Revenue appeals below Rs. 2 crores disposed following CBDT circulars on withdrawal limits applying retrospectively

The Bombay HC disposed of multiple appeals where the monetary limits were below Rs. 2 crores. The court held that CBDT circulars regarding withdrawal of pending appeals below prescribed monetary limits applied retrospectively to existing appeals, not just prospective ones. Following the precedent in V.M. Salgaonkar and Brothers, the court rejected revenue's argument for holistic reading of circulars that would distinguish between pending and future appeals. Since revenue counsel had no instructions to withdraw the appeals despite the circular requirements, the court disposed of all appeals, consistent with coordinate bench decisions and Rajasthan HC precedent.

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The High Court of Bombay considered a series of appeals in the matter of tax disputes. The core issue in these appeals revolved around the applicability of Circulars issued by the Central Board of Direct Taxes (CBDT) concerning the withdrawal of appeals where the tax effect is less than a specified monetary limit.The main legal questions considered were:1. Whether the CBDT Circulars, specifically Circular Nos. 05/2024 and 09/2024, should be interpreted retrospectively or prospectivelyRs. 2. Whether the exceptions outlined in the Circulars allowed the revenue to continue pursuing appeals below the monetary limits specifiedRs.The Court analyzed the CBDT Circulars and the exceptions provided therein. Circular No. 05/2024 set monetary limits for filing appeals in tax matters, with exceptions for cases of organized tax evasion. Circular No. 09/2024 increased these monetary limits and specified that the modifications would apply to pending appeals as well as future ones.The Court considered the arguments presented by both parties. The Appellants argued that the revenue could rely on the exceptions in the Circulars to continue pursuing appeals below the monetary limits. On the other hand, the Respondents contended that the exceptions were prospective and could not be applied to pending appeals.The Court referred to the decisions in Commissioner of Income Tax V/s. V. M. Salgaonkar and Brothers (P.) Ltd. and Commissioner of Income Tax-I V/s. Satish Kumar Agarwal to support its reasoning. The Court noted that the Circulars differentiated between the application of monetary limits and exceptions, with the latter being prospective.Ultimately, the Court upheld the Respondents' argument, emphasizing that the exceptions in the Circulars could not be applied retrospectively to pending appeals. The Court cited the decision in V. M. Salgaonkar and Brothers to support its conclusion. As a result, the Court disposed of the appeals, as the Appellants did not have instructions to withdraw them.The Court granted the Appellants the liberty to seek revival of the appeals if they discovered that the tax effect exceeded the specified limit. However, this liberty was subject to a deadline of 31 December 2025. The Court also ordered a refund of court fees for the Appellants.In conclusion, the Court's decision was based on the interpretation of the CBDT Circulars and the principle that exceptions should be applied prospectively. The Court's ruling aligned with previous decisions and established clarity on the application of monetary limits and exceptions in tax appeals.

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