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Facts
The Revenue appealed an order of the CIT(A). The assessee argued the appeal should be dismissed due to low tax effect (below Rs. 60 lakhs), citing CBDT Circular No. 9 of 2024. The Revenue contended that exceptions under CBDT Circular No. 5 of 2024 or the cascading effect principle from CIT v. Surya Herbal Ltd. applied, negating the monetary limit.
Held
The Tribunal ruled that the case did not fall under the exceptions for organized tax evasion or bogus transactions specified in CBDT Circular No. 5 of 2024. It also distinguished the Surya Herbal Ltd. precedent, noting the appeal involved additions under Section 68/69, a mixed question of fact and law. Consequently, the monetary limit of CBDT Circular No. 9 of 2024 was applicable.
Key Issues
Whether the appeal, having a tax effect below the prescribed monetary limit, was maintainable, considering the applicability of exceptions under CBDT Circular No. 5 of 2024.
Sections Cited
68, 69
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SOUNDARARAJAN K., JM
O R D E R Per Bench This is appeal filed by the Revenue directed against the order of the Commissioner of Income Tax (Appeals)-3, Kochi [CIT(A)], dated 27.12.2023 for different Assessment Years.
At the outset the learned counsel for the assessee submits that the tax effect involved in these appeals filed by the Revenue is less than Rs. 60,00,000/-. Therefore, in view of the CBDT Circular No. 9 of 2024 dated 17.09.2024 the appeal should be dismissed on law tax effect.
On the other hand, the learned CIT DR submits that the present appeals are covered by the exception enumerated in clause (h) of para 3.1 of CBDT Circular No. 5 of 2024 dated 15.03.2024 Varun Raj and, therefore, low tax effect cannot be applied on the appellant’s case. It is further submitted that in view of the judgement of the Hon'ble Supreme Court in the case of CIT v. Surya Herbal Ltd. the CBDT circular should not be applied ispo facto when the matter has a cascading effect.
We have heard the rival contentions and perused the material available on record. The issue that comes up for our consideration is whether the CBDT circular No. 5 of 2024 can be applied ispo facto or not. The exceptions enumerated in clause (h) in para 3.1 of the circular reads as under: - “(h) Cases involving organised tax evasion including cases of bogus capital gains/losses through penny stock, cases of accommodation entries.” The present matter does not involve the issue bogus capital gains/losses through penny stock and case of accommodation entries nor it can be said to be organised tax evasion. Therefore, the objections of the learned Sr. DR is ruled out. As regards the other contention of the learned Sr. DR that in view of the decision of the Hon'ble Supreme Court in the case of Surya Herbal Ltd. (supra) the circular should not be applied ispo facto also cannot be accepted in view of the fact that the no common principle of law is involved in these matters as the issue involved in the present appeal is the addition made u/s. 68/69 of the Act, which is undoubtedly a mixed question of facts and law. Therefore, we are of the considered opinion that CBDT Circular No. 5 of 2024 cannot be applied in the present matter. Accordingly the matter is disposed as under.
Varun Raj 5. Vide para 2 of Circular No. 9/2024 dated 17.09.2024 it is stated that in cases where the tax effect in the appeals to be filed before the Appellate Tribunal does not exceed Rs.60 lakhs appeals should not be filed. Thus, taking a note of CBDT Circular No. 9/2024 dated 17.09.2024 and considering the fact that the tax effect in the instant appeal is less than Rs.60 lakhs, the present appeal deserves to be dismissed as not pressed / not maintainable. However, we make it clear that the issues raised in the instant appeal are left open to be examined in the appropriate proceedings, if arises, in future. At the same time, we also make it clear that if the appeal falls in any of the exceptions referred to in the above said CBDT Circular, the Revenue is at liberty to move an application for recalling the order if so advised.
In the light of CBDT Circular No. 9/2024 dated 17.09.2024, the appeal filed by the Revenue stands dismissed.
Order pronounced in the open court on 9th June, 2025.