ASSISTANT COMMISSIONER OF INCOME TAX- 4(1), RAIPUR vs. SHRI SANJAY KUMAR KOCHAR, RAIPUR

The present appeal filed by the Revenue is directed against the order passed by the Commissioner of Income Tax, Appeals-II, Raipur (C.G.) dated 22.03.2018, which in turn arises from the order passed by the assessing officer under Sec. 143(3) of the Income-tax Act, 1961 (for short ‘the Act’) dated 31.03.2016, for assessment year 2013-14.

Central Board of Direct Taxes (CBDT) vide Circular No. 17/2019 dated 08.08.2019 has amended Circular No. 3/2018 dated 11.07.2018 for further enhancement of monetary limit for filing of appeals by the Department before the ITAT, High Courts and SLPs/Appeals before Supreme Court as measures for reducing litigation.

CBDT vide Circular No. 3/2018 dated 11.07.2018 has specified that appeals shall not be filed before the Income Tax Appellate Tribunal (ITAT) in cases where the tax effect does not exceed the monetary limit of Rs.20,00,000/-. 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 issues against which appeal is intended to be filed. Further, ‘tax effect’ shall be taxes including applicable surcharge and cess. 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 order, the ‘tax effect’ will mean quantum of penalty deleted or reduced in the order to be appealed against.

As a step towards further management of litigation, CBDT vide Circular No. 17/2019, dated 08.08.2019 has fixed the monetary limit for filing of appeals before ITAT at Rs.50,00,000/-.

In the instant appeal filed by the Department, it was averred by the ld. A.R that the ‘tax effect’ therein involved was below the monetary limit of Rs.50,00,000/-. The said fact was brought to the notice of the ld. Departmental Representative (for short ‘D.R’) who did not controvert the same but submitted it fall in the exception that the sales tax department has passed the relevant information and assessment was done in accordance with that information.

The learned AR appearing on behalf of the assessee submitted that it does not fall within the exception listed at Sr No. 10(e) of the CBDT circular no. 142/2007 dated 20.08.2018 and thus the appeal of the department has below tax appeal and not maintainable. In support his arguments he has relied upon the decision of jurisdictional high court on this aspect having direct bearing and has similar set of facts the relevant extract of the decision relied upon by the ld. AR the decision of Hon’ble High Court of Chhattisgarh, Bilaspur in case of DCIT 1, Bhilai vs, Bhojraj Lal Chand Nawani, Maharashtra is extracted as under: “3. Having heard learned counsel for revenue and having seen the subject clause 10(e), it appears the same would apply where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ED/DRI/SFIO/Directorate General of GST Intelligence (DGGI). In the case at hand the information on the basis of which this MCC has been filed was received from the Department of Sales Tax of the State of Maharashtra. Thus, the said information having not emanated from the CBI/ED/DRI/SFIO/DGGI, clause 10(e) would have no application. 4. In our considered view, the TAXC No. 11 of 2019, was rightly dismissed being hit by the Circular dated 11.07.2018 read with the amendment in the said circular vide subsequent CBDT circular dated 20.08.2018.”

As the Hon’ble court has already clarified that the information received from the sales tax department is not emanated from the CBI/ED/DRI/SFIO/ DGGI, clause 10(e) would have no application.

Respectfully, following the said observation the appeal involving a ‘tax effect’ of less than Rs.50,00,000/- is required dismissed in compliance of the board circular.

In the result, appeal of the Revenue is dismissed in terms of our aforesaid observations.