TaxTMI 
TaxTMI 
2017 (11) TMI 919
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....y us reads as under: "268A. Filing of appeal or application for reference by income-tax authority.- (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 any other assessment year; or (b) any other assessee for the same or any other assessment year. (3) Notwithstanding that no appeal or application for reference has been filed by an income-tax authority pursuant to the orders or instructions or directions issued under sub-section (1), it shall not be lawful for an assessee, being a party in any appeal ....
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....r income-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information; (b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income-tax authority, not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law; (c) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order for reasons to be specified therein, relax any requirement contained in any of the provisions of Chapter IV or Chapter VI-A, where the assessee has failed to comply with any requirement specified in....
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.... "disputed Issues"). However the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against. 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. ....
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....instruction may have to be produced in courts, the judicial folders in the office of CSIT must be maintained in a Systemic manner for easy retrieval. 8. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect. (a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department. 9. The proposal for filing Special Leave Petition under Article 136 of the Constitution before the Supreme Court should, in all cases, be sent to the Directorate of Income- tax (Legal & Research), New Delhi and the decision to file Special Leave Petition shall be in consultation with the Ministry of Law and Justice. 10. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income-tax, filing of appeals in other direct tax matters shal....
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....e tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as "disputed issues"). However the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against. 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. lf, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in r....
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....ce should be drawn that the decisions rendered therein were acceptable to the Department. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any precedent value. As the evidence of not filing appeal due to this instruction may have to Page 2 of 4 be produced in courts, the judicial folders in the office of CSIT must be maintained in a systemic manner for easy retrieval. 8. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: (a) Where the Constitutional validity of the provision under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign assets/ bank accounts. 9. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax ....
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....voidance or reduction of the liability of assessee to tax on capital gains. In view of these conditions, this provision has a limited operation and does not apply to other cases where the tax liability on capital gains arising on transfer of capital assets between parties not connected with each other, is sought to be avoided or reduced by an under-statement of the consideration paid for the transfer of the asset. The circular also drew the attention of Income- tax Authorities to the assurance given by the Finance Minister in his speech that Sub-section (2) was not aimed at perfectly honest and bonafide transactions where the consideration in respect of the transfer was correctly disclosed or declared by the assessee, but was intended to deal only with cases where the consideration for the transfer was under-stated by the assessee and was shown at a lesser figure than that actually received by him. It appears that despite this circular, the Income-tax Authorities in several cases levied tax by invoking the provision in Sub-section (2) even in cases where the transaction was perfectly, honest and bonafide and there was no under-statement of the consideration. This ....
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....highly persuasive." The validity of this rule was also recognised in Baleshwar Bagarti v. Bhagirathi Dass ILR 35 Cal. 701 where Mookerjee, J. stated the rule in these terms: It is a well-settled principle of interpretation that courts in construing a statute will give much weight to the interpretation put upon it, at the time of its enactment and since, by those whose duty it has been to construe, execute and apply it. and this statement of the rule was quoted with approval by this Court in Deshbandhu Guptu & Co. v. Delhi Stock Exchange Association Ltd. [1979]3SCR373 . It is clear from these two circulars that the Central Board of Direct Taxes, which is the highest authority entrusted with the execution of the provisions of the Act, understood Sub-section (2) as limited to cases where the consideration for the transfer has been under-stated by the assessee and this must be regarded as a strong circumstance supporting the construction which we are placing on that sub-section. 12. But the construction which is commending itself to us does not rest merely on the principle of contemporanea exposition. The two circulars of the Central Board of Direct Taxes to ....
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....lly have attracted the stringent provisions of Section 12(1B) as it was introduced in 1955, were substantially granted exemption from the operation of the said provisions by making it clear to all the companies and their shareholders that if the past loans were genuinely refunded to the companies they would not be taken into account under Section 12(1B)" Sections 2(6A)(e) and 12(1B) did not suffer from the vice of unconstitutionality. This decision was followed in Ellerman Lives case (supra) where referring to another circular issued by the Central Board of Revenue under Section 5(8) of the Indian Income Tax Act 1922 on which reliance was placed on behalf of the assessee, this Court observed: Now, coming to the question as to the effect of instructions issued under Section 5(8) of the Act, this Court observed in Navnit Lal C. Jhaveri v. K.K. Shah Appellate Assistant Commissioner, Bombay. It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under Section 5(8) of the Act. This circular pointed out to all the officers that it was likely that some of the compani....
