CBDT monetary-limit rules bar low-tax-effect departmental appeals, while a registered firm's status must continue absent any change in constitution.

CBDT monetary-limit instructions for departmental appeals are binding on income-tax authorities under section 119, so appeals filed below the prescribed tax effect are not maintainable and must be dismissed. The commentary also states that where a partnership is evidenced by an instrument and partners' shares are specified, the assessee is to be treated as a firm; in the absence of any change in constitution or profit-sharing ratio, section 184(3) requires the same status to continue in later years, and the assessment status cannot be altered to an association of persons.

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Issues: (i) Whether the revenue appeals were maintainable in view of the CBDT's monetary limit for filing departmental appeals. (ii) Whether, on merits, the assessee was entitled to be assessed as a firm and not as an association of persons, in the absence of any change in the constitution of the firm or the partners' shares.

Issue (i): Whether the revenue appeals were maintainable in view of the CBDT's monetary limit for filing departmental appeals.

Analysis: The appeals involved tax effect below the prescribed monetary limit. The applicable CBDT instructions, issued under section 119, were treated as binding on the income-tax authorities and were intended to prevent avoidable litigation and arbitrary pick-and-choose appeals. On that basis, filing the appeals contrary to the monetary policy was impermissible.

Conclusion: The appeals were not maintainable and were liable to be dismissed as unadmitted.

Issue (ii): Whether, on merits, the assessee was entitled to be assessed as a firm and not as an association of persons, in the absence of any change in the constitution of the firm or the partners' shares.

Analysis: Under the amended scheme of section 184, where the partnership is evidenced by an instrument and the individual shares are specified, the assessee is to be treated as a firm. Once a firm is assessed as such, section 184(3) requires it to be assessed in the same capacity in subsequent years unless there is a change in constitution or profit-sharing ratio. As no such change was shown, the Assessing Officer had no power to alter the status to an association of persons, and the earlier assessment status could not be unsettled in the subsequent years.

Conclusion: The assessee was entitled to continued assessment as a firm and not as an association of persons.

Final Conclusion: The departmental appeals failed both on maintainability and on the substantive issue regarding the assessee's status, and therefore stood dismissed.

Ratio Decidendi: CBDT instructions prescribing monetary limits for departmental appeals are binding on income-tax authorities under section 119, and where a firm has been assessed as such without any change in its constitution or partners' shares, section 184(3) mandates assessment in the same capacity in subsequent years.

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