New appeal filing monetary limit applies to pending appeals also

Brief of the Case

ITAT Mumbai held in the case ITO vs. Smt. Sudha Brijratan Damani that in the case of CIT v. P.S. Jain & Co. (2011) 335 ITR 591, Hon’ble Delhi High Court held that by passage of time, money value has gone down, the cost of litigation expenses has gone up, the assessees on the file of the Departments have been increased, consequently, the burden on the Department has also increased to a tremendous extent. The corridors of the superior courts are chocked with huge pendency of cases. In this view of the matter, the Board has rightly taken a decision not to file references if the tax effect less than Rs. 2 lakhs. The same policy for old matters needs to be adopted by the Department. In our view, the Board’s circular dated 27-3- 2000 is very much applicable even to the old references which are still undecided. The Department is not justified in proceeding with the old references wherein the tax impact is minimal. Thus, there is no justification to proceeds with decades old references having negligible tax effect. On the same analogy, the recent instruction revising the monetary limit to Rs. 4 lakh for filing appeal before ITAT on income tax matters, as issued vide Instruction No.5/2014 FNo279/Misc.142/2007-ITJ(Pt) dated 10-7-2014 will apply to pending appeals also as this instruction is exactly identical to earlier instructions.

Facts of the Case

Whether, this appeal of revenue, which is below the prescribed limit of tax effect in view of the Board’s Instruction No.5/2014 issued on 10-7-2014 revising the monetary limits for filing of appeals by the Department before ITAT is maintainable or not.

Held by ITAT

ITAT held that in the case of CIT v. P.S. Jain & Co. (2011) 335 ITR 591, Hon’ble Delhi High Court held that “This court can very well take judicial notice of the fact that by passage of time money value has gone down, the cost of litigation expenses has gone up, the assessees on the file of the Departments have been increased consequently, the burden on the Department has also increased to a tremendous extent. The corridors of the superior courts are chocked with huge pendency of cases. In this view of the matter, the Board has rightly taken a decision not to file references if the tax effect less than Rs. 2 lakhs. The same policy for old matters needs to be adopted by the Department. In our view, the Board’s circular dated 27-3- 2000 is very much applicable even to the old references which are still undecided. The Department is not justified in proceeding with the old references wherein the tax impact is minimal. Thus, there is no justification to proceeds with decades old references having negligible tax effect.” Similarly, Hon’ble Gujarat High Court in the case of CIT v. Sureshchandra Durgaprasad Khatod (HUF) (2014) 363 ITR 556/(2013) 214 Taxman 59 has specifically considered instruction No. 3/2011 and held that the same would apply to pending cases as well even though there was a specific condition in that instruction also that the same would apply to appeals file on or after February, 2011.

We find from the above case law of Hon’ble Gujarat High Court in the case of Sureshchandra Durgaprasad Khatod (HUF) that in the similar situation and exactly identical instructions were applied to the retrospectively pending appeals also. Hon’ble Gujarat High Court has discussed that almost all High Courts are of the unanimous view, considering the main objective of such instructions that to reduce the pending litigation, where the tax effect is considerable low or small, the appeal is not maintainable. The recent instruction revising the monetary limit to Rs. 4 lakh for filing appeal before ITAT on income tax matters, as issued vide Instruction No.5/2014 FNo279/Misc.142/2007-ITJ(Pt) dated 10-7-2014 will apply to pending appeals also for the reason that the same is exactly identical to earlier instructions.

Considering the above judicial pronouncements, we found that this appeal of the revenue is not maintainable as the tax effect in this appeal is below Rs.4 lakhs. Even on merits we found that as per the findings recorded by CIT (A) profit earned on sale of share are liable to be texted as short term capital.

Accordingly appeal of the revenue dismissed.