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....ecutive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law. 7. As noted in the order of reference the correct position vis-à-vis the observations in para 11 of Dhiren Chemical's case (supra) has been stated in Kalyani's case (supra). If the submissions of learned Counsel for the assessee are accepted, it would mean that there is no scope for filing an appeal. In that case, there is no question of a decision of this Court on the point being rendered. Obviously, the assessee will not file an appeal questioning the view expressed vis- a-vis the circular. It has to be the revenue authority who has to question that. To lay content with the circular would mean that the valuable right of challenge would be denied to him and there would be no scope for adjudication by the High Court or the Supreme Court. That would be against very concept of majesty of law declared by this Court and the binding effect in terms of Article 141 of the Constitution. (iii) Kalyani Packaging Industry vs. Union of India (UOI) (06.05.2004 - SC), (2004) 6 SCC 719 4. This Court has, in the case of Collector ....
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....ady been granted, the Revenue would remain bound. The purpose was to see that such cases were not reopened. However, this did not mean that even in cases where Revenue/Department had already contended that the benefit of an exemption Notification was not available, and the matter was sub-judice before a Court or a Tribunal, the Court or Tribunal would also give effect to circulars of the Board in preference to a decision of the Constitution Bench of this Court. Where as a result of dispute the matter is sub-judice a Court/Tribunal is, after Dhiren Chemical's case, bound to interpret as set out in that judgment. To hold otherwise and to interpret in the manner suggested would mean that Courts/Tribunals have to ignore a judgment of this Court and follow circulars of the Board. That was not what was meant by Para 9 of Dhiren Chemical's case. (iv) Commissioner of Income Tax (CNTL), Ludhiana vs. Hero Cycles Pvt. Ltd., Ludhiana (28.08.1997 - SC) [1997] 228 ITR 463 (SC). 13. We have passed similar orders in a large number of cases but in this case on behalf of the assessee it has been contended that there is a circular issued by Central Board of Direct Taxes, New....
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....the Act but only for giving effect to the provisions of the Act. Since the goods manufactured by the appellant are different and distinct goods from cast iron, their sale attracts the levy created by the Act. In such a case, the government can not say, in exercise of its power under Section 42(2) that the levy created by the Act shall not be effective or operative. In other words, the said power cannot be utilised for dispensing with the levy created by the Act, over a class of goods or a class of persons, as the case may be. For doing that, the power of exemption conferred by Section 9 of the A.P. Act has to be exercised. Though it is not argued before us, we tried to see the possibility but we find it difficult to relate the order in G.O. Ms. 383 to the power of the Government under Section 9, apart from the fact that the nature and character of the power under Section 42 is different from the one conferred by Section 9. As exemption under Section 9 has to be granted not only by a notification, it is also required to be published in the Andhra Pradesh Gazette. It is not suggested, nor is it brought to our notice, that G.O. Ms. 383 was published in the Andhra Pradesh Gazette. This....
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...., M/s Garment Cradts in DB ITA No.42/2008 decided on 12.01.2016 held that if a substantial question is covered by the judgment of the Apex Court and this Court and is no more res integra then the circular of Central Board of Direct Taxes about tax effect may not be binding to non-suit the Revenue. (iii) CIT vs. M/s Gad Fashion, DB ITA No. 937/2008 decided on 26.04.2016 7. Insofar as the argument of the learned counsel for the assessee about the appeals involving tax effect being less than Rs. 20 lac is concerned, this bCOurt in Garment Crafts (supra) and M/s Saraf Exports (supra), has already taken a view that if an issue/question issqarely covered by judgment of the Apex Court and of this Court directly, then the Circular is inapplicable. Accordingly the argument of the learned counsel for the assessee in this regard is also rejected. Taking into consideration the above judgments, the question of law is answered in favour of the Revenue and against the assessee. 7. Mr. Anuroop Singhi appearing for the Department has relied upon the following decisions: (i) CIT vs. Udaipur Mineral Development Syndicate (P) Ltd.,DB ITR No. 32/1995, decided on 12.11.2014....
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....om the view of the Bombay High Court and observed that the object of section 268A is to govern monetary limit for filing of the appeals and there is no scope of reaching the circular as being applicable to pending appeals. It further expressed that even Bombay High Court held that the circular was not retrospective and it only observed that having regard to the falling money value and chocking court docket, policy of monetary limit was needed to be adopted for pending matters. 16. The Hon'ble Apex Court, in the case of CIT v. Surya Herbal Ltd: [2013] 350 ITR300 has expressed that the circular dt. 09/02/2011 issued by the Board should not be applied ipso facto, though it also observed that when the matter has a cascading effect in which a common principle may be involved in a subsequent group of matters or a large number of matters. In such cases if the attention of the High Court is drawn, the High Court will not apply the circular ipso facto for the purpose. 17. Thus, we are of the view that once reference has been admitted by this Court u/s256(1) or 256(2), then the matter cannot be disposed off merely because the tax effect is minimal. We dissent with....
