COMMISSIONER OF INCOME TAX JAI vs. M/S KRISHNA ENTERPRISES

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ITA/224/2008HC RajasthanRJHC02044233200814 March 20163 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal noted that the tax effect in the instant appeals was less than Rs. 20 lac, which is below the monetary limit prescribed for filing appeals before the High Court as per CBDT Circular No. 21/2015. The Tribunal observed that the circular applies retrospectively to pending appeals and that pending appeals below the specified tax limits may be withdrawn or not pressed. Consequently, the appeals were dismissed as not pressed. However, the Tribunal clarified that the substantial questions of law raised in the appeals, if any, are left open to be examined in future appropriate proceedings. It was also made clear that if an appeal falls within any of the exceptions mentioned in the circular, the Revenue would be at liberty to move an application for recalling the order.

What were the facts?

These are multiple Income Tax Appeals filed by the Revenue against orders of the Income Tax Appellate Tribunal. The tax effect in these appeals is stated to be less than Rs. 20 lac. The appeals were filed prior to a Circular No. 21/2015 issued by the Central Board of Direct Taxes (CBDT) on December 10, 2015. This circular revised the monetary limits for filing appeals by the Revenue before various appellate authorities, including the Tribunal and High Courts, with the objective of reducing litigation. The circular also provided for retrospective application to pending appeals.

What were the issues?

1. Whether the appeals filed by the Revenue, where the tax effect is less than Rs. 20 lac, should be dismissed in light of CBDT Circular No. 21/2015 dated 10.12.2015, which prescribes monetary limits for filing appeals before the High Court. Assessee's Contention: The assessee's counsel would likely argue that the appeals are not maintainable due to the low tax effect, as per the CBDT circular. They would rely on the circular's intent to reduce litigation and its retrospective application to pending matters. Revenue's Contention: The Revenue would likely contend that the appeals should be heard on merits, possibly arguing that the case falls under the exceptions mentioned in the circular (para 8), or that the circular's application should not prejudice their right to argue substantial questions of law. They might also argue that the circular's retrospective application should be interpreted in a manner that allows them to pursue appeals with significant legal issues.

Which sections of the Income-tax Act were involved?

Section 268A(1)

AI-generated summary — verify with the full judgment below

-1- 1. D.B.Income Tax Appeal No.123/2004. 2. D.B.Income Tax Appeal No.89/2005. 3. D.B.Income Tax Appeal No.177/2005. 4. D.B.Income Tax Appeal No.190/2005. 5. D.B.Income Tax Appeal No.14/2006. 6. D.B.Income Tax Appeal No.224/2008. 7. D.B.Income Tax Appeal No.322/2008. 8. D.B.Income Tax Appeal No.379/2008. 9. D.B.Income Tax Appeal No.558/2008. 10. D.B.Income Tax Appeal No.624/2008. 11. D.B.Income Tax Appeal No.757/2008. 12. D.B.Income Tax Appeal No.558/2009. 13. D.B.Income Tax Appeal No.282/2010. 14. D.B.Income Tax Appeal No.94/2011. 14.03.2016. HON'BLE MR.JUSTICE AJAY RASTOGI HON'BLE MR.JUSTICE AJAY RASTOGI HON'BLE MR.JUSTICE PRAKASH GUPTA HON'BLE MR.JUSTICE PRAKASH GUPTA Mr.Sameer Jain ] Mr.R.B.Mathur ] Mr.Anuroop Singhi ] Mrs.Parinitoo Jain ] Counsel for appellants. Mr.Anil Mehta ] Mr.T.C.Jain ] Mr.A.Kasliwal ] Mr.S.K.Singhal ] Mr.N.L.Agarwal ] Ms.Anupama Parashar ] Counsel for respondents. Mr.Gunjan Pathak ] ***** Instant appeals are 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- 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 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,

-3- much less than what has been prescribed for filing appeal 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 appeals, 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 appeals stand dismissed as not pressed. Let a copy of this order be placed in each file separately. (PRAKASH GUPTA),J.

(AJAY RASTOGI),J. All corrections made in judgment/order have been All corrections made in judgment/order have been incorporated in the judgment/order being emailed. incorporated in the judgment/order being emailed. Solanki DS, P.S. Solanki DS, P.S.

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