CBDT Monetary Limit Circulars: Retrospective Application to Pending Appeals vs. Prospective Operation of Exceptions — Bombay High Court Rules in PCIT Vs Axis AD Print Media (India) Ltd.
Case Overview
Court: Bombay High Court
Case: PCIT Vs Axis AD Print Media (India) Ltd.
Subject Matter: Applicability of CBDT monetary limit circulars to pending income tax appeals and whether subsequently introduced exceptions under those circulars can operate retrospectively
Background and Context
The Bombay High Court recently adjudicated a batch of four income tax appeals wherein a fundamental question arose regarding the interplay between CBDT monetary threshold circulars and the pending appeals filed before the enhanced limits came into force. The central dispute revolved around whether the Revenue could continue pressing these appeals despite the tax effect in each case falling well below the revised monetary ceiling of ₹50,00,000.
The assessees took the position that since all four appeals were instituted prior to 28 August 2018, and given that the tax effect in each matter was below ₹50,00,000, the appeals were liable to be disposed of in light of CBDT Circular No. 21 of 2015 dated 10 December 2015 and CBDT Circular No. 3 of 2018 dated 11 July 2018.
The Revenue, on the other hand, resisted this position by raising multiple arguments, including the claim that the appeals were originally filed when the applicable monetary threshold was ₹20,00,000 — and that the tax effect at the time of filing exceeded that limit. The Revenue further argued that Circular No. 3 of 2018 was itself subsequently amended on 20 August 2018, and that when the two instruments are read together, appeals involving additions based on intelligence received from external law enforcement agencies — including the CBI, ED, DRI, SFIO, and Directorate General of GST Intelligence (DGGI) — could be pursued on merits regardless of the tax effect.
Details of the Four Appeals
The Court noted the following particulars of the four appeals under consideration:
| Appeal No. | Date of Filing | Tax Effect Involved |
|---|---|---|
| ITXA/1880/2018 | 20 April 2018 | ₹25.25 Lakhs |
| ITXA/1994/2018 | 10 April 2018 | ₹27.72 Lakhs |
| ITXA/2013/2018 | 10 April 2018 | ₹16.80 Lakhs |
| ITXA/2029/2018 | 25 August 2018 | ₹29.92 Lakhs |
All four appeals thus carried tax effects ranging between approximately ₹16.80 lakh and ₹29.92 lakh — each falling below the revised ceiling of ₹50 lakh introduced by Circular No. 3 of 2018.
Examining the Relevant CBDT Circulars
CBDT Circular No. 21 of 2015 (Dated 10 December 2015)
At the time these appeals were originally filed, the governing circular was CBDT Circular No. 21 of 2015 dated 10 December 2015, which prescribed a monetary threshold of ₹20,00,000 for appeals before High Courts. Paragraph 8 of that circular carved out certain exceptions to this monetary limit. Both sides were in agreement that none of the four appeals in question fell within those exceptions.