Revenue appeal dismissed as not maintainable due to low tax effect under CBDT monetary limit circulars, liberty reserved

The ITAT Delhi (AT) dismissed the Revenue's appeal as not maintainable on account of low tax effect, holding that its institution was contrary to the monetary limits prescribed in the CBDT circulars dated 11.07.2018 and 08.08.2019. The Tribunal noted that the SC has taken cognizance of the enhanced monetary limits while dismissing similar departmental challenges. The appeal was treated as withdrawn/not pressed. However, liberty was expressly reserved to the Revenue to seek recall and restoration if it is later established that the disputed tax effect exceeds the prescribed threshold.

---

---

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the revised monetary limits for filing departmental appeals before the Tribunal, as prescribed by CBDT Circular dated 08.08.2019 read with Circular dated 11.07.2018 and clarification dated 20.08.2019, apply to the pending appeals listed before the Tribunal.

1.2 Whether any of the pending appeals are saved from dismissal by virtue of falling within the exceptions carved out in para 10 of CBDT Circular dated 11.07.2018 and its amendment dated 20.08.2018.

1.3 Consequentially, whether the pending appeals of the Revenue, having tax effect below the prescribed monetary limit and not covered by exceptions, should be treated as withdrawn/not pressed without adjudication on merits, with liberty to seek recall if the monetary conditions or exceptions are later found applicable.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Applicability of revised CBDT monetary limits to pending appeals

Legal framework

2.1 The Tribunal noted CBDT Circular No. 3/2018 dated 11.07.2018 prescribing monetary limits for filing of appeals by the Department before the Tribunal, as amended by CBDT Circular No. 17/2019 dated 08.08.2019 enhancing the monetary limit to Rs. 50 lakhs. It further referred to CBDT clarification F. No. 279/Misc/M-93/2018-ITJ dated 20.08.2019, clarifying that the revised monetary limits are applicable to pending appeals also.

Interpretation and reasoning

2.2 The Tribunal recorded that, in all the captioned appeals, the tax effect in dispute was stated to be below the enhanced monetary limit of Rs. 50 lakhs prescribed in the Circular dated 08.08.2019 read with Circular dated 11.07.2018.

2.3 Relying on the CBDT clarification dated 20.08.2019, the Tribunal treated the revised limits as binding on the Department even in relation to appeals already pending before it.

2.4 The Tribunal also noticed that the Supreme Court, in dismissing the special leave petition in DCIT & Ors. v. MSEB Holding Company Ltd. (SLP (Civil) No. 26373/2019 dated 16.08.2019), had taken cognizance of the enhanced limit, thereby reinforcing the application of the revised monetary limits.

Conclusions

2.5 The Tribunal concluded that the enhanced monetary limits prescribed by the CBDT apply to the pending departmental appeals before it, including the captioned matters, and that such appeals with tax effect below Rs. 50 lakhs are not to be pursued by the Department.

Issue 2: Existence and applicability of exceptions under CBDT Circular

Legal framework

2.6 The Tribunal referred to para 10 of CBDT Circular No. 3/2018 dated 11.07.2018 and its amendment dated 20.08.2018, which carve out specific exceptions where appeals may still be filed/not withdrawn notwithstanding low tax effect.

Interpretation and reasoning

2.7 The Tribunal specifically required the Departmental Representative to indicate whether any of the captioned appeals were covered by the exceptions in para 10 of the Circular and its amendment.

2.8 The Departmental Representative did not refer to any material to show that any of the pending appeals fell within the stated exceptions.

Conclusions

2.9 The Tribunal held that none of the captioned appeals were shown to be covered by the exceptions in para 10 of the Circular dated 11.07.2018 and amendment dated 20.08.2018, and therefore they were not protected from the operation of the revised monetary limits.

Issue 3: Consequential treatment of appeals and liberty to seek recall

Interpretation and reasoning

2.10 Having found that (a) the tax effect in each appeal was below Rs. 50 lakhs, (b) the revised CBDT limits applied to pending appeals, and (c) no exception under para 10 was established, the Tribunal held that the filing and continuance of such appeals was not in consonance with the applicable CBDT instructions.

2.11 The Tribunal expressly declined to examine or decide the appeals on merits and proceeded to treat them as deemed withdrawn/not pressed solely on the basis of the CBDT circulars.

2.12 The Tribunal further clarified that if, at a later date, the Revenue finds that in any of the captioned appeals (i) the tax effect in dispute exceeds the prescribed monetary limit under the Circular dated 08.08.2019, or (ii) the case is covered by any of the exceptions in para 10 of Circular dated 11.07.2018, the Revenue would be at liberty to move an application for recall of the order and restoration of the appeal for adjudication on merits, to be considered in accordance with law.

Conclusions

2.13 All the captioned Revenue appeals, having tax effect below the enhanced monetary limit and not shown to fall within any exception, were dismissed as withdrawn/not pressed without going into the merits of the issues, subject to the liberty reserved to the Revenue to seek recall and reinstatement if the prescribed conditions regarding tax effect or exceptions are subsequently found to be satisfied.

---