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....d the initiative undertaken by the Government of India to frame the National Litigation Policy with a view to ensure conduct of responsible litigation by the Central Government and urges every State Government to evolve similar policies. The National Litigation Policy is as follows: The Vision/Mission 1. The National Litigation Policy is based on the recognition that the Government and its various agencies are the pre-dominant litigants in courts and Tribunals in the country. Its aim is to transform the Government into an efficient and responsible litigant. This policy is also based on the recognition that it is the responsibility of the Government to protect the rights of citizens, to respect fundamental rights and those in charge of the conduct of the Government litigation should never forget this basic principle. "Efficient litigant" means Focusing on the core issues involved in the litigation and addressing them squarely. Managing and conducting litigation in a cohesive, co-ordinated and time-bound manner. Ensuring that good cases are won and bad cases are not needlessly persevered with. A litigant who is r....
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....cers. Review of pending cases (A) All pending cases involving the Government will be reviewed. This due diligence process shall involve drawing upon statistics of all pending matters which shall be provided for by all Government departments (including public sector undertakings). The Office of the Attorney General and the Solicitor General shall also be responsible for reviewing all pending cases and filtering frivolous and vexatious matters from the meritorious ones. (B) Cases will be grouped and categorized. The practice of grouping should be introduced whereby cases should be assigned a particular number of identity according to the subject and statute involved. In fact, further sub-grouping will also be attempted. To facilitate this process, standard forms must be devised which lawyers have to fill up at the time of filing of cases. Panels will be set up to implement categorization, review such cases to identify cases which can be withdrawn. These include cases which are covered by decisions of courts and cases which are found without merit withdrawn. This must be done in a time bound fashion." 6. This policy was formulated with the purpose t....
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.... case of- (a) the same assessee for any other assessment year; or (b) any other assessee for the same or any other assessment year. (3) Notwithstanding that no appeal or application for reference has been filed by an income-tax authority pursuant to the orders or instructions or directions issued under sub-section (1), it shall not be lawful for an assessee, being a party in any appeal or reference, to contend that the income- tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case. (4) The Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to the orders, instructions or directions issued under subsection (1) and the circumstances under which such appeal or application for reference was filed or not filed in respect of any case. (5) Every order, instruction or direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub-section (1) and the provisions of sub-sections (2), (3) and (4) shall apply accordingly." 12. Su....
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....ll decide the appeal or the reference on the merits of the issue under consideration. It is also proposed to provide that every order or instruction or direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub-section (1) and the provisions of sub-sections (2), (3) and (4) shall apply accordingly. This amendment will take effect retrospectively from 1st April, 1999." 15. Numerous rules of interpretation have been formulated by courts. If a statutory provision is open to more than one interpretation, the Court has to choose that interpretation which represents the true intention of the legislature. The duty of the Court is to expound and not to legislate. However, at times, there is a marginal area in which the Court could mould or creatively interpret legislation. The Court in such a situation are called refiners or polishers of legislation. At times there are gaps in the legislation and Courts are called upon to fill in the gaps. Lord Due Parco in Cutler Vs. Wandsworth Stadium Ltd. (1949) 1 All ER 544 was of the view that in some cases it becomes nec....
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....tisfied unless the question of law involved or raised in appeal or referred to the High Court for opinion was of a recurring nature requiring it to be settled by the High Court. 35. The legislature in its wisdom clearly desired to give effect to all instructions issued on the subject of monetary limits for regulating filing of appeals retrospectively. Accordingly, all instructions laying down monetary limits for filing appeals issued on or after 1st April, 1999 by a deeming fiction has to be treated as having been issued under Section 268(1) of the Act. 36. The contention of the department that Section 260A of the Act authorises the department to prefer an appeal to the High Court from every order passed in appeal by the appellate authority subject to the condition that the department should satisfy the High Court that the case involves a substantial question of law and, consequently, this substantive right cannot be curtailed by the provision of Section 268A of the Act or by the instructions issued by the CBDT under Section 119 of the Act cannot be accepted. At the outset, the instructions issued by the CBDT are binding on the department. Prior to the intro....
