2016 (5) TMI 1483 - AT - Income Tax

Maintainability of appeal - tax effect - monetary limit - Held that - We find that the CBDT vide the aforesaid Circular dated 10.12.2015 has revised the monetary limit to Rs. 10 lakh for filing the appeal by the department before Income Tax Appellate Tribunal. Para 3 of the aforesaid Circular has been made applicable vide para 10 retrospectively. Considering the settled legal precedent that the Board s instructions or directions issued to the Income Tax Authorities u/s 268A of the Income Tax Act 1961 are binding on the authorities we dismiss the departmental appeal considering the material available on record. In view of the same relying upon the aforesaid circular the departmental appeal is dismissed

Summary

Issues:
1. Appeal filed by Revenue challenging deletion made by CIT(A) in 2004-05 assessment year.
2. Violation of CBDT Circular No.21/2015 dated 10th December, 2015.
3. Assailed additions of Rs. 6,57,641, Rs. 1,00,000, and relief of Rs. 1,82,594 by Revenue.
4. Tax effect less than Rs. 10 lakhs.

Analysis:

Issue 1: Appeal by Revenue
The Revenue filed an appeal challenging the deletion made by CIT(A) in the 2004-05 assessment year. The Revenue contested the deletion of Gross Profit (G.P.) addition of Rs. 6,57,641, an additional Rs. 1,00,000, and the relief of Rs. 1,82,594 made by CIT(A). The total tax effect of these additions was claimed to be less than Rs. 10 lakhs.

Issue 2: Violation of CBDT Circular
The Ld. Sr.DR highlighted that the appeal by the Revenue was in violation of CBDT Circular No.21/2015 dated 10th December 2015, as the tax effect was less than Rs. 10 lakhs. The Circular revised the monetary limit for filing appeals by the department before the Income Tax Appellate Tribunal to Rs. 10 lakhs. The Circular was made applicable retrospectively, and as per legal precedent, the Board's instructions to Income Tax Authorities are binding. Consequently, the departmental appeal was dismissed based on the Circular's provisions.

Conclusion:
After hearing submissions and reviewing the record, the Tribunal dismissed the departmental appeal by the Revenue in consideration of the CBDT Circular No.21/2015. The Circular's monetary limit of Rs. 10 lakhs for filing appeals was upheld, leading to the dismissal of the Revenue's appeal and rendering the C.O. filed by the assessee infructuous. The judgment was pronounced on 3rd May 2016, upholding the dismissal of the Revenue's appeal and rendering the assessee's C.O. moot.