PCIT Vs Arvind Dwarkadas Purohit (Bombay High Court)
Core Issue: The principal issue before the Bombay High Court was whether the exceptions to the monetary limits for filing departmental appeals, introduced by the CBDT through its letter dated 20.08.2018 modifying Circular dated 11.07.2018, would apply retrospectively to appeals already instituted before 20.08.2018. The Court also considered whether a Revenue appeal involving alleged bogus purchases could be entertained where the tax effect was below the prescribed monetary limit by invoking the subsequently introduced exceptions.
Facts: The Revenue filed an appeal under section 260A challenging the ITAT’s order deleting additions relating to alleged bogus purchases. The Revenue contended that the assessee had failed to establish the genuineness of purchases from non-existent suppliers identified by the Maharashtra Sales Tax Department and that the entire purchases ought to have been disallowed in view of the decisions in N.K. Industries Ltd. and N.K. Proteins Ltd. Although the tax effect involved in the appeal was only Rs.10,21,276, the Revenue argued that the appeal was maintainable because it fell within the exceptions introduced by the CBDT’s letter dated 20.08.2018 modifying the earlier monetary limit Circular dated 11.07.2018.
Findings of the High Court: The Court examined the CBDT letter dated 20.08.2018 and observed that the language of the modification itself made it clear that the newly introduced exceptions would operate from the date of issuance of the letter. Consequently, while the revised monetary limits prescribed by the CBDT would govern even pending appeals, the exceptions carved out by the subsequent communication could not be given retrospective operation.
