2025 (6) TMI 1553 - HC - Income Tax

Monetary limit to maintain appeal in High court - whether Appeals where the department has accepted the Revenue audit objection are not liable to be withdrawn based on the tax effect involved? - HELD THAT - As perused the circulars of 20 August 2018 and 15 March 2024. Upon reading the two circulars we find merit in Mr Chaudhary s contention. The exception in paragraph No. 10 (c) in the communication of 20 August 2018 read with Circular No. 03 of 2018 dated 11 July 2018 is not reflected in Circular No. 05 of 2014 dated 15 March 2024. Besides circular No. 05 of 2024 raises the tax effect ceiling to Rs. 2 Crores. Admittedly the tax effect involved in this Appeal is only Rs. 12, 11, 053/-. Therefore even though this Appeal may have been properly instituted now given Circular No. 05 of 2024 it will have to be disposed of on account of the tax effect. Our order dated 02 April 2025 insofar as this Appeal is recalled because it does contain errors apparent on the face of the record but after such recall and restoration the Appeal is disposed of for the above reasons relying on Circular No. 05 of 2024 dated 15 March 2024. The questions of how are however kept open.

Summary

The Bombay High Court, in ITXA No. 32 of 2019, addressed a challenge by the Revenue seeking recall of the Court's order dated 02 April 2025. The Revenue contended that despite the tax effect being below Rs. 2 Crores, the appeal should not have been withdrawn per the CBDT communication dated 20 August 2018, which exempts withdrawal only where the department accepts Revenue audit objections. The Revenue also argued there was an "error apparent on the face of the record" due to incorrect clubbing with appeals involving bogus purchases.The Assessee's counsel accepted these points but relied on the subsequent CBDT Circular No. 05 of 2024 dated 15 March 2024, which supersedes the 2018 communication, raises the tax effect threshold to Rs. 2 Crores, and omits the earlier exception relating to accepted audit objections.The Court found merit in the Assessee's reliance on Circular No. 05 of 2024, noting that the tax effect here was Rs. 12,11,053/-, below the revised threshold. Consequently, although the appeal was properly instituted, it must be disposed of on the ground of insufficient tax effect under the latest circular. The Court recalled its prior order only to dispose of the appeal accordingly, keeping open the question of "how" disposal should proceed.In sum, the Court held that "given Circular No. 05 of 2024 dated 15 March 2024," the appeal is to be disposed of due to the tax effect being below Rs. 2 Crores, overriding the earlier communication relied upon by the Revenue.