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....of 2011 had not kept in mind the object and intention sought to be achieved by the National Litigation Policy and, in order to bring harmony with the National Litigation Policy, we are of the opinion that the Instruction No. 3 of 2011 would also apply to pending appeals in various Courts or Tribunals unless it is pointed out by the department that the appeal would have a cascading effect in other assessment years of the assessee or that it is within the exception provided in the instructions that was issued at the time when the appeal was presented." (ii) CIT, Tamil Nadu-IV, MADras vs. G.K.Enterprises,(2016) 73 Taxmann.com 56 (Madras) "6. It is appropriate to notice that the Central Board of Direct Taxes has issued the instructions contained in the said Circular in exercise of its power available to it under Section 268A(i) of the Income-tax Act, 1961 and hence, the Circular has statutorily enforceable character. In that view of the matter, we treat this appeal as not pressed and dismiss it as such. However, it goes without saying that the questions of law raised in this appeal for consideration of this Court in this appeal, are kept open to be decided on merits i....
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....No. 5 of 2008, dated 15-5-2008, imposes a monetary limit of Rs. 4,00,000 for preferring an appeal under section 260A of the Act nor is it in dispute before us that the net tax effect in the case at hand, is less than Rs. 4,00,000. It is also not in question before us in view of a catena of decisions of the Supreme Court on the issue, that the instructions issued by the Central Board of Direct Taxes, are binding on the Revenue except where (a) the constitutional validity of the provisions of an Act or Rule is under challenge; (b) the Boards order, notification, instruction or circular has been held to be illegal or ultra vires; and (c) a Revenue audit objection in the case has been accepted by the Department. 13. Though what has been indicated above is sufficient to dispose of the present appeal as not maintainable inasmuch as the appeal runs counter to the instructions, which have been issued by the Central Board of Direct Taxes, we deem it appropriate to point out that section 268A has been inserted in the Act, with effect from 1-4-1999, by the Finance Bill, 2008. The Memorandum Explaining the Provisions of the Finance Bill, 2008, while highlighting the underlying object ....
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....n to the Department to move the High Court pointing out that the Circular dated February 9, 2011, should not be applied ipso facto, particularly, when the matter has a cascading effect. There are cases under the Income-tax Act, 1961, in which a common principle may be involved in subsequent group of matters or large number of matters. In our view, in such cases, if attention of the High Court is drawn, the High Court will not apply the Circular ipso facto. For that purpose, liberty is granted to the Department to move the High Court in two weeks." (v) Commissioner of Income Tax vs. Camco Colour Co. (26.11.2001 - BOMHC) [2002] 254 ITR 565 3. The issue in the present case being one of some potential general significance in relation to the policy decision taken by the Board not to raise questions of law where the effect is less than the amount prescribed in the instructions issued by the Central Board of Direct Taxes with a view to reduce litigations before the High Courts and the Supreme Court, we propose to dispose of this appeal on this short contention canvassed by learned counsel for the respondent without examining the merits of the question of law sought to be....
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....curities took place on February 1, 2000, therefore, the said investment was within one year prior to the date of transfer of the long-term capital asset. In view of the said fact, it was held that the assessee was fully eligible for the benefit of Section 54F of the Act. Though the Income Tax Appellate Tribunal has deleted the addition on the basis of the above-said finding of fact, yet, in our opinion, the dispute arises in this appeal is not of recurring nature. Even if it is taken that the alleged substantial question of law raised in this appeal is of recurring nature, in our opinion, the Revenue cannot maintain the instant appeal in view of Circular No. 5 of 2008 issued by the Central Board of Direct Taxes, as the cumulative tax effect involved, in this appeal is less than Rs. 4 lakhs. In CIT v. Oscar Laboratories P. Ltd. [2010] 324 ITR 115 (P & H), it was held that the Instructions/Circulars issued by the Central Board of Direct Taxes laying down monetary limits for filing of appeals are mandatory and binding on the Revenue. The contention of the learned Counsel for the Revenue that Circular No. 5 of 2008 is not applicable on the appeals filed prior to May 15, 2008, cannot be....
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....ffect less than Rs. 4 lakhs notwithstanding the issue being of recurring nature. The aforesaid paragraph (5) was a subject- matter of the judicial interpretation in the case of CIT v. Polycott Corporation in Income Tax Appeal No. 1241 of 2008 decided on January 23, 2009, (since reported in [2009] 318 ITR 144 (Bom) wherein this Court ruled as under (page 146): It would be clear from the above that if in the case of an assessee if the disputed issues arise in more than one assessment year, appeals are to be filed only in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in paragraph 3. In other words, even if in respect of the same issue in respect of the same assessee for other assessment years the monetary limit is not more than Rs. 4 lakhs, appeals need not be filed. Paragraph 6 makes it clear that in such a case if an appeal is not filed, there will be no presumption that the Income Tax Department has acquiesced in the decision on the disputed issues. The aforesaid judicial verdict makes it clear that the Circular dated May 15, 2008, in general and paragraph (5) thereof in part....
