2004 (9) TMI 50 - HC - Income Tax

Tribunal's Dismissal Over Monetary Limit Reversed

Commissioner of Income-Tax Versus Kodananad Tea Estates Co.

The High Court of Madras, in a case concerning the dismissal of the Revenue's appeal by the Tribunal based on a departmental monetary limit for filing ... Tribunal not deciding the issue on merits - whether the Appellate Tribunal is right in dismissing the appeal filed by the Revenue without considering it on the merits on the ground that the Departmental instruction bearing No. 1979 instructs that if effect involved in the appeals is less than the amount prescribed therein, no appeal need be filed before the Tribunal - The instruction came into force only with effect from April 1, 2000. The assessment years involved in these appeals are earlier to the date from which the notification was given effect to. Hence, the application of notification for dismissing the appeal cannot be legally sustainable - We are of the view that the Tribunal has committed a mistake in not considering the issue on the merits and dismissing the appeal on the basis of the notification. Accordingly, the orders of the Tribunal, which are impugned in these appeals are set aside Issues:- Whether the Tribunal was right in dismissing the appeal filed by the Revenue without considering it on the merits based on a departmental instruction setting a monetary limit for filing appeals.Analysis:The High Court of Madras, in a judgment delivered by Justice K. Raviraja Pandian, addressed the issue of whether the Tribunal's dismissal of the Revenue's appeal without considering it on the merits, in accordance with a departmental instruction setting a monetary limit for filing appeals, was correct. The Tribunal had dismissed the appeals based on Circular Instruction No. 1903 and Instruction No. 1777, which established a monetary limit of Rs. one lakh for filing appeals. However, the Court noted that Instruction No. 1979, dated March 27, 2000, mandated that adverse judgments relating to specific criteria should be contested irrespective of revenue effect. Importantly, this instruction came into force from April 1, 2000, while the assessment years in question predated this date. The Court highlighted that the application of the notification for dismissing the appeal was not legally sustainable due to the retrospective nature of the instruction's implementation.Furthermore, the Court emphasized that Instruction No. 1979 stipulated that appeals must be decided on their merits if they involve the Board's order, notification, instruction, or circular, regardless of the revenue effect. In this context, the Court found that the Tribunal erred in not considering the issue on its merits and instead dismissing the appeal based solely on the notification. Consequently, the Court set aside the Tribunal's orders and remanded the matters back to the Tribunal for a reevaluation of the appeals on their merits. The Court concluded the judgment by stating that no costs were to be imposed in this matter.