2025 (7) TMI 1062 - HC - Income Tax

Maintainability of appeal on low tax effect before High Court - HELD THAT - The monetary limits prescribed in the CBDT Circular would apply even to pending Appeals. Hence the Circular dated 17th September 2024 would certainly apply. Any Appeal where the tax effect is below Rs.2 Crores would have to be withdrawn by the Revenue subject to the exceptions if any. However these decisions also lay down that the exceptions carved out by any of the Circulars would apply only prospectively i.e. from the date of the introduction of such exception. In other words the concerned exception would not apply to any Appeals that were filed prior to the date of the concerned Circular. Once this is the law laid down by this Court we find merit in the argument of the Respondents that the above Appeal ought to be disposed of because it is below the monetary limits as set out in the Circular dated 17th September 2024 and the Revenue cannot rely upon the exception set out in the Circular dated 17th March 2024 to justify prosecuting the above Appeal and which was filed on 13th January 2023. Appeal is accordingly disposed of because the tax effect is admittedly below the monetary limits set out in the Circular dated 17th September 2024. No order as to costs.

Summary

ISSUES:

• Whether an appeal filed below the prescribed monetary limits set by CBDT Circulars can be entertained by the High Court.
• Whether exceptions to the monetary limits prescribed by CBDT Circulars apply retrospectively to appeals filed before the date of such Circulars.
• Whether the revised monetary limits in subsequent CBDT Circulars apply to pending appeals filed prior to the issuance of those Circulars.

RULINGS / HOLDINGS:

• The Court held that the monetary limits prescribed in the CBDT Circulars apply to pending appeals, and the revised monetary limits set out in the Circular dated 17th September 2024, increasing the limit to ? 2 Crores, are applicable to the present appeal.
• The exceptions carved out by the CBDT Circulars apply only prospectively, "i.e. from the date of the introduction of such exception," and do not apply to appeals filed prior to the relevant Circular.
• Since the appeal was filed on 13th January 2023, before the Circular dated 15th March 2024, the Revenue cannot rely on the exception under Clause 3.1(h) of that Circular to maintain the appeal.
• The appeal is accordingly disposed of as the tax effect is below the monetary limit of ? 2 Crores prescribed by the latest Circular, with no order as to costs.

RATIONALE:

• The Court applied the legal framework established by CBDT Circulars dated 15th March 2024 and 17th September 2024, which prescribe monetary limits for filing and prosecuting appeals before the High Court.
• Precedent decisions of this Court confirm that monetary limits apply to pending appeals and that exceptions in Circulars are prospective only, not retrospective.
• This interpretation ensures consistency and predictability in appellate jurisdiction, preventing the Revenue from relying on exceptions introduced after the filing of an appeal.
• The Court expressly reserved the right to consider the substantive questions of law raised by the Revenue in an appropriate case, thereby limiting the present decision strictly to the issue of maintainability based on monetary limits and exceptions.