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....e Department to examine all appeals pending before this Court on case to case basis with further direction to withdraw cases wherein the criteria of monetary limits as per the prevailing instruction is not satisfied, unless the question of law involved or raised in appeal or referred to the High Court for opinion is of a recurring nature required to be settled by the higher court. The aforesaid Circular makes it clear that on the date of issuance of Circular, prevailing instructions fixing monetary limit will hold good even for pending cases. Adopting the same approach, we are of the considered view that the Central Board of Direct Taxes Circular dated May 15, 2008, would be very much applicable to the pending cases requiring the Department to withdraw cases wherein the tax effect is less than the prescribed monetary limits. At this juncture, it will also be relevant to mention that it was necessary for the Central Board of Direct Taxes to put a caveat, while issuing instructions, vide its Circular dated June 5, 2007, that the appeals involving substantial question of law of recurring nature should not be withdrawn since provision like Section 268A of the Income T....
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.... CIT v. Pithwa Engg. Works [2005]276ITR519(Bom) and held that it is not open for the Department to contend that this circular is binding only with respect to the new cases and not with respect to the old cases even if the tax is less than Rs. 2 lakhs. The same policy for old matters needs to be adopted by the Department. 5. The above instructions dt. 27th March, 2000, reflects the policy decision taken by the Board not to raise questions of law where the tax effect is less than the amount prescribed in the instructions with a view to reduce litigations before High Courts and Supreme Court. The circular is binding on the Revenue. There is no justification to proceed with the appeal having tax effect less than Rs. 7,000. 6. We, thus, do not think it necessary to entertain this appeal and answer the question raised by the appellant-Revenue. Accordingly, appeal stands dismissed with no order as to costs." (ix) CIT vs. Paramount Guest House & Resort Ltd., [2013] 38 taxmann.com 262 (Allahabad) "5. We find that under Section 268A of the Act which has been inserted with retrospective effect from 1.04.1999 the Board has power to issue circular regarding f....
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....p; following the circular. The similar view was taken by the Division Bench of the High Court of Madhya Pradesh in the case of Asst. CIT v. Aradhana Oil Mills [2002] 30 ITC 446 and following the circular of the Central Board of Direct Taxes, the appeal was dismissed. 6. In Ashok Manibhai Patel (supra) another Division Bench has also taken similar view. Justice Dipak Misra, as his Lordship then was, speaking for the Bench held thus:- 11. The factual scenario can be perceived from another aspect. Submission of Mr. A.K. Shrivastava, learned counsel for the respondent is that the tax impact is Rs. 52,565 and, therefore, as per the circular of the Central Board of Direct Taxes the reference need not be adverted to. A Division Bench of the High Court of Bombay in the case of CIT v. Pithwa Engg. Works[2005] 276 ITR 519 (Bom) in paragraph 6 expressed the view as under (page 520): 'This court can very well take judicial notice of the fact that by passage of time money value has gone down, the cost of litigation expenses has gone up, the assessees on the file of Department has also increased to a tremendous extent. The corridors of the superior courts are....
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....down, cost of litigation expenses has gone up, the assessees on the file of the departments have increased; consequently, burden on the department has also increased to a tremendous extent. The corridors of the superior courts are chocked with huge pendency of cases. In this view of the matter, the Board has rightly taken decision not to file references if the tax effect less than Rs. 2 lakhs. The same policy for old matters needs to be adopted by the department. In our view, the Board's circular dated 27th March, 2000 is very much applicable even to the old references which are still undecided. The department is not justified in proceeding with the old references wherein the tax impact is minimal. Thus, there is no justification to proceed with the decades old references having negligible tax effect. 8. The aforesaid judgments specifically lays down that any appeal, if tax effect less then Rs. 2 lakhs, could not have been filed by the Department. 9. From the perusal of the instructions issued by the Board, we find that the Board had issued directions that the appeals will be filed only in cases where the tax effect exceeds Rs. 2 lakhs in the matter of High Co....
