Case Law Details
ITO Vs Rainbow Diamonds Pvt. Ltd. (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, dismissed the Revenue’s appeal for Assessment Year 2017-18 on the ground of low tax effect under CBDT Circular No. 09/2024 dated 17.09.2024. The appeal arose from an order of the Commissioner of Income Tax (Appeals), NFAC, which had deleted an addition of Rs.79.75 lakh made by the Assessing Officer.
Before the Tribunal, the assessee submitted that the actual tax effect in the matter was below the monetary threshold limit of Rs.60 lakh prescribed for filing appeals before the Tribunal. According to the assessee, the Assessing Officer had computed the tax effect at Rs.61.60 lakh by including Education Cess at 3%. It was argued that if Education Cess was excluded, the tax effect would come to Rs.59.81 lakh. The assessee relied on a Hyderabad Tribunal decision, which in turn relied upon the Delhi High Court judgment in Dalmia Cement (Bharat) Ltd. vs. CIT, holding that Education Cess is not part of tax.
The Revenue argued that Education Cess forms part of tax and was correctly included while calculating the tax effect.
After hearing both sides, the Tribunal noted that CBDT Circular No. 09/2024 revised the monetary limit for filing appeals before the Tribunal to Rs.60 lakh and clarified that the circular applies to pending appeals as well. The Tribunal held that the present appeal was not maintainable due to low tax effect.
The Tribunal also clarified that the Revenue would be free to seek restoration of the appeal if it could later establish that the matter fell within any prescribed exception or that the tax effect exceeded the monetary threshold. Accordingly, the Revenue’s appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal is filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals, National Faceless Appeal Centre, (NFAC) New Delhi (‘CIT(A)’ in short) dated 30.09.2025 arising from the assessment order passed by the Assessing Officer dated 30.12.2019 under Section 143(3) of the Income Tax Act (‘the Act’ in short) for AY 2017-18.
2. The Revenue has raised following ground of appeal:-
1. “Whether the learned CIT(A) erred in deleting the addition of Rs 79,75,000/- disregarding the detailed analysis made by the Assessing officer showing abnormal sales pattern and abnormal cash in hand/cash deposit pattern.
2. Whether the Ld.’ CIT(A) has erred in deleting the addition on the basis of self-serving documents without appreciating that self-serving documents cannot substitute for independent evidence.
3. The appellant craves to be allowed to add any fresh ground(s) of appeal and or deleted or amend any of the ground(s) of appeal.”
3. Before us, ld. AR for the assessee submits that in the instant case the tax effect is less than the threshold limit of Rs. 60.00 lacs as per CBDT Circular No.09/2024 dated 17.09.2024 however, the AO while calculating the tax Rs. 61,60,687/- has included Education Cess @ 3%. As per ld. AR if the Education Cess is excluded, the total tax effect would be Rs. 59,81,250/-. Ld. AR placed reliance on the judgement of Co-ordinate Bench of Hyderabad Tribunal in MA No. 35/HYD/2017 wherein the Co-ordinate bench has relied upon the judgement of Hon’ble Jurisdictional High Court in the case of Dalmia Cement (Bharat) Ltd. Vs. CIT reported in 357 ITR 419 (Delhi) wherein the Hon’ble High Court has held that Education Cess is not part of the tax. Accordingly, ld. AR submits that the appeal of the revenue is not maintainable due to low tax effect.
4. On the other hand, Ld. Sr. DR for the Revenue stated that the Education Cess is part of the tax and thus the AO is correct in including the same in the total tax computed for the purpose of computing the tax effect. He prayed accordingly.
5. Heard the parties and considered submissions made. The CBDT vide Circular No. 9/2024 dated 17.09.2024 has revised the monetary limit for filing the appeals before the Tribunal to Rs. 60 Lacs and further clarified that Circular No.9/2024 would be applicable to all pending appeals. In such circumstances, the present appeal filed by the Revenue being of low tax effect is not maintainable.
6. Before parting, we clarify here that the Revenue shall be at liberty to approach the Tribunal for re-institution of appeal, if the requisite material is brought to show that the appeal is protected by the exceptions prescribed or tax effect is above the maximum limit provided in the aforesaid circular.
7. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open Court on 30.04.2026.
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