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Issues Involved:
1. Binding nature of instructions issued by the CBDT on income-tax authorities. 2. Whether observations by the Punjab and Haryana High Court in the case of Rani Paliwal v. CIT form part of ratio decidendi. 3. Whether mistakes pointed out by the Revenue could be rectified under section 254(2) of the Income-tax Act. Detailed Analysis: 1. Binding Nature of Instructions Issued by the CBDT: The Tribunal examined whether the instructions issued by the Central Board of Direct Taxes (CBDT) are binding on income-tax authorities. The Tribunal concluded that both instructions under section 119(1) and circulars under section 119(2) of the Income-tax Act are binding on the income-tax authorities. This conclusion was drawn based on the statutory mandate in section 119, which requires all income-tax authorities to observe and follow such orders, instructions, and directions of the Board, except in cases where such instructions interfere with the discretion of the Commissioner (Appeals) or direct a particular assessment or case disposal. The Tribunal cited several judgments to support this conclusion, including: - Navnit Lal C. Javeri v. K. K. Sen, AAC of I. T. [1965] 56 ITR 198 - UCO Bank v. CIT [1999] 237 ITR 889 - Collector of Central Excise v. Dhiren Chemical Industries [2002] 254 ITR 554 (SC) - Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC) These judgments consistently held that instructions and circulars issued by the CBDT are binding on income-tax authorities. The Tribunal also referred to the commentary of Kanga, Palkhivala, and Vyas, which supported the view that instructions prescribing monetary limits for filing appeals are binding on income-tax authorities. 2. Observations by the Punjab and Haryana High Court in the Case of Rani Paliwal v. CIT: The Tribunal analyzed whether the observations made by the Punjab and Haryana High Court in the case of Rani Paliwal v. CIT [2004] 268 ITR 220 form part of the ratio decidendi and are binding. The High Court had observed that the Tribunal is not bound by the CBDT's instructions and must decide appeals on merits once filed. The Tribunal concluded that these observations were passing remarks and not part of the ratio decidendi. The High Court dismissed the appeal on the ground that no substantial question of law was involved and that the plea regarding tax effect was not raised before the Tribunal. The Tribunal emphasized that observations become part of ratio decidendi only if the parties are heard and their arguments considered. The Tribunal cited the judgment of the Supreme Court in the case of S. Shanmugavel Nadar v. State of Tamil Nadu [2003] 263 ITR 658, which held that a summary dismissal without laying down any law is not a declaration of law under Article 141 of the Constitution. 3. Rectification of Mistakes Under Section 254(2): The Tribunal examined whether the mistakes pointed out by the Revenue could be rectified under section 254(2) of the Income-tax Act. The Tribunal held that it has limited powers under section 254(2) to rectify mistakes that are obvious, patent, and glaring from the records. Issues involving prolonged discussions, arguments, or debatable points fall outside the purview of section 254(2). The Tribunal referred to several judgments to support this view, including: - T. S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC) - Hotz Hotels (P) Ltd. v. CIT [2001] 248 ITR 647 (Delhi) - Popular Engineering Co. v. ITAT [2001] 248 ITR 577 (P & H) - Smt. Baljeet Jolly v. CIT [2001] 250 ITR 113 (Delhi) These judgments consistently held that the Tribunal's power to rectify errors is limited to mistakes apparent from the record and does not extend to reviewing its own decisions. The Tribunal concluded that the view taken by the Amritsar Bench, relying on the CBDT's instructions, was a possible view and could not be substituted through a miscellaneous petition. Therefore, the issue of whether the instructions of the Board are binding or not and whether the appeals could be dismissed due to smallness of tax effect are highly debatable and fall outside the scope of rectification under section 254(2). Conclusion: The Tribunal held that the instructions issued by the CBDT, including those prescribing monetary limits for filing appeals, are binding on income-tax authorities. The observations made by the Punjab and Haryana High Court in the case of Rani Paliwal v. CIT were passing remarks and not binding. The Tribunal's powers under section 254(2) are limited to rectifying mistakes apparent from the record and do not extend to reviewing its own decisions. The miscellaneous applications filed by the Revenue were rejected on these grounds.
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