Revenue appeals dismissed for falling below Rs. 50 lakh threshold under CBDT Circular No.5/2024 despite audit objection claims

The ITAT Indore dismissed revenue appeals for AY 2014-15 and 2015-16 due to low tax effect of Rs. 3,23,712 and Rs. 3,13,567 respectively, which fell below the Rs. 50 lakh threshold prescribed in CBDT Circular No.5/2024. The AO argued these cases qualified for exception under audit objections per earlier circulars, but ITAT held that the latest circular removed all exceptions to monetary limits. Following Bombay HC precedent, the circular applied to pending appeals, making the revenue appeals non-maintainable. The tribunal did not examine the merits regarding cooperative society's deduction claim under section 80P(2)(d) on interest income.

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Issues:
- Appeal against Commissioner of Income Tax (Appeals) orders for Assessment Years 2014-15 and 2015-16.
- Entitlement of Co-operative society to claim deduction u/s 80P(2)(d) on interest income.
- Validity of reopening assessment due to lack of mention of issue in original assessment order.
- Maintainability of appeals by revenue due to low tax effect.
- Applicability of CBDT circulars on monetary limits for filing appeals.
- Impact of latest Circular No.5/2024 superseding earlier circulars.
- Interpretation of CBDT circulars by assessing officer and arguments by both parties.
- Precedent set by Hon'ble Supreme Court judgment and CBDT circular No.18/2015.
- Consideration of exceptions to monetary limits for filing appeals as per latest Circular No.5/2024.
- Application of CBDT Circular No.5/2024 in deciding the maintainability of appeals by revenue.

Analysis:
The Appellate Tribunal ITAT INDORE heard appeals by the revenue against the Commissioner of Income Tax (Appeals) orders for Assessment Years 2014-15 and 2015-16. The main issue was the entitlement of a Co-operative society to claim deduction u/s 80P(2)(d) on interest income from FDR/Deposits. The revenue raised grounds related to the validity of reopening assessments due to the absence of mention of the issue in the original assessment orders. The Assessing Officer reported a low tax effect for both appeals, below the prescribed monetary limit, but argued for an exception due to audit objections. The parties debated the maintainability of the appeals based on CBDT circulars and the impact of Circular No.5/2024 superseding earlier circulars.

The assessing officer contended that the cases fell under an exception in Circular No.3/2018 due to audit objections, while the appellant argued that the latest Circular No.5/2024 did not provide an exception for audit objections. The appellant also referenced a CBDT circular and a Supreme Court judgment supporting the Co-operative society's entitlement to the deduction. The Tribunal considered the latest circular's exceptions to monetary limits for filing appeals, emphasizing cases where tax effect is not quantifiable or not involved, among others.

The Tribunal highlighted the applicability of Circular No.5/2024 in deciding the maintainability of the appeals by the revenue. Citing a judgment by the Hon'ble Bombay High Court, the Tribunal concluded that due to the low tax effect, the appeals were not maintainable and ordered their dismissal. As a result, the Tribunal did not delve into the merits of the deduction claim under section 80P(2)(a)(i) of the Act. The appeals of the revenue were ultimately dismissed based on the principles outlined in the CBDT circulars and relevant judicial precedents.

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