2025 (2) TMI 770 - HC - Income Tax

Maintainability of appeal on low tax effect - assessees submit that the tax effect in these appeals is less than Rs. 50, 00, 000/- - HELD THAT - The letter dated 20 August 2018 categorically states that the modification introduced thereby to the CBDT circular dated 11 July 2018 shall come into effect on the date of issue of this letter. Thus no retrospective effect is given to the two added exceptions by letter dated 20 August 2018. Paragraph 13 of the CBDT circular dated 11 July 2018 remains unamended. This means that insofar as the increased monetary limits are concerned they would apply even to the pending appeals. However when it comes to applying the exceptions the same would apply from 20 August 2018 and not earlier. A similar issue arose before the co-ordinate bench in the case of V. M. Salgaonkar and Brothers (P.) Ltd. 2024 (12) TMI 717 - BOMBAY HIGH COURT On analysing circulars 5 of 2024 and 9 of 2024 the coordinate bench held that the monetary limits would apply to the pending appeals but when it comes to the exceptions subsequently introduced such exceptions could not be construed retrospectively. The above decision was followed by us in M/s IPL Loan Trust) 2025 (2) TMI 453 - BOMBAY HIGH COURT Applying the same principles to the circulars and amending letters involved in the present appeals we are satisfied that these four appeals which were instituted before 20 August 2018 would have to be disposed of as the tax effect involved in these appeals is below the monetary limits of Rs.50, 00, 000/-.

Summary

The High Court of Bombay heard appeals related to tax matters where the tax effect involved was less than Rs. 50,00,000/-. The core legal question considered was whether the appeals should be dismissed based on circulars dated 10 December 2015 and 11 July 2018, which set monetary limits for appeals before the High Court. The Court evaluated the circulars and precedents on the subject to determine the outcome of the appeals.The appeals were initially filed based on Circular No. 21 of 2015, which set the monetary limit at Rs. 20,00,000/-. Subsequently, Circular No. 3 of 2018 increased the monetary limit to Rs. 50,00,000/-. The exceptions provided in the circulars were analyzed, and it was found that the appeals did not fall within the exceptions specified.Paragraph 13 of the circular dated 11 July 2018 stated that pending appeals below the specified tax limits may be withdrawn or not pressed. However, on 20 August 2018, the CBDT modified the circular, adding exceptions, including cases where additions were based on information from external sources like law enforcement agencies. The Revenue contended that all four appeals fell within this exception.The Court considered the modification introduced on 20 August 2018 and clarified that while the increased monetary limits applied to pending appeals, the exceptions would apply from 20 August 2018 onwards. Referring to a similar case precedent, the Court held that the exceptions could not be applied retrospectively to appeals filed before the modification date.Based on the analysis of the circulars and precedents, the Court concluded that the appeals, instituted before 20 August 2018, should be disposed of as the tax effect involved was below the monetary limit of Rs. 50,00,000/-. The Court decided to dispose of the appeals, leaving the questions of law raised therein open.In summary, the Court considered the applicability of CBDT circulars regarding monetary limits for appeals and exceptions to determine the fate of appeals with tax effects below Rs. 50,00,000/-. The Court's decision was based on the interpretation of the circulars and relevant precedents, leading to the disposal of the appeals without delving into the substantive legal issues raised.