2016 (8) TMI 1267 - HC - Income Tax

Monetary limit - Maintainability of appeal - References on board - Held that - The Central Board of Direct Tax has issued a Clarification dated 8th March 2016 wherein the earlier Circular No.21 of 2015 dated 10th December 2015 was made applicable to pending References. Therefore the Officers of the Revenue would not now press pending References before this Court where the tax effect involved is less than 20 lakhs. Revenue is directed to examine each of the above References and ascertain the tax effect involved in each of them. Thereafter file an affidavit indicating the References where the tax effect involved is less than 20 lakhs. Affidavit should be filed on or before next date i.e. 29th July 2016. These References which have tax effect of less than 20 lakhs would be covered by the above Circular. It is made clear that in case the aforesaid exercise is not done then we may be constrained to return all the above References unanswered. All the above References to be on board on 29th July 2016 under the caption for final disposal. Today none appears on behalf of the Revenue. It appears that Revenue is not interested in pursuing the aforesaid References. We had specifically stated in our order dated 22nd July 2016 that in case the exercise of finding out the tax effect in pending References is not done by the Revenue we may be constrained to return References unanswered. In the above view the aforesaid References are returned unanswered. Question raised in these References for our opinion are left open for consideration in an appropriate Reference/Proceedings.

Summary

Issues:
1. Application of Circular No.21 of 2015 to pending References with tax effect less than ?20 lakhs.
2. Revenue's failure to examine tax effect in pending References.
3. Decision to return unanswered References with tax effect less than ?20 lakhs.
4. Preservation of questions raised in the References for future consideration.

Analysis:
1. The High Court considered the application of Circular No.21 of 2015, which made it applicable to pending References with a tax effect less than ?20 lakhs. The Court directed the Revenue to examine each Reference to determine the tax effect involved and file an affidavit listing References falling under the threshold. Failure to comply would result in the return of unanswered References.
2. Despite the Court's directive, the Revenue failed to appear and show interest in pursuing the pending References. Consequently, the Court decided to return the References unanswered due to the Revenue's lack of action in determining the tax effect in the pending cases.
3. The Court clarified that while the References were being returned unanswered, the questions raised in these References for the Court's opinion were left open for consideration in future appropriate proceedings or References. No specific costs were awarded in this regard.
4. In conclusion, all the pending References with a tax effect less than ?20 lakhs were returned unanswered due to the Revenue's non-compliance with the Court's directive. However, the legal questions raised in these References were preserved for potential consideration in future proceedings.