THE ACIT, CENTRAL CIRCLE-1, VAPI vs. SHRI KAMALBHAI JAYNTILAL SHAH, VAPI

1. The captioned appeal filed by the Revenue, pertaining to assessment year 2014-15, is directed against the order passed by the Commissioner of Income Tax (Appeal)-4, Surat, [in short “the CIT(A)”] in Appeal No. CAS/4/597 to 599/2015-16 dated 03.06.2016, which in turn arises out an assessment order passed by the Assessing Officer [in short “the AO”] u/s143(3) of the Income Tax Act, 1961 (in short the ‘Act’) dated 28/03/2016.

At the outset, ld. Counsel for the assessee submitted before the Bench that revenue has raised grounds of appeal in respect of addition deleted by the ld. CIT(A) of Rs.74,57,981/-, which comes in the ambit of tax effect of CBDT Circular, vide Circular No. 17/2019 dated 08.08.2019, therefore appeal filed by the Revenue

Recently the CBDT has issued Circular No. 17/2019 dated 08.08.2019, whereby the monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court have been increased as measure for reducing litigation. The revised monetary limits laid down in para-2 of this Circular are as follows:

In the present case, the tax effect is less than Rs.50,00,000/-. Though this appeal had been filed by the revenue on 07/09/2016 and was within the monetary limit in the form of tax effect for filing appeals before Tribunal, however, in view of the recent Circular of CBDT, even such appeals will be governed by the new monetary limits laid down in the CBDT Circular No.17/2019 referred to above.

It is a settled law that the Circulars issued by CBDT are binding on the Revenue. This position was confirmed by the Apex Court in the case of Commissioner of Customs vs. Indian Oil Corporation Ltd. reported in 267 ITR 272 wherein their Lordships examined the earlier decisions of the Apex Court with regard to binding nature of the Circular and laid down that when a circular issued by the Board remains in operation then the Revenue is bound by it and cannot be allowed to plead that it is not valid or that it is contrary to the terms of the statute. The appeal under consideration has certainly been filed contrary to the Circular issued by the CBDT Circular No.17 dated 08.08.2019.

In the event, the Revenue finds at a later point of time that the tax effect in the appeal is more than Rs.50 lakhs or despite low tax effect the appeal of the ITA 2310/AHD/2016 Assessment Year. 2014-15 Kamalbhai Jayantilal Shah revenue is maintainable, the revenue is at liberty to move this Tribunal for recalling of this order.

In view of the above, we hold that the appeal filed by the Department, against the impugned order of the Ld. CIT(A), is contrary to the policy decision of the Department and as such the appeal filed by the Department in AY. 2014-15 is dismissed in limine.

In the result, the appeal of the Revenue in is dismissed. Order pronounced in the Court on 13.10.2020