2017 (2) TMI 1371 - HC - Income Tax

Maintainability of appeal - monetary limit - Held that - Taking note of the CBDT Circular dt. 10/12/2015 and the tax effect which indisputably in the instant case is less than ₹ 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 stand dismissed as not pressed.

Summary

Issues:
- Appeal against order of Income Tax Appellate Tribunal with tax effect less than ?20 lac
- Interpretation of Circular No. 21/2015 by Central Board of Direct Taxes regarding monetary limits for filing appeals
- Exceptions specified in Circular for contesting adverse judgments on merits
- Applicability of Circular to pending and future appeals in High Courts and Tribunals

Interpretation of Circular No. 21/2015:
The High Court analyzed Circular No. 21/2015 issued by the Central Board of Direct Taxes, which specified monetary limits for filing appeals to reduce litigation. The Circular outlined limits for appeals before Appellate Tribunal, High Court, and Supreme Court based on tax effect. It emphasized that appeals should not be filed solely based on exceeding monetary limits, with filing to be decided on case merits. The Circular also detailed exceptions where adverse judgments should be contested on merits regardless of tax effect, such as constitutional validity challenges, illegal Board orders, accepted Revenue Audit objections, or undisclosed foreign assets.

Applicability of Circular to Pending Appeals:
The Court noted that the Circular's limits may not apply to certain exceptions specified in para 8. It clarified that the Circular would apply retrospectively to pending and future appeals in High Courts and Tribunals. Appeals falling within exceptions could be preferred in High Courts even if the tax effect was less than ?20 lac. Pending appeals below specified tax limits could be withdrawn/not pressed, and appeals to the Supreme Court would follow the relevant instructions at the time of filing.

Decision on the Instant Appeal:
Considering the CBDT Circular and the tax effect in the case being less than ?20 lac, the Court decided to dismiss the appeal as not pressed. However, it left open the examination of any substantial questions of law raised for future proceedings. The Court observed that if the appeal fell within the exceptions outlined in the Circular, the Revenue could apply for recalling the order. Accordingly, the appeal was dismissed as not pressed in line with the Circular dated 10.12.2015.

This judgment highlighted the importance of adhering to the monetary limits specified in Circular No. 21/2015 for filing appeals, while also recognizing exceptions where adverse judgments should be contested on merits. The retrospective applicability of the Circular to pending and future appeals emphasized the need for compliance with the guidelines set by the Central Board of Direct Taxes to streamline the appeal process and reduce unnecessary litigation.