Circular No. DIT(L&R)-I/NZ/SLP/393/2011/5091

What this is

Circular No. DIT(L&R)-I/NZ/SLP/393/2011/5091 was issued by the Central Board of Direct Taxes on 16 September 2011. Its subject is Section 260A of the Income-tax Act, 1961 - High Courts, Appeals to - Summary Dismissal of Departmental Appeal by Delhi High Court by Retrospective Application of Monetary Limits of TAX Effect -(i) Suggestion to File Recall Petition Instead of Review in High Court -(ii) Filing of Review/recall Petition in Cases Where TAX Effect Is Below RS. 4 Lakhs.

This fixes the monetary limits below which the department will not appeal. It binds the department only: it is not a rule about the merits, and an assessee cannot draw an inference from a withdrawn appeal.

What it does

Tells the field how to respond where the Delhi High Court dismissed departmental appeals in a bunch by applying the monetary limits of tax effect retrospectively. On the choice of remedy, a suggestion had been made that a recall petition be filed rather than a review, on the strength of the Supreme Court's order in the Surya Herbal case, because the thirty day limit that applies to a review does not apply to a recall; officers are told to file a review or a recall as the Senior Standing Counsel advises in the particular case. On the second point, the Board's decision conveyed by the letter of 24 August 2011 was only that a special leave petition should not be filed where the tax effect is small; it did not say that a review or recall should not be sought. So where the appeal to the High Court had itself been validly filed under the Instruction in force at the time of filing, a review or recall petition is to be filed even where the tax effect is below Rs.4 lakhs.

Why it was issued

After the earlier letters of 1 and 2 September 2011, suggestions came in about filing a recall instead of a review, and there was confusion in the field about whether to move at all in the small tax effect cases.

Who it reaches

• Assessees whose matters were among the appeals dismissed in bulk by the High Court on monetary limits
• Assessees with a tax effect below Rs.4 lakhs facing a recall or review petition
• Senior Standing Counsel advising on the remedy
• Chief Commissioners in the Delhi region

The provisions it speaks to

The instrument, as the Board published it

SECTION 260A OF THE INCOME-TAX ACT, 1961 - HIGH COURTS, APPEALS TO - SUMMARY DISMISSAL OF DEPARTMENTAL APPEAL BY DELHI HIGH COURT BY RETROSPECTIVE APPLICATION OF MONETARY LIMITS OF TAX EFFECT -(I) SUGGESTION TO FILE RECALL PETITION INSTEAD OF REVIEW IN HIGH COURT -(II) FILING OF REVIEW/RECALL PETITION IN CASES WHERE TAX EFFECT IS BELOW RS. 4 LAKHS
LETTER NO. DIT(L&R)-I/NZ/SLP/393/2011/5091, DATED 16-9-2011
Ref : Directorate of L&R letters dated 2-9-2011 for filing of review petition and dated 1-9-11 for sending SLP proposal
Kindly refer to the above.
2. Subsequent to the letter under reference, some suggestions have been received that instead of filing review petition, a recall petition may be filed in High Court on the basis of Supreme Court order in Surya Herbal case. This is because for filing review petition there is a time limit of 30 days from the date of relevant order which will not be applicable for filing recall petition. In view of the above, the field officers are advised to file review or recall petition as may be suggested by the Sr. Standing Counsel in a particular case.
3. Another confusion in the field relating to this matter is whether or not review petition is to be filed in those cases where tax effect is less than Rs. 4 lakhs. It was suggested by this Directorate letter No. Addl DIT(L&R)-I/SLP/2011-12/4502 dated 1-9-2011 addressed to all CCsIT/DGsIT at Delhi that proposal to file SLP was not to be sent in such cases. In this regard it is clarified that as per letter dated 24-8-2011 the Board’s decision only not to file SLP due to smallness of tax effect was conveyed. However since appeal to High Court was filed as per the relevant Instruction applicable at the time of filing, review/recall petition in such cases is also to be filed where tax effect is less than Rs. 4 lakhs, if filing appeal to High Court was permissible as per Instruction applicable at the time of filing.

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What to watch

• The department's own position is that the monetary limit governing whether an appeal could be filed is the one in the Instruction in force on the date of filing, not a later, higher limit - that is the argument this letter is built on and it cuts both ways.
• A recall petition is being used precisely to escape the thirty day limitation on a review, which is the point to test when such a petition comes in late.
• The decision not to file a special leave petition for smallness of tax effect is not a decision to abandon the appeal already filed in the High Court.
• This is an internal letter of a directorate; it decides nothing and gives an assessee no right, though it shows the basis on which revival was being sought.

Where you meet it

On a departmental review or recall petition seeking to restore an appeal that a High Court dismissed for want of tax effect.

← Circular No. 8/FT&TR/2011 [F.NO. 500/15/2011-FT&TR-I]  ·  Circular No. No.402/92/2006-MC (22 of 2011) →