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....sed following the circular. The similar view was taken by the Division Bench of the High Court of Madhya Pradesh in the case of Asst. CIT v. Aradhana Oil Mills [2002] 30 ITC 446 and following the circular of the Central Board of Direct Taxes, the appeal was dismissed. 6. In Ashok Manibhai Patel (supra) another Division Bench has also taken similar view. Justice Dipak Misra, as his Lordship then was, speaking for the Bench held thus:- 11. The factual scenario can be perceived from another aspect. Submission of Mr. A.K. Shrivastava, learned counsel for the respondent is that the tax impact is Rs. 52,565 and, therefore, as per the circular of the Central Board of Direct Taxes the reference need not be adverted to. A Division Bench of the High Court of Bombay in the case of CIT v. Pithwa Engg. Works [2005] 276 ITR 519 (Bom) in paragraph 6 expressed the view as under (page 520): 'This court can very well take judicial notice of the fact that by passage of time money value has gone down, the cost of litigation expenses has gone up, the assessees on the file of Department has also increased to a tremendous extent. The corridors of the superior courts are cho....
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....value has gone down, cost of litigation expenses has gone up, the assessees on the file of the departments have increased; consequently, burden on the department has also increased to a tremendous extent. The corridors of the superior courts are chocked with huge pendency of cases. In this view of the matter, the Board has rightly taken decision not to file references if the tax effect less than Rs. 2 lakhs. The same policy for old matters needs to be adopted by the department. In our view, the Board's circular dated 27th March, 2000 is very much applicable even to the old references which are still undecided. The department is not justified in proceeding with the old references wherein the tax impact is minimal. Thus, there is no justification to proceed with the decades old references having negligible tax effect. 8. The aforesaid judgments specifically lays down that any appeal, if tax effect less then Rs. 2 lakhs, could not have been filed by the Department. 9. From the perusal of the instructions issued by the Board, we find that the Board had issued directions that the appeals will be filed only in cases where the tax effect exceeds Rs. 2 lakhs in the ma....
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....ar will not be considered by the Courts and the Division Bench of the Bombay High Court was satisfied that the Board has taken a policy decision not to file appeal in a type of case in hand and the same is binding on the Revenue and in the result the appeal was dismissed following the circular. The similar view was taken by the Division Bench of the High Court of Madhya Pradesh in; the case of Asstt. CIT v. Aradhana Oil Mills (2002) 30 ITC 446 (MP) and following the circular of CBDT, the appeal was dismissed. 5. We may point out that the circular issued by the CBDT as referred to above carves out only one exception with regard to the permissibility of filing of appeals, etc., notwithstanding the embargo contained in the circular of the monetary limit. It is only in cases involving substantial question of law of importance as well as cases where the same question of law will repeatedly arise either in the case concerned or in similar cases that the Department will not be hindered by the monetary limits. The question, therefore, arises as to whether the Department can be left at l....
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....inciples laid down by all these decisions are: (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show-cause notice and demand contrary to existing circulars of the Board are ab initio bad. (4) It is open to the Revenue to advance an argument or file an appeal contrary to the circulars. (xiv) The Commissioner of Income Tax vs. Ranka and Ranka (02.11.2011 - KARHC), [2013] 352 ITR 121 (Karnataka) 18. The circular No. 1/2009 dated 27.03.2009 states that there is a prescribed dispute resolution mechanism in the Income Tax Act. In this regard the Central Board of Tax cases has issued instructions from time to time directing the departmental officers not to file appeals if the tax effect is less than the....
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....ctions issued under sub-section (1) and the circumstances under which such appeal or application for reference was filed or not filed in respect of any case. (5) Every order, instruction or direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub-section (1) and the provisions of sub-sections (2), (3) and (4) shall apply accordingly. 19. In the case of CIT Vs. OSCAR LABORATIES P. LTD (STR VOL 324 Pg. 115 at 144) the Punjab and Haryana High Court has referred to the objects for enacting Section 268A of the Act, which reads as under: 36. Aimed at alleviating and remedying the aforesaid predicament of the Revenue, the Finance Act, 2008, inserted section 268A into the 1961 Act This conclusion of ours is clearly derivable from the objects recorded in the Bill introduced in Parliament for the promulgation of the Finance Act, 2008. An extract of the objects recorded in the Bill pertaining to the insertion of section 268A into the 1961 Act, is reproduced hereunder: (2008) 298 ITR(st) 170 The proposed section seeks to provide that the Board may, from....
