This case involves the Income Tax Officer (ITO) Ward 5(4), New Delhi as the appellant and C K Software Pvt Ltd., New Delhi as the respondent. The dispute centers around an addition of Rs.1 crore to the respondent’s income as unexplained share capital for the assessment year 2011-12.
The appellant contended that the respondent company had received unexplained share capital amounting to Rs.3 crores from four different parties. The CIT (Appeals)-2, New Delhi, upon reviewing the case, deleted the addition of Rs.1 crore associated with one party, while confirming the remaining Rs.2 crores. This decision prompted the Revenue to appeal to the tribunal.
During the tribunal hearings, the key issue discussed was the applicability of the CBDT Circular No. 17/2019 which sets the monetary limits for filing appeals. It was noted that the tax effect involved was below the stipulated threshold of Rs.50 lakhs, making the appeal potentially non-maintainable. The tribunal examined the circular’s directives and precedents, ultimately dismissing the Revenue’s appeal due to the low tax effect, thus upholding the CIT (Appeals)’ decision.
The tribunal’s decision highlights the importance of adhering to procedural guidelines such as monetary thresholds for appeals, which are aimed at reducing frivolous litigation and fostering a more efficient judicial process. This case also underscores the need for clear documentation and justification when dealing with share capital transactions to avoid legal disputes.
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