for assessment year 2011-12 contains a mistake apparent on record and should be recalled for fresh hearing because the appeal falls within the exception to the CBDT low-tax appeal policy where a revenue audit objection had been accepted and the assessment was reopened.

Analysis: The Tribunal considered the material on record showing that a revenue audit objection had been accepted by the department, including the revenue audit objections and a letter dated 12.01.2016 indicating acceptance by the ITO, and the grounds of appeal filed by Revenue which invoked the exceptions in the CBDT circular(s). The Tribunal noted that CBDT Circular No. 03/2018 and its amendment by CBDT Circular No. 17/2019 set monetary limits for filing Revenue appeals but expressly carve out an exception for adverse judgments on issues where a revenue audit objection has been accepted by the Department. The Tribunal found that the appellate order dated 20.11.2019 dismissed the Revenue appeal on the ground of low tax effect without addressing the exception arising from the accepted revenue audit objection and that this omission amounted to a mistake apparent on the record within the meaning of the statutory provision relied upon.

Conclusion: The appellate order dated 20.11.2019 in ITA No. 319/Alld/2018 for assessment year 2011-12 is recalled and the matter is directed to be placed before the Division Bench of the Tribunal for fresh hearing; M.A. No. 01/Alld/2020 is allowed.

Ratio Decidendi: Where a revenue audit objection has been accepted by the department, an adverse appellate order dismissing a Revenue appeal as covered by a low-tax appeal circular may be recalled under the statutory provision relied upon as a mistake apparent on record, and the matter must be heard on merits by the appropriate Bench despite the monetary threshold in the circular.

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