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.... "Under Section 268A(1) of the Income Tax Act, 1961, the Central Board of Direct Taxes has been authorised to issue orders, instructions or directions to the income-tax authorities, laying down monetary limits for purposes of filing appeals. As a consequence of the insertion of section 268A in the Act orders, instructions or direction issued on the subject of monetary limits for filing appeals must be deemed to have attained statutory status. There can be no dispute that every requirement under the mandate of law, leads to a consequential statutory obligation to comply with the requirement. Subsection (5) of Section 268A mandates that instructions, orders or directions, even issued earlier, i.e., prior to the insertion of section 268A in the 1961 Act, by the Finance Act, 2008, fixing monetary limits for filing of appeals, shall be deemed to have been issued under sub-section (1) of section 268A of the 1961 Act. This conclusion emerges from the fact that section 268A of the 1961 Act was introduced with retrospective effect from April 1, 1999. Accordingly, instructions, orders or directions issued even prior to the insertion of section 268A of the 1961 Act must be deemed to....
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....hat in the pending appeals, where constitutional validity of the provisions of the Act or Rule are under challenge, or where Board's order, notification, instruction or circular has been held to be illegal or ultra vires or whether Revenue Audit Objection in the case has been accepted by the Department, notwithstanding the fact that the tax effect is less then the monetary limit fixed under the aforesaid circular, still it is open to the Department to request the Court to permit them to prosecute such appeals. Thus, the Department has to apply its mind in all the pending appeals and point out to the Court, which are those appeals in which they intend to prosecute. Therefore sufficient safeguards have been made to protect the interest of the public revenue. By this approach we would be saving the time of the Court, the time of the Department and public time in general and giving effect to the Nation Litigation Policy, 2011, so that it can be used for better and productive purpose. (xv) Commissioner of Income Tax vs. Ideal Garden Complex P. Ltd. (19.08.2008 - MADHC), [2008] 307 ITR 176 (Madras) 11. It may be noted that this court considered a similar issue in th....
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....missed. (xvi) CIT, Kolkata-I vs. Indo Tossa (P.) LTd., [2016] 66 taxmann.com 182 (Calcutta) 4. Since the tax effect in this appeal is Rs. 15,32,504/- and since the monetary limit of Rs. 20 lakhs is fixed for filing appeals before the High Court by the Department as per Circular which has been issued with retrospective effect and as Mr. Dudhoria submits that he has no written instruction from the Department for withdrawing this appeal, as the said Circular, in view of Section 119(1) is binding on the departmental authority, the appeal is treated to be dismissed as withdrawn. (xvii) Commissioner of Income Tax vs. Manbhar Devi Meena (04.05.2016 - RAJHC) [2016] 70 taxmann.com 275 (Rajasthan) A Circular No. 21/2015 has been issued by the Central Board of Direct Taxes dated 10.12.2015 in exercise of its power u/sec. 268A (1) of the Income-tax Act 1961 in supersession of the Boards Instruction No. 5/2014, Dt. 10.7.2014 regularising the monetary limits for filing the appeals by the Revenue before the Tribunal, High Courts and Apex Court with an object for reducing litigation. Relevant para Nos. 3, 8, 9 and 10 reads ad infra:-- "3. Henceforth, ap....
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....the tax effect even if is less than Rs. 20 lac, can be preferred in High Courts. 2. Taking note of the CBDT Circular Dt. 10/12/2015 and the tax effect which indisputably in the instant case is less than Rs. 20 lac, much less than what has been prescribed for filing appeal before the High Courts, deserves to be dismissed as not pressed. However, it is made clear that the substantial questions of law raised in the instant appeals, if any, are left open to be examined in an appropriate proceeding, if arises in future. At the same time we consider it appropriate to observe that if the appeal falls in any of the exceptions as referred to in the Circular Dt. 10/12/2015, the Revenue will be at liberty to move an application for recalling of the order if so advised." (xviii) Commissioner of Income Tax vs. Garment Crafts and Ors. (12.01.2016 - RAJHC) ITA No. 42/2008 & Ors. "9. Counsels in some of the cases also contended that in few of the appeals preferred by the Revenue, the tax effect is less than Rs. 20 lac and therefore, in the light of the latest circular of the Central Board of Direct Taxes bearing No. 21/2005 dt. 10/12/2015, the board has instructed ....
