2019 (4) TMI 1167 - HC - Income Tax

Monetary limit - maintainability of appeal - tax effect - HELD THAT - The present appeal filed by the Revenue neither has any cascading tax effect nor it involves any issues of common principles involved in a group of matters or a large number of matters. Thus, the decision initially pointed out by the learned counsel for the appellant-Revenue in the case of CIT v. Gemini Distilleries 2017 (10) TMI 1275 - SUPREME COURT OF INDIA does not come in the way of the present appeal being withdrawn and the withdrawal of the appeal can be permitted as per recent Central Board of Direct Taxes' circular dated July 11, 2018. Assessee does not dispute this position. Accordingly, in view of the aforesaid reasons and the Circular dated July 11, 2018 issued by the Central Board of Direct Taxes, the present appeal filed by the appellant-Revenue is permitted to be withdrawn. The appeal is, accordingly, dismissed as withdrawn/not pressed.

Summary

Issues Involved:
1. Maintainability of the Income-tax appeal based on the monetary limits prescribed by the Central Board of Direct Taxes (CBDT).
2. Retrospective application of CBDT Circulars.
3. Specific conditions under which CBDT Circulars should not be applied ipso facto.
4. Recent revisions in monetary limits for filing appeals by the Department.

Issue-wise Detailed Analysis:

1. Maintainability of the Income-tax appeal based on the monetary limits prescribed by the Central Board of Direct Taxes (CBDT):
The appeal was initially disposed of by the High Court on November 2, 2011, due to the tax effect being less than ?20 lakhs, as per the CBDT instructions issued in 2011. The matter was remanded back by the Supreme Court for reconsideration in light of subsequent developments.

2. Retrospective application of CBDT Circulars:
The Supreme Court clarified in DIT v. S. R. M. B. Dairy Farming (P.) Ltd. that CBDT Circulars regarding monetary limits for appeals apply retrospectively to pending cases. This principle was established to avoid anomalous situations where appeals with similar financial implications might be treated differently based on the timing of the appeal.

3. Specific conditions under which CBDT Circulars should not be applied ipso facto:
The Supreme Court in Surya Herbal Ltd. emphasized that the Circular should not be applied ipso facto in cases with cascading effects or where common principles are involved in multiple matters. This ensures that significant issues affecting numerous cases are addressed comprehensively, rather than dismissed solely based on monetary limits.

4. Recent revisions in monetary limits for filing appeals by the Department:
The CBDT, through Circular No. 3 of 2018, revised the monetary limits for filing appeals: ?20 lakhs for Appellate Tribunals, ?50 lakhs for High Courts, and ?1 crore for the Supreme Court. This revision aims to reduce litigation and streamline the appeal process. The Circular also specifies conditions under which appeals should still be filed, such as challenges to the constitutional validity of provisions, illegal or ultra vires Board orders, and cases involving undisclosed foreign assets.

Conclusion:
The High Court acknowledged the revised CBDT Circulars and the Supreme Court's guidelines, leading to the dismissal of the Revenue's appeal. The appeal did not meet the criteria for exceptions to the monetary limits, and both parties agreed to the withdrawal. The judgment underscores the importance of adhering to updated monetary limits and the specific conditions under which exceptions apply, ensuring consistency and reducing unnecessary litigation.