ACIT Circle-64(1), New Delhi vs. Chetan Bhushan Sanghi: Case Filed for 2013-14 Assessment Year – Appeal Dismissed Due to Tax Effect Limit

ACIT Circle-64(1), New Delhi vs. Chetan Bhushan Sanghi: Case Filed for 2013-14 Assessment Year – Appeal Dismissed Due to Tax Effect Limit

Case Number: ITA 6007/DEL/2019

Appellant: ACIT, Circle-64(1), New Delhi

Respondent: Chetan Bhushan Sanghi, New Delhi

Assessment Year: 2013-14

Case Filed On: 12th July 2019

Order Type: Final Tribunal Order

Date of Order: 30th September 2019

Pronounced On: 30th September 2019

Background of the Case

This case involves an appeal filed by the Assistant Commissioner of Income Tax (ACIT), Circle-64(1), New Delhi, against Chetan Bhushan Sanghi, a resident of New Delhi, for the assessment year 2013-14. The appeal was initially filed on 12th July 2019, challenging the decisions made by the Commissioner of Income Tax (Appeals) [CIT(A)].

The core issue in this appeal was the quantum of tax effect, which fell below the threshold limit specified by the Central Board of Direct Taxes (CBDT) for filing appeals. The ACIT had sought to challenge the order passed by the CIT(A) based on the grounds that the tax effect warranted further review by the Income Tax Appellate Tribunal (ITAT). However, the case was ultimately dismissed due to the tax effect being lower than the specified limit, as outlined in CBDT Circular No. 17/2019, issued on 8th August 2019.

Proceedings in the Tribunal

The appeal was heard by the Delhi Bench ‘E’ of the Income Tax Appellate Tribunal through video conferencing. The bench was presided over by Shri H.S. Sidhu, Judicial Member, and Shri Prashant Maharishi, Accountant Member. The hearing took place on 27th September 2019, with the final order pronounced on 30th September 2019.

During the hearing, the Department’s Representative (DR), Ms. Rakhi Vimal, argued that the appeal should be considered despite the tax effect being below the monetary limit. The DR contended that the CBDT circular should not apply retrospectively to pending appeals, and therefore, the appeal warranted a review based on its merits.

However, no one appeared on behalf of the respondent, Chetan Bhushan Sanghi, and the case proceeded ex-parte against the respondent.

Dispute Over the Tax Effect Threshold

The central issue in this appeal was the applicability of CBDT Circular No. 17/2019, which raised the monetary limit for filing appeals by the Department before the ITAT, High Courts, and Supreme Court. According to the circular, appeals could only be filed if the tax effect exceeded Rs. 50 lakhs for ITAT cases, Rs. 1 crore for High Court cases, and Rs. 2 crores for Supreme Court cases.

The DR argued that the circular should apply only to new appeals filed after the date of the circular and not to pending appeals like the present one. The DR maintained that the appeal should be decided based on its merits, irrespective of the tax effect threshold.

Tribunal’s Analysis and Decision

The Tribunal considered the arguments presented by the Department’s Representative and reviewed the relevant circulars issued by the CBDT. The Tribunal noted that CBDT Circular No. 17/2019 was issued as part of the government’s efforts to reduce litigation and manage the workload of tax authorities by limiting the filing of appeals to cases involving substantial tax effects.

The Tribunal referred to a similar case decided by the Ahmedabad Bench of the ITAT in Dinesh Madhavlal Patel [TS-469-ITAT-2019(Ahd)], where it was held that the revised monetary limits specified in the CBDT circular would apply to all pending appeals. The Tribunal concurred with this view, emphasizing that the circular was intended to apply retrospectively to all pending cases.

Given that the tax effect in the present case was below the Rs. 50 lakh threshold, the Tribunal ruled that the appeal was not maintainable. The Tribunal dismissed the appeal filed by the Department, citing the binding nature of CBDT instructions on tax authorities.

Conclusion

The case of ACIT Circle-64(1), New Delhi vs. Chetan Bhushan Sanghi serves as a critical example of how CBDT circulars influence the administration of tax litigation. The Tribunal’s decision to dismiss the appeal due to the tax effect being below the specified limit reinforces the importance of adhering to CBDT guidelines and managing litigation effectively.

This case underscores the Tribunal’s commitment to upholding the principles set out by the CBDT to reduce unnecessary litigation. For tax authorities and professionals, this case highlights the need to carefully evaluate the tax effect before pursuing appeals, ensuring compliance with the guidelines laid out in relevant circulars.

For taxpayers, this ruling is a reminder that not all disputes will be pursued by the Department, especially when the tax effect is below the prescribed threshold, as outlined in CBDT Circular No. 17/2019. The Tribunal’s decision provides clarity on the application of monetary limits to pending appeals and reinforces the broader objective of reducing litigation.

The final order, pronounced on 30th September 2019 by Shri H.S. Sidhu, Judicial Member, and Shri Prashant Maharishi, Accountant Member, reflects the Tribunal’s adherence to the circular and its focus on efficient case management.

Order Pronounced By: Shri H.S. Sidhu, Judicial Member, and Shri Prashant Maharishi, Accountant Member

Final Order: Appeal Dismissed Due to Tax Effect Being Below Threshold

ACIT Circle-64(1), New Delhi vs. Chetan Bhushan Sanghi: Case Filed for 2013-14 Assessment Year – Appeal Dismissed Due to Tax Effect Limit