C I T JAIPUR vs. M/S BHANSALI TRADING CORP

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ITA/119/2011HC RajasthanRJHC02051685201102 February 20173 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal filed by the Revenue was to be dismissed as not pressed, primarily due to the tax effect being less than Rs. 20 lac, which is the monetary limit prescribed for filing appeals before the High Courts as per CBDT Circular No. 21/2015 dated 10.12.2015. The Court noted that this circular applies retrospectively to pending appeals. The substantial questions of law raised in the appeal, if any, were left open to be examined in future appropriate proceedings. The Revenue was granted liberty to move an application for recalling the order if the appeal fell under any of the exceptions specified in the circular, such as constitutional validity challenges, or if the Board's order was held illegal, or if the addition related to undisclosed foreign assets/bank accounts. The operative direction was to dismiss the appeal as not pressed.

What were the facts?

The petitioner, CIT Jaipur (Revenue), filed an appeal before the High Court of Judicature for Rajasthan, Bench at Jaipur, against an order of the Income Tax Appellate Tribunal. The assessment years are not specified. The amount in dispute, referred to as the 'tax effect', was stated to be less than Rs. 20 lac. The appeal was filed under Section 268A(1) of the Income-tax Act, 1961, which deals with the power of the Central Board of Direct Taxes (CBDT) to regulate monetary limits for filing appeals. The High Court considered CBDT Circular No. 21/2015 dated 10.12.2015, which revised monetary limits for appeals.

What were the issues?

1. Whether the appeal filed by the Revenue before the High Court is maintainable given that the tax effect is less than Rs. 20 lac, as stipulated by CBDT Circular No. 21/2015 for appeals before High Courts? Assessee's contentions: The judgment does not record any specific contentions from the respondent (M/s Bhansali Trading Corp). However, the High Court's decision implies that the respondent would have implicitly or explicitly relied on the CBDT circular to argue against the maintainability of the appeal due to the low tax effect. Revenue's contentions: The Revenue filed the appeal, presumably believing it had merit. However, the judgment indicates that the Revenue did not press the appeal based on the tax effect being below the prescribed limit. The judgment does not explicitly detail the Revenue's arguments on the merits of the case, but rather focuses on the procedural aspect governed by the CBDT circular.

Which sections of the Income-tax Act were involved?

Section 268A(1),Section 12A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 119 / 2011 C I T Jaipur ----Petitioner Versus M/S Bhansali Trading Corp ----Respondent _____________________________________________________ For Petitioner(s) : Mr. Anuroop Singhi For Respondent(s) : _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHUR

Judgment / Order 02/02/2017

Instant appeal is directed against order of the Income Tax Appellate Tribunal and indisputably the tax effect as brought to our notice, is less than Rs.20 lac. A Circular No.21/2015 has been issued by the Central Board of Direct Taxes dated 10.12.2015 in exercise of its power u/sec. 268A (1) of the Income-tax Act 1961 in supersession of the Boards instruction No.5/2014 dt.10.7.2014 regularising the monetary limits for filing the appeals by the Revenue before the Tribunal, High Courts and Apex Court with an object for reducing litigation. Relevant para nos.3, 8, 9 and 10 reads ad infra :- “3. Henceforth, appeals/SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder :-

(2 of 3)

S. No. Appeals in Income-tax matters Monetary Limit (in Rs.) 1 Before Appellate Tribunal 10,00,000/- 2 Before High Court 20,00,000/- 3 Before Supreme Court 25,00,000/- It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case. 4. xxx xxx xxx 5. xxx xxx xxx 6. xxx xxx xxx 7. xxx xxx xxx

8.

Adverse judgments 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 are under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign assets/bank accounts.

9.

The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevant provisions of statute & rules. Further, filing of appeal in cases of Income Tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under section 12 A of the IT Act, 1961, shall not be governed by the limits specified in para 3 above and decision to file appeal in such cases may be taken on merits of a particular case.

10.

This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.” The extract of the paragraphs referred to supra, clearly indicates that the limits specified in para 3 may not apply to certain exceptions specified in para 8, at the same time para nos.9

(3 of 3)

and 10 of the Circular if read conjointly, clearly envisages that the present instructions will apply retrospectively to all the pending appeals and appeals to be filed henceforth in High Courts/Tribunals, subject to exceptions where the tax effect even if is less than Rs.20 lac, can be preferred in High Courts. Taking note of the CBDT Circular dt. 10/12/2015 and the tax effect which indisputably in the instant case is less than Rs.20 lac, much less than what has been prescribed for filing appeals before the High Courts, deserves to be dismissed as not pressed. However, it is made clear that the substantial questions of law raised in the instant appeal, if any, are left open to be examined in an appropriate proceeding, if arises in future. At the same time we consider it appropriate to observe that if the appeal falls in any of the exceptions as referred to in the Circular dt. 10/12/2015, the Revenue will be at liberty to move an application for recalling of the order if so advised. Accordingly, in the light of the CBDT Circular dated 10.12.2015 the appeal is dismissed as not pressed. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. A.Sharma/96

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