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Facts
The Revenue filed an appeal against an order imposing a penalty under Section 270A of the Income Tax Act, 1961. The assessee's cross-objection was filed with a delay of 27 days. The dispute centers on the classification of income, where the assessee treated interest from fixed deposits and income tax refunds as 'Business Income', while the Assessing Officer classified it as 'Income from Other Sources'.
Held
The Tribunal condoned the delay in filing the cross-objection. It was held that the Revenue's appeal was not maintainable as the penalty amount of Rs. 30,77,876/- fell significantly below the revised monetary threshold of Rs. 60,00,000/- for appeals before the ITAT, as per CBDT Circular No. 05/2024, and did not fall under any exceptional categories.
Key Issues
Whether the Revenue's appeal is maintainable given the penalty amount is below the prescribed monetary threshold for appeals before the ITAT, and whether the delay in filing the cross-objection should be condoned.
Sections Cited
270A, 119
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Income Tax Appellate Tribunal, “B” BENCH MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
CO No.55/MUM/2026 Blue Rock Hospitality Ventures Pvt Ltd, AY 2017-18 O R D E R PER OM PRAKASH KANT: This appeal by the Revenue and cross-objection by the assessee are directed against order dated 15th September, 2025, passed by the Ld. Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre (NFAC), Delhi [in short, Ld. CIT(A)] for assessment year 2017- 18 in relation to penalty u/s 270A of the Income Tax Act, 1961 (in short, the Act) amounting to Rs.30,77,876/-.
A preliminary issue arises regarding a delay of 27 days in the filing of the Cross-Objection by the Assessee. The Ld. Counsel for the Assessee submitted that the delay was occasioned by the late receipt of the Revenue’s grounds of appeal, which prevented the timely filing of the Cross-Objection.
2.1 Guided by the principle that the power to condone delay must be exercised liberally to advance the cause of substantial justice, where no gross negligence or deliberate inaction is found, we find the explanation to be sufficient and bona fide. According- ly, the delay of 27 days is condoned, and the Cross-Objection is admitted for adjudication on merits.
The primary contention raised in the Assessee’s Cross- Objection relates to the maintainability of the Revenue’s appeal in light of the prevailing monetary thresholds for filing appeals before the ITAT.
The facts qua the issue in dispute are that during the year under consideration, the assessee company had income from interest of fixed deposits and interest on income tax refund which CO No.55/MUM/2026 Blue Rock Hospitality Ventures Pvt Ltd, AY 2017-18 was offered under the head business income but according to the Assessing Officer, the same was to be subjected under the head income from other sources. Thus, the underlying dispute involves the classification of income. The Assessee categorized interest from Fixed Deposits and Income Tax refunds as "Business Income," whereas the Assessing Officer treated the same as "Income from Other Sources." This reclassification led to the levy of penalty under Section 270A of the Act.
We have considered the rival submissions and examined the relevant CBDT guidelines. It is a matter of record that the total quantum of penalty under challenge is ₹30,77,876/-. The CBDT Circular No. 05/2024, dated 15.03.2024, has revised the monetary limits for filing appeals by the Department before various judicial forums. For an appeal to be maintainable before this Tribunal, the tax effect (or penalty amount) must exceed the prescribed threshold of ₹60,000,000/- (Rupees Sixty Lakhs).
5.1 The Circulars issued by the CBDT under Section 119 of the Act are binding on the Departmental authorities. The objective of this circular is to reduce litigation and manage the judicial work- load by focusing on high-value disputes. In the instant case:
(i) The contested penalty amount falls significantly below the prescribed monetary floor. (ii) The Revenue has failed to demonstrate that the case falls within any of the exceptional categories (such as matters in- volving international taxation, constitutional validity, or overarching policy implications) carved out in the said Cir- cular.
CO No.55/MUM/2026 Blue Rock Hospitality Ventures Pvt Ltd, AY 2017-18 5.2 Consequently, the Revenue's appeal is hit by the ceiling im- posed by the Circular and is rendered non-maintainable.
5.3 In view of the above, we hold that the Revenue’s appeal can- not be sustained on the grounds of low tax effect.
Since the appeal is dismissed on this threshold issue of maintainability, the Cross-Objection filed by the Assessee, seek- ing such dismissal, stands allowed.
In the result, the appeal of the Revenue is dismissed, whe- reas the cross objection of the assessee is allowed. Order is pronounced in the open court on 23rd February, 2026 Sd/- Sd/- (Om Prakash Kant) (Kavitha Rajagopal) Judicial Member Accountant Member Dated: 23rd February, 2026 Ankit, Sr.P.S. Copy to : The Appellant 1. The Respondent 2. DR, ITAT, Mumbai 3. Guard File 4. CIT 5. BY ORDER,
(Dy./Asstt.Registrar) ITAT, Mumbai