CBDT monetary-limit exception applies where prosecution is pending; appeal recall allowed for one year, refused for another.

Where a departmental appeal is barred by the CBDT monetary-limit circular, the prosecution exception must be applied if prosecution has already been filed and is pending in court. The earlier dismissal of the Revenue's appeal for one assessment year was recalled because the record showed pending prosecution against the assessee company and its directors, and a mere stay did not end the prosecution. For the other assessment year, recall was refused because no prosecution had been filed, so the exception did not apply and no error in the low-tax-effect dismissal was shown.

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Issues: (i) Whether the earlier dismissal of the Revenue's appeal for low tax effect could be recalled when prosecution had already been launched for the relevant assessment year and the case fell within the exception to the CBDT circular; (ii) Whether the earlier dismissal could be recalled for the other assessment year where no prosecution had been filed.

Issue (i): Whether the earlier dismissal of the Revenue's appeal for low tax effect could be recalled when prosecution had already been launched for the relevant assessment year and the case fell within the exception to the CBDT circular.

Analysis: The appeal had earlier been dismissed only on the basis of low tax effect under the CBDT monetary-limit circular. The record showed that prosecution had been launched against the assessee company and its directors for the relevant assessment year and the prosecution was pending before the court. The circular expressly carved out an exception for cases where prosecution had been filed by the department and was pending in court. Mere stay of the prosecution proceedings did not bring the prosecution to an end. The earlier dismissal therefore ignored the applicable exception and resulted in an apparent error.

Conclusion: The recall was justified and the Revenue's appeal for that assessment year was restored.

Issue (ii): Whether the earlier dismissal could be recalled for the other assessment year where no prosecution had been filed.

Analysis: For the other assessment year, the departmental report categorically stated that no prosecution had been filed against the assessee company. In the absence of any prosecution, the exception clause in the CBDT circular was not attracted. No error in the earlier dismissal on the ground of low tax effect was shown.

Conclusion: The request for recall for that assessment year was rejected.

Final Conclusion: The Miscellaneous Application was allowed only to the extent of restoring the appeal for the year where prosecution was pending, while the connected application for the other year remained dismissed.

Ratio Decidendi: Where the departmental appeal is otherwise barred by the monetary limit, the exception for cases in which prosecution has been filed and is pending in court must be applied, and an earlier dismissal can be recalled if that exception was overlooked.

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