2001 (12) TMI 209 - AT - Income Tax

Summary

Issues Involved:
1. Maintainability of the appeal involving tax effect up to Rs. 25,000 based on CBDT Instruction No. 1903.
2. Binding nature of instructions issued under Section 119(1) of the Income-tax Act on subordinate income-tax authorities.
3. Enforceability of such instructions by the assessee against the revenue.

Detailed Analysis:

Issue 1: Maintainability of the Appeal Involving Tax Effect Up to Rs. 25,000
The learned AR raised a preliminary objection regarding the maintainability of the appeal based on CBDT Instruction No. 1903, which sets a monetary limit for departmental appeals. The AR cited several judicial decisions supporting the contention that appeals involving a tax effect below Rs. 25,000 should not be entertained. The learned DR countered that Instruction No. 1903 is administrative and not enforceable by the assessee. However, the Tribunal, after careful consideration, held that the instruction is binding and the appeal in question, having a tax effect below Rs. 25,000, is not maintainable.

Issue 2: Binding Nature of Instructions Issued Under Section 119(1)
The Tribunal examined whether the instructions issued by the CBDT under Section 119(1) are binding on subordinate income-tax authorities. The Tribunal referred to several judicial decisions, including those of the Bombay High Court and the Supreme Court, which affirmed that instructions issued under Section 119 are binding on subordinate authorities. The Tribunal concluded that the instructions issued under Section 119(1) have the force of law and must be followed by the income-tax authorities.

Issue 3: Enforceability of Instructions by the Assessee Against the Revenue
The Tribunal addressed whether the assessee can enforce the instructions issued under Section 119(1) against the revenue. The learned DR argued that such instructions are internal and do not confer any rights on the assessee. However, the Tribunal, relying on judicial precedents, held that the instructions issued under Section 119(1) are not merely internal guidelines but have the force of law, thereby conferring rights on the assessee. The Tribunal emphasized that the purpose of these instructions is to ensure proper administration and avoid undue hardship to the assessee.

Conclusion:
The Tribunal allowed the preliminary objection raised by the assessee and dismissed the appeal, as the tax effect was below Rs. 25,000, in accordance with CBDT Instruction No. 1903. The Tribunal affirmed that instructions issued under Section 119(1) are binding on subordinate authorities and enforceable by the assessee against the revenue.

Appreciation:
The Tribunal acknowledged the assistance and efforts of the learned Departmental Representative, Mr. P.N. Dixit, in supporting the case of the Department.