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....bility and collection of taxes. Policy decisions have to be taken by the Government. However, the Government has to work through its senior officers in the matter of difficulties which the business may face, particularly in matters of tax administration. That is where the role of the Board of Revenue comes into play. The said Board takes administrative decisions, which includes the authority to grant Administrative Reliefs. This is the underlying reason for empowering the Board to issue orders, instructions and directions to the officers under it. (ii) 2004(10) SCC 1, Union of India & Anr. vs. Azadi Bachao Andolan & Anr. (07.10.2003 - SC) "47. It was contended successfully before the High Court that the circular is ultra vires the provisions of section 119. Sub-section (1) of section 119 is deliberately worded in general manner so that the Central Board of Direct Taxes is enabled to issue appropriate orders, instruction or direction to the subordinate authorities "as it may deem fit for the proper administration of the Act". As long as the circular emanates from the Central Board of Direct Taxes and contains orders, instructions or directions pertaining to....
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....neral to get this case referred to a larger Bench. We do not accept this contention in view of a number of decisions and especially the Constitution Bench decision in Dhiren Chemical Industries- (2002)2 SCC 127." 10. The provisions which are important are as under: 10.1 Article 141 of the Constitution of India 141. Law declared by Supreme Court to be binding on all courts The law declared by the Supreme Court shall be binding on all courts within the territory of India 10.2 Section 263 of the Income Tax Act 263. Revision of orders prejudicial to revenue (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the 2 Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he, may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. 3Explanation.- For the removal ....
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....f the assessee, shall not be made under this section unless the authority concerned has given notice to the assessee of its intention so to do and has allowed the assessee a reasonable opportunity of being heard. (4) Where an amendment is made under this section, an order shall be passed in writing by the income-tax authority concerned. (5) Subject to the provisions of section 241, where any such amendment has the effect of reducing the assessment, the Assessing Officer shall make any refund which may be due to such assessee. (6) Where any such amendment has the effect of enhancing the assessment or reducing a refund already made, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be issued under section 156 and the provisions of this Act shall apply accordingly. (7) Save as otherwise provided in section 155 or sub-section (4) of section 186 no amendment under this section shall be made after the expiry of four years [from the end of the financial year in which the order sought to be amended was passed. (8) Without prejudice ....
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....Workshop on 23.12.2001, Mr. Justice S.P. Bharucha (the then Chief Justice of India), made the following statement: "The principle cause of arrears in the courts does not lay with the Judges or the Bar but with the State Governments. Fast Track Courts or amendments to the Civil and Criminal Procedure Code were of no real cure to the problem unless the Governments acted responsibly." 12. In view of the contentions which have been raised by learned counsel for the parties, an apprehension which has been put forward by the Department that in spite of Supreme Court decision the authority may take contrary view. In that view of the matter, the appeal may be allowed to be filed irrespective of monetary limit. 12.1. In our considered opinion, the intention is not to allow to file appeal up to the monetary limit fixed by the Board which has statutory force and apprehension is misconceived in view of observation made in para 21. 13. We have also heard learned counsel for the parties on the issue. 14. To give a comparison of Clause 11 of the Instruction No.3/2011 issued in reference to Board's Instruction No.5/2008 dated 15.5.2008 and Clause 10 of Circular No.21/2015 date....
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....rence has been filed by an income tax authority pursuant to the above mentioned orders/ instructions/ directions of the Board, it shall not be lawful for an assessee to contend that the income tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case. The Appellate Tribunal or Court shall have regard to the above mentioned orders/ instructions/directions of the Board and the circumstances under which such appeal or application for reference was filed or no filed in respect of any case. Every order/instruction/direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub-section (1) of this new section and all the provisions of this section shall apply to such order/instruction/direction. Applicability: This amendment has been made applicable with retrospective effect from 1st April, 1999." 17. From the policy which has been referred by different High Courts and the intention of the legislation to reduce the pendency of the tax appeal and to have a uniform policy for the departmen....
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....he circular of the CBDT is binding on the subordinate officers. Per Hon'ble M.N. Bhandari, J. 24. The issue for our consideration is as to whether the Department can act contrary to the Circular issued by the Central Board of Direct Taxes (for short "the CBDT") in pursuance of Section 268A of the Income Tax Act, 1961 (for short "the Act of 1961"). 25. It is admitted by learned counsel for the parties that the Department cannot act contrary to the Circular issued by the CBDT for reduction of arrears of the cases in different courts. It is more specifically after amendment in Section 268A of the Act of 1961. It is, however, urged by learned counsel appearing for the Department that if the Tribunal takes a view contrary to the judgments of the Apex Court then the appeal should be held maintainable irrespective of value of the tax effect. 26. Learned counsel appearing for the Department submits that Article 141 of the Constitution of India provides law declared by the Supreme Court to be binding on all the Courts within the territory of India. In a case where ratio propounded by the Supreme Court is not followed then irrespective of value of tax effect, appeal should be hel....