TaxTMI 
TaxTMI 
2012 (10) TMI 149
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....unsel for the assessee at the outset raised a preliminary objection of the maintainability of the appeal on the ground that the tax effect involved is less than the minimum threshold limit provided by the CBDT in its instructions dated 9.2.2011. 4. The precise contention of the counsel for the assessee was that though at the time of filing of the appeal the limits prescribed by the Board in its instructions of 2008 applied and as per such provisions, the appeal was then maintainable, the revised limits contained in the instructions of 2011 should be applied when the appeal is taken up for hearing. Counsel for the assessee in fact contended that such limit would apply to all pending cases irrespective of the date of filing. In short, contention of the counsel was that instructions of 2011 would govern maintainability of all pending appeals of the Revenue. 4.1 For the purpose of above contention, counsel placed heavy reliance on a recent decision of Division Bench of this Court dated 24.08.2012 in case of the Commissioner of Income-tax v. Sureshchandra Durgaprasad Khatod (HUF) in Tax Appeal No. 1404/2010. In such decision, the counsel pointed out that this Court relying on deci....
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....ding that the instructions would apply prospectively and not to pending cases filed before the instructions were issued, were not noticed by this Court in case of Sureshchandra Durgaprasad Khatod (HUF) (supra). Counsel therefore, submitted that decision in the said case requires reconsideration. 6. We may notice that the legislature introduced section 268A in the Act through the Finance Act of 2008, however, with retrospective effect from 1.4.1999. Section 268A reads as under : "268A. (1) The Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal or application for reference by any income-tax authority under the provisions of this Chapter. (2) Where, in pursuance of the orders, instructions or directions issued under sub-section (1), an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of - (a) the same assessee for an....
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....reme Court. Paragraph 3 of the instructions however, provided for four exceptions where adverse judgments should be contested irrespective of revenue effect. It was provided that the instructions shall come into effect from 1.4.2000. (B) Such limits were revised to Rs. 2 lacs, Rs. 4 lacs and Rs. 10 lacs respectively under the instructions of 24.10.2005. Para. 3 thereof once again provided for certain exceptions on the basis of which appeals could be presented irrespective of the monetary limits. (C) The next set of instructions came from the Board on 15.5.2008 in which though the monetary limits remained unchanged, certain other changes were made in earlier instructions. For the first time, the term "tax effect" was explained. Insofar as income tax is concerned, same would include only the tax without any computation of interest thereon. Paragraph 11 of the instructions provided as under: "11. This instructions will apply to appeals filed on or after May 15, 2008. However, the cases where appeals have been filed before May 15, 2008 will be governed by the instructions on this subject, operative at the time when such appeal was filed." This was a major depart....
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....e appeal was filed. The High Court held that the Tribunal therefore, committed an error in not considering the appeal on merit. (b) Full Bench of Punjab and Haryana High Court in case of Commissioner of Income-tax v. Varindera Construction Co. reported in [2011] 331 ITR 449 (P&H)(FB), considered a similar question of applicability of instructions of 2008. The Court held that the instructions laying down the monetary limits control the filing of the appeals and not hearing of the appeals. The appeals filed in accordance with the applicable limit at the time of filing cannot be governed by a circular applicable at the time of hearing. Such decision was rendered by the Full Bench in view of the reference made by the Division Bench finding it unable to agree to the view adopted in case of Commissioner of Income-tax v. Abhinash Gupta reported in [2010] 327 ITR 619 (P&H). The Full Bench of the High Court took note of decision of Bombay High Court in case of Madhukar K. Inamdar (HUF) (supra) but differed from the view of Bombay High Court making following observations : "10. After due consideration of rival contentions, we are in agreement with the contention raised on behalf ....
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.... vide circular dated 15th May, 2008 is prospective and it has no application whatsoever to any proceedings initiated before 15th May, 2008 and the same remain undecided and pending after 15th May, 2008." (d) Such issue once again came up before the Kerala High Court in case of Commissioner of Wealth-tax v. John L. Chackola reported in [2011] 337 ITR 385 (Ker), where also High Court was unable to adopt the view of Bombay High Court in case of Madhukar K. Inamdar (HUF) (supra). Referring to paragraph 11 of the instructions of 2008, the Court noted that such para specifically provided that maintainability of appeals prior to the date of instructions should be considered with reference to the instructions in force at the time of filing the appeals. In view of such language, the Court held that the case of the assessee would be governed by earlier instructions. 9. We are not oblivious to the counter view adopted by the Bombay High Court and certain other High Courts following the view of Bombay High Court in case of Madhukar K. Inamdar (HUF) (supra). (a) In case of Commissioner of Income-tax v. Pithwa Engg. Works reported in [2005] 276 ITR 519 (Bom), the Bombay High....
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....s and secondly that granting only prospective applicability of instructions would give rise to absurdity and Court would try to avoid any interpretation which leads to an absurd situation. With respect the question of interpretation of instructions which are other-wise not ambiguous on the basis of litigation policy, in our view, would not arise. Secondly, we are also of the view that prospective application of the instructions would not lead to any absurdity. If by applying the instructions prospectively, certain appeals would be decided on merits, because the appeals were filed prior to issuance of the new instructions, the same cannot be stated to be absurd. A counter situation also may arise if such instructions are applied with retrospective effect to all pending appeals whereby an appeal would be dismissed without examination on merits simply because the same survived for a longer period than the cognate appeals. 10. From the above, it can be seen that the various High Courts have taken a view that the instructions of 2011 cannot be applied to all pending appeals, particularly, having regard to the language used in paragraph 11 thereof. 11. We are of the opinion that....
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....cond ground of absurdity also cannot be accepted for two reasons. Firstly, we are unable to see any absurdity in applying the instructions with prospective effect. Instructions are issued by the Board from time to time providing monetary limits bearing in mind value of the currency. If certain appeals are entertained on merits because they were filed before long number of years, may be 10 years in a given case before the instructions of 2011 were issued as against the appeals which arise newly, we do not see any absurdity in such a situation. It may be that certain appeals may survive longer than others. By applying the instructions to all pending appeals in fact we would be dismissing the appeals which survived longer without entering into the merits as against other appeals which might have been already been decided on merits before the instructions of 2011 were issued. The so-called absurdity may arise in either case. In fact every government policy or change in policy would come with a cut-off date. Mere prescription of cut-off date is neither absurd nor discriminatory per-se. (4) Paragraph 11 of the instructions of 2011 is unambiguous and makes the instructions applicable o....