2004 (8) TMI 341 - AT - Wealth-tax

Admissibility of appeals based on the monetary limits prescribed by the CBDT - Applicability of CBDT instructions - Binding nature of administrative instructions on appellate authorities - Binding nature of administrative instructions on appellate authorities - HELD THAT - In view of the conscious decision taken by the CBDT in revising the monetary limits in supersession of earlier instructions, it is difficult to visualize that the monetary limits fixed in 1980 to 1985 vis-a-vis Wealth-tax appeals are still permitted to be considered. It also do not appeal to logic inasmuch as, a perusal of the cost inflation index notified in the Income-tax Act indicate that by the year 2000,100 points index has touched 406 points i.e., there is fourfold increase and that salaries of the Government officials etc., have also witnessed multiple increase; the main object being avoidance of cost involved in fighting out such litigation, the CBDT would have enhanced the monetary limits to Rs. 1 lakh commensurate with the costs involved in the year 2000 for entering into litigation. In other words, the cost of filing the appeal i.e., preparation and supervision in the process of filing the appeals by various offices, appearance by the Standing counsels or the departmental officials, would involve higher cost in the present days and the CBDT would have certainly taken all these factors into consideration in enhancing the monetary limits to Rs. 1 lakh and made it uniform in respect of the appeals under direct taxes. It is necessary to bear in mind that an expression which lacks clarity requires clarification but, in present case, the policy decision taken by the CBDT vide Instruction No. 1979 being very specific and explicit, it may not be proper to give a different view on the matter in the garb of clarification. If the CBDT is of the view that the earlier instructions contained an unintended error, it could have been withdrawn and fresh circular/instruction would have been issued, which is within the powers of CBDT under section 119 of the Act. However, in our considered opinion, the CBDT is not justified in interpreting an earlier Circular, issued under section 119 of the Act. As stated earlier, Instruction No. 1979 leaves no room for doubt as to what should be the monetary limit to be taken into consideration while filing an appeal by the revenue. It is no doubt true that a contrary view was taken by the Hon'ble Punjab Haryana High Court in the case of Rani Paliwal and Rajasthan High Court's decision CIT v. Rajasthan Patrika Ltd. 2003 (10) TMI 18 - PUNJAB AND HARYANA HIGH COURT but the ITAT, Hyderabad Benches had consistently followed the view taken by the Hon'ble Bombay High Court and thus we are of the considered opinion that the department should not have preferred appeals in these cases since the tax effect in each case is less than Rs. 1 lakh; in fact in some cases the tax effect is barely in four digits. It is necessary to state here that in the case of Lohiya Trading Co. 1995 (11) TMI 15 - ANDHRA PRADESH HIGH COURT , the Hon'ble A.P. High Court has not expressed any view on this issue and thus it cannot be considered as a binding precedent on the issue on hand. On a conspectus of the matter, we are of the view that the appeals filed by the revenue are contrary to the Instruction No. 1979 dated 27-3-2000 and accordingly we dismiss all the appeals filed by the revenue.

Summary

Issues Involved:
1. Admissibility of appeals based on the monetary limits prescribed by the CBDT.
2. Applicability of CBDT instructions to Wealth-tax appeals.
3. Binding nature of administrative instructions on appellate authorities.
4. Interpretation of the term "each case taken singly" in Instruction No. 1979.

Summary:

1. Admissibility of Appeals Based on Monetary Limits:
The primary issue raised by the assessees was the admissibility of appeals, arguing that the tax effect in each case being less than Rs. 1 lakh, the appeals were filed in violation of CBDT Instruction No. 1979 dated 27-3-2000. The learned DR countered that different monetary limits are prescribed for Wealth-tax appeals and submitted various CBDT instructions to support this claim.

2. Applicability of CBDT Instructions to Wealth-tax Appeals:
The learned DR argued that separate monetary limits for Wealth-tax appeals were maintained over time, citing instructions like No. 1328, 1573, 1612, 1777, 1903, and 1979. The DR emphasized that the monetary limit for Wealth-tax appeals remained Rs. 5,000, as per Instruction No. 1612, and was not enhanced by Instruction No. 1979, which primarily addressed Income-tax matters.

3. Binding Nature of Administrative Instructions on Appellate Authorities:
The learned DR contended that administrative instructions are not binding on appellate authorities, who must decide appeals on merits once filed. This position was supported by various judicial decisions, including Asstt. CIT v. Jain Motors & Tractors and CIT v. Lohiya Trading Co. Conversely, the learned counsel argued that Instruction No. 1979 supersedes earlier instructions and sets new monetary limits applicable to all direct taxes, including Wealth-tax, citing the Supreme Court's decision in Union of India v. Azadi Bachao Andolan.

4. Interpretation of "Each Case Taken Singly" in Instruction No. 1979:
The learned counsel argued that "each case taken singly" means each assessment year should be considered separately for determining the monetary limit, rejecting the idea of clubbing multiple years for a cumulative tax effect. The learned DR, however, suggested that the cumulative tax effect for multiple years should be considered if appeals involve identical issues.

Conclusion:
The Tribunal concluded that Instruction No. 1979 dated 27-3-2000 did not distinguish between Income-tax and other direct taxes regarding monetary limits for filing appeals. The instruction's intent was to reduce litigation and associated costs, implying a uniform monetary limit of Rs. 1 lakh for all direct taxes. The Tribunal dismissed the revenue's appeals, stating that the tax effect in each case was less than Rs. 1 lakh, aligning with the view taken by the Hon'ble Bombay High Court and the ITAT, Hyderabad Benches. The Tribunal emphasized the importance of adhering to CBDT's policy decisions to avoid unnecessary litigation.