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Disposal of Low Tax Appeals: Application of Circular No. 17/2019, dated 8-8-2019

August 14, 2019[2019] 108 211 (Ahmedabad - Trib.)

INCOME TAX: Today, on 14th August 2019, the Income Tax Appellate Tribunal, Ahmedabad bench headed by Hon'ble Justice P.P. Bhatt, ITAT President, has disposed of 628 appeals, involving estimated tax demands of Rs. 350 crores, to implement tax friendly measure introduced by the Government under the relaxation under the new tax litigation policy. The ITAT described the relaxation as "freedom from the prolonged agony and uncertainty of litigation to so many taxpayers on the eve of this Independence Day". It is estimated that there will be around 5,000 such appeals, involving estimated tax relief of over Rs. 2,500 crores, pending in the ITAT all over the country. The process of identifying and disposing of these appeals is in progress at all the stations

• On 8th August 2019, the CBDT had announced relaxation in its litigation policy and increased the threshold limit for filing of appeals by the income tax department before the Income Tax Appellate Tribunal to the cases involving tax effect of at least Rs. 50 lakhs, appeals before the High Court to Rs. 1 crore and before the Supreme Court to Rs. 2 crores. Within 2 working days of this decision being announced, the Income Tax Appellate Tribunal Ahmedabad benches had identified 628 such appeals, involving estimate tax effect of Rs. 350 crores, and dismissed all these appeals, in one go, as withdrawn.

• Explaining the impact of the concession in new tax litigation policy, the ITAT observed as follows:

• What it means, in plain words, is that when a Commissioner (Appeals) gives the taxpayer tax relief of upto Rs. 50 lakhs in an appeal in an assessment year, the matter ends there and the relief so granted by the Commissioner (Appeals) cannot be challenged before this Tribunal, that when this Tribunal gives the taxpayer relief of upto Rs. 1 crore in an appeal in an assessment year, the matter ends there and the relief so granted by the Tribunal cannot be challenged before the Hon'ble High Court, and that when Hon'ble High Court gives relief of upto Rs. 2 crore to the taxpayer in an appeal in an assessment year, that relief cannot be challenged before Hon'ble Supreme Court. These monetary threshold appeals for filing of appeals by the income tax authorities do not take into account interest and other corollaries of the tax demands being confirmed such as penalties, except when a penalty itself is subject matter of litigation, and prosecutions. The enhancement of these monetary limits is at an unprecedented scale. The monetary limit for appeals before this Tribunal, which was Rs. 3,00,000 till 10th July 2014, has been in effect enhanced to almost 1,700% in the last five years. This substantial relaxation is certainly a huge step which signifies trust reposed by the Government of India in the decisions of the appellate forums, and substantially cuts down time taken in the finality of the appellate process. It is indeed heartening to note that in one stroke, the Government has not only prevented, but has, in effect, set the stage for withdrawal of thousands of appeals before this Tribunal and before Hon'ble Courts above. In an environment in which retrospectivity was attached only to the taxation and not to tax reliefs or concessions, such an approach is a pleasant departure from legacy practices.

• The ITAT has also observed as follows:

The taxpayer relief involved in these appeals, including interest and the other corollaries, is estimated to be well over Rs. 350 crores. The lead case before us is an appeal filed over fifteen years ago by the Income Tax Officer and it deals with an assessment year which pertains to the period over twenty years ago. Yet, the matter had not reached the finality and the revenue's challenge to the relief granted by the Commissioner (Appeals) had remained undecided. That is nothing but prolonged agony of uncertainty to the taxpayers. It is indeed an appreciate goodwill gesture by the Government, for so many taxpayers, on the eve of this Independence Day and offering them freedom from the prolonged mental agony and uncertainty of litigation.

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