ACIT Circle-7(1) vs. Delton Cables Ltd.: Appeal Dismissed Due to Low Tax Effect

ACIT Circle-7(1) vs. Delton Cables Ltd.: Appeal Dismissed Due to Low Tax Effect

Case Number: ITA 5760/DEL/2019

Appellant: ACIT Circle-7(1), New Delhi

Respondent: Delton Cables Ltd., New Delhi

Assessment Year: 2015-16

Case Filed On: 2019-07-01

Order Type: Final Tribunal Order

Date of Order: 2019-09-30

Pronounced On: 2019-09-30

Conclusion: The appeal filed by the revenue was dismissed as the tax effect was below the monetary limit specified in Circular No. 17/2019.

Background

The Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘E’, New Delhi, comprising Judicial Member Shri H.S. Sidhu and Accountant Member Shri Prashant Maharishi, heard the case.

The appellant, ACIT Circle-7(1), New Delhi, filed an appeal against Delton Cables Ltd., New Delhi, for the assessment year 2015-16. The respondent had a PAN: AAACD2482Q.

Contentions

At the outset of the hearing, the Authorized Representatives (ARs) for the appellant brought to the Tribunal’s attention that the Central Board of Direct Taxes (CBDT) issued Circular No. 17/2019 dated 08th August 2019. The circular instructed that appeals should not be filed by the revenue before the Tribunal if the tax effect is less than Rs. 50 lakhs.

The ARs pleaded that the appeal of the revenue be decided as per the instruction of the CBDT.

Arguments

The Departmental Representatives (DRs) objected to the application of the circular, arguing that it applies prospectively and not to pending appeals.

Decision

After hearing the contentions of the rival parties and perusing the material on record, the Tribunal found that the CBDT Circular No. 17/2019 dated 08th August 2019 had indeed enhanced the monetary limit for filing appeals by the department before the Income Tax Appellate Tribunal, Hon’ble High Courts, and Hon’ble Supreme Court. The relevant paragraph of the circular was reproduced:

“2. As a step towards further management of litigation, it has been decided by the Board that monetary limits for filing of appeals in income-tax cases be enhanced further through amendment in Para 3 of the Circular mentioned above and accordingly, the table for monetary limits specified in Para 3 of the Circular shall read as follows:

Further, with a view to provide parity in filing of appeals in scenarios where separate order is passed by higher appellate authorities for each assessment year vis-a-vis where composite order for more than one assessment year is passed, para 5 of the circular is substituted by the following para:

“5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. Further, even in the case of composite order of any High Court or appellate authority which involves more than one assessment year and common issues in more than one assessment year, no appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In case where a composite order/judgment involves more than one assessee, each assessee shall be dealt with separately.”

The modifications took effect from the date of issue of this Circular. The Tribunal noted that the tax effect involved in the appeal of the revenue was below Rs. 50 lakhs. The Board’s instructions or directions issued to the Income-tax authorities are binding on those authorities. Therefore, the Department should have withdrawn or not pressed the present appeal in view of the aforesaid instruction since the tax effect in the instant appeal is less than the amount of Rs. 50 lakhs.

The issue of the applicability of the above circular to pending appeals had been decided by the coordinate bench in Dinesh Madhavlal Patel [TS-469-ITAT-2019(Ahd)] 2019-TIOL-1556-ITAT-AHM dated 14th August 2019.

In view of the above, Circular No. 17/2019 dated 08/08/2019 applied to all pending appeals. Therefore, it was held that the appeal is not maintainable in the instant case as the tax effect is less than Rs. 50 lakhs. Accordingly, it was held that the appeal filed by the revenue is not maintainable. The Tribunal also added that if certain instances stated in para No. 10 of the CBDT Circular No. 3/2018 dated 11.07.2018 are not discernable from the assessment and appellate orders, the revenue may file a miscellaneous application with such evidences.

Conclusion

In the result, the appeal filed by the department and the cross objections filed by the assessee were dismissed.

Order pronounced in the open court on 30/09/2019.

(H.S.SIDHU)
JUDICIAL MEMBER

(PRASHANT MAHARISHI)
ACCOUNTANT MEMBER

Dated: 30/09/2019

A K Keot

Copy forwarded to

• Applicant
• Respondent
• CIT
• CIT (A)
• DR: ITAT

ASSISTANT REGISTRAR
ITAT, New Delhi

ACIT Circle-7(1) vs. Delton Cables Ltd.: Appeal Dismissed Due to Low Tax Effect