2012 (10) TMI 149 - HC - Income Tax

Maintainability of the appeal before the High Court - whether instructions of 2011 would govern maintainability of all pending appeals of the Revenue? - Held that - With respect the question of interpretation of instructions which are other-wise not ambiguous on the basis of litigation policy, in our view, would not arise. Secondly, the view that prospective application of the instructions would not lead to any absurdity. If by applying the instructions prospectively, certain appeals would be decided on merits, because the appeals were filed prior to issuance of the new instructions, the same cannot be stated to be absurd. A counter situation also may arise if such instructions are applied with retrospective effect to all pending appeals whereby an appeal would be dismissed without examination on merits simply because the same survived for a longer period than the cognate appeals. It can be seen that the various High Courts have taken a view that the instructions of 2011 cannot be applied to all pending appeals, particularly, having regard to the language used in paragraph 11 thereof that this instructions will apply to appeals filed on or after 9th February 2011. Thus the view adopted by this Court in case of Sureshchandra Durgaprasad Khatod (HUF) (2012 (9) TMI 20 - GUJARAT HIGH COURT) requires reconsideration as the instructions of 2011 provide revised monetary limits permitting the Revenue to file appeals before the Tribunal, High Court and Supreme Court. Paragraph 11 thereof clearly provides that such instructions will apply to appeals filed on or after 9th February 2011. It is further made clear that cases where appeals have been filed before 9th February 2011 will be governed by the instructions on the subject operative at the time when such appeal was filed. Any other interpretation to make the instructions of 2011 applicable to all pending appeals would not be permissible and would be doing violation to the plain language used in the instructions. These provisions contained in the instructions of 2011 have not been given due weightage in Sureshchandra Durgaprasad Khatod case above. Thus case is to be placed before Hon ble Chief Justice for constituting a Bench for answering the reference.

Summary

Issues Involved:
1. Maintainability of the appeal based on revised monetary limits provided by CBDT instructions.
2. Applicability of CBDT instructions to pending appeals.
3. Interpretation of statutory provisions and instructions.

Detailed Analysis:

1. Maintainability of the Appeal Based on Revised Monetary Limits Provided by CBDT Instructions:
The appeal filed by the Revenue questioned the judgment of the Income Tax Appellate Tribunal dated 31.5.2010. At the time of filing the appeal on 13.10.2010, the tax effect exceeded Rs. 4 lac, which was within the threshold limit as per CBDT instructions of 2008. However, the revised limit provided by the instructions of 2011 raised the threshold to Rs. 10 lac. The counsel for the assessee argued that the revised limits should apply to all pending appeals, making the current appeal non-maintainable. The Revenue, however, contended that the instructions should be interpreted based on their plain language, which indicated prospective application only.

2. Applicability of CBDT Instructions to Pending Appeals:
The counsel for the assessee relied on a recent decision of the Division Bench in the case of Commissioner of Income-tax v. Sureshchandra Durgaprasad Khatod (HUF), which held that the instructions of 2011 would apply to pending appeals. The arguments were supported by the National Litigation Policy aimed at reducing delay and pendency, and the view that prospective application would lead to absurd situations. Conversely, the Revenue's counsel argued that the plain language of the instructions of 2011 indicated prospective application only and that the decision in Sureshchandra Durgaprasad Khatod (HUF) required reconsideration.

3. Interpretation of Statutory Provisions and Instructions:
The Court examined section 268A of the Income-tax Act, 1961, which empowers the Board to issue instructions fixing monetary limits for filing appeals. The instructions of 2011, like previous instructions, provided specific monetary limits and exceptions. Paragraph 11 of the instructions of 2011 explicitly stated that the instructions would apply to appeals filed on or after 9th February 2011, and appeals filed before this date would be governed by the instructions operative at the time of filing. The Court noted that various High Courts had differing views on whether such instructions should apply to pending appeals. The Court highlighted decisions from the Punjab and Haryana High Court, Chhattisgarh High Court, and Kerala High Court, which held that the instructions should apply prospectively. In contrast, the Bombay High Court and other High Courts had adopted a contrary view.

Conclusion:
The Court concluded that the issue required consideration by a larger Bench due to the conflicting views of various High Courts and the need for a clear interpretation of the instructions of 2011. The Court expressed doubts about the applicability of the instructions to pending appeals and emphasized the need to adhere to the plain language of the instructions. The Court referred the following question to a larger Bench: "Whether the view taken by this Court in the case of Sureshchandra Durgaprasad Khatod (HUF) that the instructions of 2011 of the Board providing for revised monetary limits for filing the appeals to the Tribunals, High Courts, and Supreme Court, would apply to all pending cases irrespective of the date of filing of such appeals is correct, particularly, in view of express language used in paragraph 2 of the instructions which provides for revised monetary limits for filing of the appeals and paragraph 11 thereof which provides inter-alia that such instructions will apply to appeals filed on or after 9th February 2011?"

The matter was directed to be placed before the Hon'ble Chief Justice for constituting a Bench to answer the reference.