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Income Tax Appellate Tribunal, BENCH, NAGPUR
Before: SHRI D. KARUNAKARA RAO, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER D. KARUNAKARA RAO, AM:
This appeal is filed by the Revenue against the order of the CIT(A)-3, Nagpur, dated 09.03.2017 for the assessment year 2005-06.
Before us, at the outset, Ld. Counsel for the assessee submitted that the appeal of the Revenue is liable to be dismissed on account of low tax effect in terms of latest CBDT Circular No.17/2019 [F.No.279/Misc.142/2007-ITJ (Pt)] dated 08th August, 2019 read with Circular No.3 of 2018 dated 11.07.2018. The Ld. Counsel for the assessee submitted that the Revenue in appeal raised grounds assailing the findings of CIT(A) in deleting the additions. Thus, the tax effect on the said additions is less than Rs.50 lakhs.
Per contra, the Ld. DR submitted that the tax effect in this case is below Rs.50 lakhs and however, this is a case where the prosecution was launched for delay in filing the return of income u/s 153A of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟). Therefore, this case should not be decided on low tax effect and the same can be decided on merits of the issue. As per Ld. DR, such cases are covered by the exceptions provided in para 10, clause (f), of the Circular No.3 of 2018.
Per contra, the Ld. Counsel for the assessee filed written submissions analyzing the contents of para 10 of CBDT Circular No.3 of 2018, dated 11.07.2018 read with subsequent amendments to said Circular. Making reference to the contents of clause (f) of para 10, the Ld. Counsel for the assessee submitted although this is a case where prosecution has been launched by the Department, however, relevant default is in no way connected to the grounds raised
before the Tribunal. The prosecution was launched for the failure of assessee in filing the return of income in time and the same is unconnected to the additions made by the Assessing Officer in the assessment which are not the subject matter of litigation before the Tribunal. Invoking the principle of harmonious reading of contents of main para 10 read with the contents of clause (f) of the said paragraph, the Ld. Counsel for the assessee submitted so long as the prosecution is not connected to the additions or the issue raised in the appeal, such cases can still be dismissed on the ground of low tax effect. The written submissions of assessee are extracted as under:- “(1) As per the notification, the department is directed to contest on merits on the issues mentioned in modified para 10 of the circular No.3/2018 dated 11th July, 2018 which reads as under:-
10. Adverse judgment relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect :- (a) ....(b) ....(c) .....(d) .....(e) ...... (f) Cases where prosecution has been filed by the department and is pending in the Court". (2) It is respectfully submitted that it is provided in the circular that the cases of prosecution should be contested irrespective of the quantum (amount) of such prosecution proceedings. For e.g. (a) if an assessee has defaulted in payment of TDS of say Rs.10 lacs and for that reason if prosecution proceedings are pending, then in such cases the issue should be contested even though the amount is less than the limits prescribed in the circular. (b) Another example would be of non-payment of Advance Tax or self- assessment tax of Say Rs.2.50 lacs. The prosecution proceedings pending against the assessee in such cases should be contested. (c) Failure to furnish the return of income irrespective of the fact that the returned income may be Rs.5 lacs or the tax involved is Rs.1.5 lacs. The prosecution proceedings pending against the assessee in such cases should be contested. Thus, it is submitted that just because a prosecution is pending against the assessee does not mean that all the cases/appeals pending at various forum needs to be contested irrespective of the issues and its quantum involved in such cases/appeals.
(3) In the instant case the appeal has been preferred by the department against the order of the learned CIT(A) in which additions have been deleted on merits. There is no prosecution launched or pending with respect to such addition which are the issues in appeal before your honours for consideration. The prosecution for the Asstt. Year 2005-06 has been initiated for delay in filing of return of income u/s.153A which is not the subject matter of case before your honour. In such circumstances, the above-mentioned clause of the circular cannot be applied.”
Both sides heard. The Revenue is in appeal against the order of CIT(A) in deleting the additions. Undisputedly, the tax effect involved in appeal is less than the monetary limit prescribed by the recent CBDT Circular No.17/2019 [F.No.279/Misc.142/2007-ITJ (Pt)] dated 08th August, 2019 read with Circular No.3 of 2018 dated 11.07.2018 for filing of appeals before the Tribunal by the Department. The CBDT vide circular dated 08-08-2019 (supra) has amended Para 3 of Circular No.3 of 2018 dated 11-07-2018 thereby enhancing monetary limit of tax effect from Rs.20 Lakhs to Rs.50 Lakhs for filing of appeals by the Department before the Tribunal.
Further, after hearing both the sides on the issue of exclusion of this case from the scope of Circular, we are of the opinion the view explained by the Ld. Counsel for the assessee is one plausible interpretation. Considering the core purpose of the Circular i.e. to discourage the filing of appeals with low tax, we find merit in such interpretation / explanation of Ld. AR. We don‟t find any reason as to how the „launching of prosecution for default of late filing‟ is anything to do with the adjudication of the “issues on merits”. Accordingly, the present appeal of the Revenue is dismissed on the ground of low tax effect.
Before parting, we clarify here that the Revenue shall be at liberty to approach the Tribunal for restoration of appeal, with the requisite material to show that the appeal is protected by the exceptions prescribed in Para 10 of the Circular dated 11-07-2018 and its amendment dated 20-08-2018.
In the result, appeal of the Revenue is dismissed.
Order pronounced in open Court on 16th day of October, 2019.
Sd/- Sd/- PARTHA SARATHI CHAUDHURY D. KARUNAKARA RAO JUDICIAL MEMBER ACCOUNTANT MEMBER पपणे / Pune; ददनधंक / Dated : 16th October, 2019. GCVSR आदेश की प्रनतनलनप अग्रेनषत / Copy of the Order forwarded to : अपऩलधथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT(A)-3, Nagpur. 4. The CIT(Central), Nagpur. 5. नवभधगऩय प्रनतनननध, आयकर अपऩलऩय अनधकरण, Nagpur / DR, ITAT, Nagpur. गधर्ा फ़धइल / Guard File. 6. आदेशधनपसधर / BY ORDER, // True Copy //
Senior Private Secretary आयकर अपऩलऩय अनधकरण, पपणे / ITAT, Pune.