C I T-I JAIPUR vs. RAJNANDINI CONSTRUCTION PVT LTD

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ITA/102/2014HC RajasthanRJHC02071783201402 December 20164 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, taking into account CBDT Circular No. 21/2015 and the fact that the tax effect was less than Rs. 20 lac, which is the prescribed monetary limit for filing appeals before the High Courts. The Court clarified that any substantial questions of law raised in the appeal were left open to be examined in an appropriate future proceeding. 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 adverse rulings on Board's orders/notifications. The operative direction was to dismiss the appeal as not pressed, with liberty to revive.

What were the facts?

The appellant, CIT-I Jaipur (Revenue), filed an appeal before the Rajasthan High Court against an order of the Income Tax Appellate Tribunal. The respondent is Rajnandini Construction Pvt Ltd. The tax effect in the present appeal was stated to be less than Rs. 20 lac. The appeal was filed in 2014. The Central Board of Direct Taxes (CBDT) issued Circular No. 21/2015 on December 10, 2015, which revised the monetary limits for filing appeals by the Revenue before various judicial forums, including the High Courts, with the objective of reducing litigation. This circular was to apply retrospectively to pending 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 the prescribed monetary limit of Rs. 20 lac, as per CBDT Circular No. 21/2015. Assessee's contentions: The assessee did not explicitly argue any points as the judgment focuses on the applicability of the CBDT circular. However, the implication is that the appeal should be dismissed due to the low tax effect. Revenue's contentions: The Revenue's primary contention, by filing the appeal, was to challenge the order of the Income Tax Appellate Tribunal. The judgment does not record specific arguments made by the Revenue regarding the merits of the case or exceptions to the circular. The Revenue's position is implicitly that the appeal should be heard on its merits, or that the circular does not preclude the appeal.

Which sections of the Income-tax Act were involved?

Section 268A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B.INCOME TAX APPEAL NO. 102 / 2014 C I T-I JAIPUR ----Appellant Versus RAJNANDINI CONSTRUCTION PVT LTD ----Respondent __________________________________________ For Appellant : __________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE DINESH MEHTA

Judgment Per Hon’ble Mr. Jhaveri, J. 02/12/2016 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 :-

(2 of 4 ) [ITA-478/2008] “3. Henceforth, appeals/SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder :- 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.”

(3 of 4 ) [ITA-478/2008] 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 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 examned 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. Liberty to revive in case of difficulty.

(DINESH MEHTA)J. (K.S.JHAVERI)J.

(4 of 4 ) [ITA-478/2008]

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