Case Law Details
ITO Vs Hotchand Kalachand Loungani (ITAT Guwahati)
In a recent development, the Income Tax Appellate Tribunal (ITAT) Guwahati dismissed an appeal by the revenue in the case of ITO vs Hotchand Kalachand Loungani. The dismissal was based on the tax effect being less than the prescribed monetary limit by the Central Board of Direct Taxes (CBDT) for filing an appeal. This order was passed even though the ld. DR argued that the case falls under exception clause 10 of the CBDT Circular No.17 of 2019.
The ITAT Guwahati was explicit in its order that the tax effect involved in the appeal did not exceed the CBDT’s prescribed limit. This was in spite of the ld. DR’s insistence that the appeal fell under exception clause 10, which allows for challenges against constitutional validity or cases where Board’s order, notification, instruction, or circular has been deemed illegal or ultra vires. The ITAT pointed out that no such issues were present in the appeal filed by the assessee.
This decision of the ITAT Guwahati indicates a clear enforcement of the monetary limit set by the CBDT for filing appeals. It sends a strong message about adhering to this limit, barring cases where exceptional conditions, as set out in Circular No.17 of 2019, are applicable.
Conclusion: The ITAT Guwahati’s dismissal of the revenue appeal in the case of ITO vs Hotchand Kalachand Loungani underscores the importance of the prescribed monetary limit for tax appeals. This decision has implications for future tax-related appeals and underscores the importance of abiding by the tax effect limit set by the CBDT. Exceptions can only be made if the legal prerequisites are met, as outlined in the exception clauses of the relevant CBDT circular.
FULL TEXT OF THE ORDER OF ITAT GUWAHATI
The present appeal has been preferred by the revenue against the order dated 10.10.2022 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
2. No one has put in appearance on behalf of the assessee despite notice. Therefore, we proceed to decide the appeal after hearing the ld. DR.
3. It is to be noted that the tax effect involved is less than the prescribed monetary limit by the CBDT for filing appeal to this Tribunal vide Circular No.17 of 2019.
4. The ld. DR though admitted that the tax effect is less than the prescribed limit, however, has submitted that the issue involved in this appeal is hit by the exception clause no.10 of the Circular No.17 of 2019 of CBDT which for the sake of convenience is reproduced 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) Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or
(b) Where Board’s order, Notification, Instruction or circular has been held to be illegal or ultra vires, or”
5. However, a perusal of the impugned order of the CIT(A) would reveal that neither the assessee in his appeal before the CIT(A) has ever challenged the constitutional validity of any provisions of the Act or Rule nor the CIT(A) has held any circular, notification or instruction of the Board to be illegal or ultra vires, therefore, this case does not fall within the exception clause. Since the tax effect involved is less than the prescribed limit, hence, the present appeal is not maintainable u/s 268A of the Act and the same is accordingly dismissed.
6. In the result, the appeal of the revenue stands dismissed.
Kolkata, the 7th June, 2023.
