2011 (2) TMI 103 - HC - Income Tax

Monetary limit for filing an appeal - Pending appeals - Circular laying down monetary limit controls the filing of the appeals and not their hearing - Appeals filed as per applicable limit at the time of filing cannot be governed by circular applicable at the time of hearing - The object of circular under section 268A as already mentioned is only to govern monetary limit for filing of the appeals - There is no scope for reading the circular as being applicable to pending appeals -Held that The said memorandum was purportedly issued on a direction of the High Court and was applicable only to cases pending in Bombay High Court. The same cannot be read to mean that in all High Courts, all pending appeals were to be examined in the light of monetary limit applicable on the date of hearing and not on the date of filing. - monetary limit laid down vide circular dated 15.5.2008 will apply only to filing of appeals. Appeals already filed and pending prior thereto will be governed by monetary limit laid down at the time of filing.

Summary

Issues Involved:
1. Applicability of monetary limits for filing appeals by the department as per circular dated 15.5.2008 to pending appeals.
2. Interpretation of circulars issued by the Central Board of Direct Taxes (CBDT) regarding monetary limits for filing appeals.

Issue-wise Detailed Analysis:

1. Applicability of Monetary Limits for Filing Appeals by the Department as per Circular Dated 15.5.2008 to Pending Appeals:

The primary question addressed in this judgment is whether the monetary limits for filing appeals, as prescribed by the CBDT circular dated 15.5.2008, should apply to appeals that were already pending before the issuance of the circular. The counsel for the revenue argued that the circular dated 15.5.2008 cannot apply retrospectively to appeals filed before the circular's issuance. They contended that the judgment in CIT v. Abhinash Gupta, which followed the Bombay High Court's decision in CIT v. Madhukar K. Inamdar (HUF), needed reconsideration because it wrongly inferred that the circular applied to pending appeals.

The court noted that the circular dated 5.6.2007, referred to by the Bombay High Court, was an office memorandum issued to comply with a specific direction from the Bombay High Court. This memorandum required the department to review pending cases to check compliance with the prescribed monetary limits. However, it did not imply that all pending appeals must conform to the current monetary limits. The court emphasized that the object of the circular under section 268A is to regulate the filing of appeals, not to regulate appeals already filed. Once an appeal is properly filed, its hearing is not in the hands of a party, and controlling it by new monetary limits applicable at the time of hearing would create uncertainty. This interpretation aligns with the principle that the act of the court should not prejudice anyone (actus curiae neminem gravabit).

2. Interpretation of Circulars Issued by the Central Board of Direct Taxes (CBDT) Regarding Monetary Limits for Filing Appeals:

The court examined the relevant provisions and circulars, including section 268A of the Income Tax Act, which empowers the CBDT to issue orders, instructions, or directions fixing monetary limits for filing appeals. The circular dated 5.6.2007 directed the department to withdraw appeals that did not meet the monetary limits unless the question of law involved was of a recurring nature. The circular dated 15.5.2008 revised the monetary limits for filing departmental appeals and specified that it would apply to appeals filed on or after 15.5.2008.

The Bombay High Court, in CIT v. Madhukar K. Inamdar (HUF), interpreted the circular dated 15.5.2008 as applicable to pending cases, requiring the department to withdraw appeals with tax effects below the prescribed limits. This view was followed by the Punjab and Haryana High Court in CIT v. Abhinash Gupta, which held that the circular was binding on the revenue and applicable to pending appeals.

However, the present court disagreed with this interpretation. It held that the monetary limit laid down in the circular dated 15.5.2008 applies only to the filing of appeals and not to their hearing. Appeals filed as per the applicable limit at the time of filing cannot be governed by the circular applicable at the time of hearing. The court emphasized that the circular's objective is to govern the monetary limit for filing appeals, not for pending appeals. The document referred to as the circular dated 5.6.2007 was specific to cases pending in the Bombay High Court and did not imply a general application to all High Courts.

Conclusion:

The court concluded that the monetary limit prescribed in the circular dated 15.5.2008 applies only to the filing of appeals and not to appeals already filed and pending before its issuance. Appeals filed before 15.5.2008 will be governed by the monetary limits applicable at the time of their filing. The question was answered accordingly, and the matter was directed to be placed before the appropriate bench for further proceedings.