TaxTMI 
TaxTMI 
2007 (11) TMI 124
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....s of the present cases are Instruction No. 2 of 2005 issued on October 24, 2005. 3. The contention of Mr. N. R. Siva Swamy, learned counsel for the respondents, is that these instructions are enforceable by courts of law and if courts of law do not enforce them, then the instructions would become redundant and the Department can use the instructions with arbitrariness holding in some cases that appeals should be filed and holding in some cases that appeals should not be filed. These instructions, as a matter of fact, have been issued with a view to reduce the litigation at various fora where the amounts claimed by the Revenue do not exceed a particular limit. The instructions issued on March 27, 2000, laid down that appeal shall be filed only in cases where the tax effect exceed Rs. 1,00,000 if appeals were to be filed before the Appellate Tribunal and it should exceed Rs. 2,00,000 if appeals were to be filed before the High Court and it should exceed Rs. 5,00,000 if appeals were to be filed in the Supreme Court. These instructions were modified by Instruction No. 1985, dated June 29, 2000, clarifying certain aspects of the scheme, with which we will deal with later and on Octob....
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.... N. R. Siva Swamy submits that there is nothing on the record that these circulars were neither published nor were circulated for general information. As a matter of fact, all these circulars were publicly known to everybody and, therefore, they cannot be held to be non-enforceable as they were not published. In any case, there is no restriction imposed by section 119(2) of the Act that these circulars should be published in the Official Gazette. He also contends that if these instructions do not come under sections 119 and 120 of the Act, then there is no power with the Department to issue such instructions and these instructions, if held to be unenforceable, that will give power to the income-tax authorities to use these circulars selectively. In some cases, they will not file appeals on the ground that the tax effect does not exceed the monetary limit prescribed by the circular, but in some cases, the authority may decide to file appeals on the ground that the circulars were not enforceable. Such a situation could not be envisaged by the Board and cannot be permitted by the courts. Mr. S. R. Ashok, on the other hand, contends that the appeals can be filed under section 253 of th....
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...., there is a judgment of this High Court reported in CIT v. Andhra Pradesh State Road Transport Corporation [2006] 285 ITR147, where this court held (headnote): "The Department has no right to challenge a circular issued by the Board on any ground whatsoever, including the ground that it was inconsistent with the statutory provision." 9. Reliance has also been placed by Mr. Swamy on the judgment reported in Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC). While dealing with the powers of the Central Board of Direct Taxes, the Supreme court, in this judgment, considered the effect of circular under section 119 of the Act and was of the view (page 727): "Section 119, strategically placed in Chapter XIII which deals with "income-tax authorities" is an enabling power of the Central Board of Direct Taxes, which is recognised as an authority under the Income-tax Act under section 116(a). The Central Board of Direct Taxes under this section is empowered to issue such orders, instructions and directions to other income-tax authorities 'as it may deem fit for proper administration of this Act'. Such authorities and all other persons employed in the execution of....
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.... the other hand, submits that though the courts have consistently held that the instructions laid down by the Board are binding on the Department, but the question of enforceability of the circulars in question has come directly before various High Courts and there is a consistent view of various High Courts that these circulars do not take away the power of the Department to file appeals if the appeals do not fill up the monetary criteria laid down by those circulars. In this connection, he refers to a judgment of the Delhi High Court reported in CIT v. Blaze Advertising (Delhi) Pvt. Ltd. [2002] 255 ITR 460 (Delhi). This judgment was pronounced in altogether a different context where a circular was not in conformity with the judgment and, therefore, the Delhi High Court held, (page 466): "Circulars issued under section 119 of the Act stand on a different footing. The Supreme Court in UCO Bank's case [1999] 237 ITR 889 has held that circulars under section 119 are meant for ensuring proper administration of the statutes and mitigate rigours of the provisions of law. These circulars are binding and enforceable against the Revenue. However, when the Supreme Court or the ....
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....ported in Jugal Kishore Arora v. DCIT [2004] 269 ITR 133. This judgment has not dealt with the questions which have been raised during the arguments before this court. It is true that it was considering the effect of a circular which laid down that no appeal could be filed where the tax effect was not more than Rs. 1,00,000. But what the High Court said was (page 140) "AS regards the contention that the appeal should not have been entertained in view of the direction of the Central Board of Direct Taxes dated March 27, 2000, we are of the opinion that the instructions of the Central Board of Direct Taxes regarding filing of appeals are only internal matters of the Department. and the assessee cannot object to filing of an appeal despite such an instruction. The appeal is clearly maintainable before the Tribunal on behalf of the Department under section 253(2) of the Income-tax Act, and this right to file an appeal is a statutory right and cannot be taken away or prohibited by executive instructions." 17. We very respectfully do not agree with this view because of the reasons which have been mentioned by us earlier and also during the course of this judgment that if such an in....
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....t. 21. Mr. S. R. Ashok has also relied on a judgment of the Supreme Court reported in J. R. Raghupathy v. State of A.P., AIR 1988 SC 1681. This judgment is relied on for canvassing the principle of law that under article 226 of the Constitution, the High Courts could not issue writs to enforce administrative rules, regulations and instructions which have no statutory force. In the absence of exceptional circumstances, the Supreme Court held (page 1691) "It is well-settled that mandamus does not lie to enforce departmental manuals or instructions not having any statutory force, which do not give rise to any legal right in favour of the petitioner." 22. There is no quarrel with the principle laid down by the Supreme Court in this judgment, but, in the present cases, we are dealing with appeals and not exercising our power under article 226 of the Constitution and, secondly, on the facts, we have found that the circulars in question are statutory in nature and are issued by the Board in exercise of powers under section 119 of the Act. 23. Reference has also been made to a judgment of this court reported in G. Ramaswamy v. State of A. P. [1973] 32 STC 309 (AP) w....