[CIT v. Surya Herbal Ltd., SLP (CC) No. 13694 of 2011 dated 29-8-2011]
By an Instruction No. 3/2011 [F. No. 279/Misc. 142/2007-IT] dated 9-2-2011, the Central Board of Direct Taxes specified the monetary limits and other conditions for filing departmental appeals (in income-tax matters) before the Appellate Tribunal, High Courts and Supreme Court were specified as under:
As per the instructions, the appeals should not be filed in cases where the tax effect does not exceed the monetary limits given hereunder:
|
Sr. No. |
Appeals in income-tax matters |
Monetary limit (in Rs.) |
|
1. |
Appeal before Appellate Tribunal |
3,00,000 |
|
2. |
Appeal u/s.260A before High Court |
10,00,000 |
|
3. |
Appeal before Supreme Court |
25,00,000 |
It was clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases should to be decided on merits of the case.
Paragraph 5 of the said Circular read as under:
5. “The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or Appellate Authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if the ‘tax effect’ is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which ‘tax effect’ exceeds the monetary limit prescribed. In case where a composite order/judgment involves more than one assessee, each assessee shall be dealt with separately.”
The Delhi High Court by its order dated 21st February, 2011 passed in ITXA No. 379 of 2011, dismissed the Revenue’s appeal for the reason that the tax effect was less than Rs.10 lakh.
On an appeal against the order of the Delhi High Court, the Supreme Court gave liberty to the Department to move the High Court pointing out that the Circular dated 9th February, 2011, should not be applied ipso facto, particularly, when the matter has a cascading effect. The Supreme Court held that there are cases under the Income-tax Act, 1961, in which a common principle may be involved in subsequent group of matters or large number of matters. The Supreme Court was of the view, that in such cases if attention of the High Court was drawn, the High Court would not apply the Circular ipso facto. For that purpose, liberty was granted to the Department to move the High Court in two weeks. The special leave petition was, accordingly, disposed of.
