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2021 (11) TMI 56 - HC - Income TaxMaintainability of appeal - low tax effect - Order u/s 234E as maintainable under Section 260 - present petitions invoking Article 226 of the Constitution of India contending that the tax effect involved is below monetary limits as prescribed in Central Board of Direct Taxes (hereinafter referred to as CBDT ) Circular No.17 of 2019 dated 8th August 2019 and the issue involved in the interpretation of Section has a cascading effect - HELD THAT - It is undisputed that the subject-matter of present writ petitions does not fall within any criterion prescribed in clause 10 of Circular No.3 of 2018 as amended by Circular dated 20th August 2018. The right to challenge the order passed by the Tribunal by way of statutory appeal has been circumscribed by the involvement of substantial questions of law to be decided by the High Court. While a High Court would normally not exercise its writ jurisdiction under Article 226 of the Constitution if an effective and efficacious alternate remedy is available the existence of an alternate remedy does not by itself bar the High Court from exercising its jurisdiction in certain contingencies - See REGISTRAR OF TRADE MARKS MUMBAI ORS. 1998 (10) TMI 510 - SUPREME COURT . None of the exceptions as laid down by the Supreme Court in the case of Radha Krishan Industries (Supra) has been fulfilled. On an overall consideration of the issue involved particularly in view of the case of the Petitioner that the issue involved is of interpretation of Section which has a cascading effect it was open for the Petitioner to avail statutory remedy under Section 260A of the Act. Having failed to avail the statutory remedy and the case of the Petitioner does not fall into the exceptions laid down by the Supreme Court in the case of Radha Krishan Industries 2021 (4) TMI 837 - SUPREME COURT we decline to exercise extraordinary jurisdiction under Article 226 of the Constitution of India.
Issues:
Challenge to ITAT order under Section 234E of Income Tax Act, maintainability of writ petitions invoking Article 226, interpretation of Circulars of CBDT regarding monetary limits for filing appeals, application of Circular No.3 of 2018, relevance of Supreme Court judgments on cascading effect, power under Section 268A(4) of Income Tax Act, exercise of writ jurisdiction under Article 226 in the presence of alternate remedy. Analysis: The High Court addressed the challenge to an order passed by the Income Tax Appellate Tribunal (ITAT) under Section 234E of the Income Tax Act, 1961. The Revenue contested the ITAT order, arguing that despite the availability of the statutory remedy of appeal under Section 260A of the Act, they filed petitions under Article 226 of the Constitution of India due to the tax effect being below the monetary limits set by CBDT Circular No.17 of 2019. The Court noted that the petitions involved a common question of maintainability based on the monetary limits issue. The Court examined the Circulars of CBDT, particularly Circular No.3 of 2018, which revised the monetary limits for filing appeals to reduce litigation. The Circular dated 8th August 2019 specified that no appeal shall be filed in the High Court if the tax effect is below Rupees One Crore. The Court emphasized that the subject matter of the writ petitions did not meet the criteria outlined in the Circular, as the tax effect was below the prescribed limit. Referring to Supreme Court judgments, the Court highlighted the importance of the cascading effect in tax matters. The judgments emphasized that the Circulars should not be applied automatically in cases with a cascading effect, and the Revenue should demonstrate the need to challenge such cases through statutory remedies. The Court quoted Circular provisions and Supreme Court observations to support its decision. The Court discussed the power under Section 268A(4) of the Income Tax Act, which aims to reduce the burden on Courts and Tribunals in cases with lower tax effects. It emphasized that Income Tax authorities must adhere to CBDT directions unless there is a cascading effect. The Court also cited principles from Supreme Court cases regarding the exercise of writ jurisdiction under Article 226 in the presence of an alternate remedy, emphasizing the need for fulfilling exceptions to the rule of an alternate remedy. Ultimately, the Court declined to exercise extraordinary jurisdiction under Article 226 as the Petitioner did not avail the statutory remedy under Section 260A and did not meet the exceptions laid down by the Supreme Court. The Court dismissed the petitions based on the overall consideration of the issues involved, including the interpretation of Section with a cascading effect and the availability of statutory remedies. In conclusion, the judgment focused on the maintainability of writ petitions in tax matters, emphasizing the importance of statutory remedies, adherence to Circular provisions, and the need to fulfill exceptions for invoking extraordinary jurisdiction under Article 226.
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