What did the Tribunal hold?

The Tribunal held that the Revenue's appeal was not maintainable due to the low tax effect, as per the enhanced monetary limits prescribed by CBDT Circular No. 17 of 2019. The circular applies retrospectively to pending appeals.

The Revenue appealed against the CIT(A)'s deletion of an addition of Rs. 65,63,544/- made on account of understatement of closing stock. The assessee argued for dismissal due to low tax effect based on a CBDT circular.

What were the issues?

Whether the Revenue's appeal is maintainable before the Tribunal given the low tax effect in light of the CBDT's enhanced monetary limits for appeals.

DCIT vs M/S. Plastichemix Industries… | ITAT Ahmedabad 2019

Income Tax Appellate Tribunal, AHMEDABAD BENCH ‘C’, AHMEDABAD

By way of this appeal, the Assessing Officer has challenged correctness of the order dated 12th August 2016, passed by the learned CIT(A)-4, Vadodara for the assessment year 2012-13.

Grievances raised by the Assessing Officer are as follows:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in deleting the addition of Rs.65,63,544/- on account of understatement of Closing Stock simply accepting the submissions of the assessee and without considering the facts that the assessee suppressed the value of closing stock as brought on record by the Assessing Officer.

2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.65,63,544/- by considering the contention of the assessee that valuation of closing stock is to be done as worked out by the assessee and ignoring the findings brought on record by the Assessing

DCIT Vs. Plastichemix Industries Assessment Year : 2012-13 Page 2 of 3 Officer that there was anomaly in showing closing stock quantity as well as the value adopted by the assessee is very less in comparison to the average cost of opening stock and average cost of purchases.”

When this appeal was called out for hearing, learned counsel for the assessee submitted that the present appeal of the Revenue needs to be dismissed on account of low tax effect in view of the recent CBDT Circular No. 17 of 2019 dated 08.08.2019 whereby the monetary limits for filing the appeal by the Revenue before the Tribunal was enhanced from Rs.20 lakhs to Rs.50 lakhs. This instruction is applicable to the pending cases also. Therefore, the present appeal of the Revenue is liable to be dismissed as non-maintainable as held by this Tribunal in the case of ITO Vs. Dinesh Madhavlal Patel in for AY 1998-99 vide a consolidated order dated 14.08.2019.

The learned Departmental Representative fairly admitted that the tax effect involved in this appeal is less than the limit prescribed by the aforesaid CBDT Circular.

We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. As learned counsel rightly contends, this appeal of the Revenue is no longer maintainable in view of the recent CBDT Circular No. 17 of 2019 dated 08.08.2019. The mandatory limit for cases in which Revenue can challenge the relief granted by the CIT(A) now stands enhanced to Rs.50 lakhs. This concession granted by the Central Board of Direct Taxes (CBDT) is retrospective in effect inasmuch as it applies to all pending appeals as well. In view of the above position, the appeal of the Revenue is no longer maintainable and must be dismissed as such.

It is, however, made clear that on re-verification at the end of the Assessing Officer it comes out that the tax effect of more than Rs.50 lakhs is being involved in the appeal or the appeal falls within the exemption clause of the Circular, then the Revenue will be at liberty to file Miscellaneous Application to recall the Tribunal order. The application should be filed within time limit prescribed in the Act.

In the result, appeal of the Revenue is dismissed due to low tax effect. Pronounced in the open court today on the 27th August, 2019.

THE DY. CIT., CIRCLE-1(2), BARODA vs. M/S. PLASTICHEMIX INDUSTRIES, BARODA

What did the Tribunal hold?

What were the facts?

What were the issues?

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