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Income Tax Appellate Tribunal, BANGALORE BENCH-SMC “ C ”
Before: SHRI VIJAY PAL RAO
Per Shri Vijay Pal Rao, J.M. : This appeal by the revenue is directed against the order dt.30.11.2016 of Commissioner of Income Tax (Appeals), Hubli for the Assessment Year 2013-14.
The revenue has raised the following grounds :
“ Whether on facts and circumstances of the case learned CIT (Appeals) is correct in directing the Assessing Officer to assess the business income of AOP of Rs.21,61,725 and tax it in the manner as Indl./HUF as business income, even though the Section 164(1) of the IT Act, 1961 clearly states that where the share of beneficiaries or any part thereof is not specifically receivable on behalf or for the benefit of any one whose benefit such income or such part thereof is receivable or indeterminate or unknown, the tax shall be charged in the relevant income or part of relevant income at the maximum marginal rate.”
None has appeared on behalf of the assessee. Since this appeal by the revenue is not maintainable because of the low tax effect therefore it is proposed to hear and dispose of exparte.
I have heard the learned Departmental Representative and considered the relevant material on record. At the outset, the learned Departmental Representative has pointed out that the tax effect in this appeal by the revenue is only Rs.1,16,297 which is much below the limit prescribed as per CBDT Circular No.21/2015 DT. 10.12.2015. However Ld DR stated that existence or not of any Revenue audit objections leading to the filing of the appeal needed to be ascertained.
I have perused the orders and heard the contentions. Paras 3, 4 & 10 of the circular No.21/2015 (supra) is reproduced hereunder :
“3. Henceforth, appeals/SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder:— S.No. Appeals in Income-tax Monetary Limit (in matters Rs.) 1. Before Appellate Tribunal 10,00,000/- 2. Before High Court 20,00,000/- 3. Before Supreme Court 25,00,000/- It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case 4. For this purpose, “tax effect” means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as “disputed issues”). However the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against.
This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/ not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.”
The tax effect on the issues and / or the penalty that is disputed in each appeal by the Revenue is less than Rs.10 lakhs for the impugned assessment years. Neither the constitutional validity of any provisions of the Act or Rules nor the legality or vires of any Board order, Notification, Instruction or Circular was an issue before the lower authorities. Revenue has not brought to our notice anything to show that the appeal arose on an issue emanating from any Revenue Audit Objections accepted by the Department. Addition giving rise to the appeals does not relate to any undisclosed foreign assets / bank accounts.
Thus I find that the circular No.21/ 2015 (supra) is squarely applicable in this case. However if Revenue, at a later stage find that appeal arise out of issues emanating from audit objection it will be free to file MP for recalling this order.