Guidelines to Chief Comm. for filing appeal/reference. - Income Tax - 1777/CBDT

INSTRUCTION NO. 1777/CBDT Dated: November 4, 1987 At present Board's approval is required for filing Reference Application under section 256(2) before the High Court where the application under section 256(1) is rejected by the Tribunal. Similarly, Board's approval is required for accepting or contesting any adverse order of the High Court. Board's approval is also required for contesting before the High Court or the Supreme Court, the adverse orders of the Settlement Commission or the Appellate Tribunal for Forfeited properties. 2. This area of the Board's functions has been reconsidered. It has been now decided that the decision to accept or contest adverse judgements of High Courts/ITAT etc. will be taken by the concerned Chief Commissioner. 3. The Board desire that while deciding the question of filing an appeal/reference in respect of an adverse judgment of High Court/ITAT etc., the Chief Commissioner should follow the following guidelines: Monetary Limits: Filing of departmental appeal/reference should be selective. Guidelines were issued laying down monetary limits of revenue effect of Rs.10,000/- for filing appeals before ITAT, Rs.30,000/- for Reference before High Court and Rs.60,000/- for appeals to Supreme Court (Instruction No.1573 dated 12.7.84 and 1612 dated 6.4.1985). These guidelines should be adhered to subject to the exceptions given below. For the purpose of working out monetary limit, the cumulative revenue effect of the issue in the assessee's case for all the years upto the year for which returns have been filed should be taken into consideration. Where the same issue is involved in different cases of a group (e.g. industrial house, family, connected cases etc.), the revenue effect of the group and not the individual case should be taken into account for the purpose of the monetary limit. While applying the monetary limits, the effect of carry forward, effect of consequential addition/deletions in other years should be kept in view. In cases of firms/AOP the revenue effect in cases of partners/members be also taken into account. (ii) question of law: Where a question of law arises for the first time before the High Court concerned, it should be contested irrespective of revenue involved. Where an adverse judgment is delivered by a High Court in such cases, stay of the operation of the judgment should be obtained either from the High Court itself or from the Supreme Court. (iii) Other adverse judgments which need to be contested irrespective of the revenue effect: The judgment relating to the following should be contested irrespective of revenue effect: a) Where prosecution proceedings are contemplated against the assessee; b) Where strictures have been passed against the Department or its officers c) where Revenue Audit objection in the case has been accepted by the Department. d) Where Board's order, notification, instruction or circular is the subject matter of adverse order. e) where in respect of one assessment year the order is contested in the case of an assessee for any reason, the adverse judgment for other years in the issue in that case should also be contested irrespective of the amount involved so that Department's case on the issue is not prejudiced on the ground that in respect of some year the Department has already accepted the assessee's case. A report to the Board should be sent in respect of the judgments containing strictures or which are contrary to Board's orders, notifications, instructions, circulars etc. iv) Adverse judgments which need not be contested; a) Where the adverse judgment is in accordance with the view in the Board's instruction or circulars etc. b) Where the adverse judgment is in respect of mere procedural failure of the assessee like non-signing of appeal memo by the appellant or Form 12 by one of the partners etc. c) Adverse judgment in respect of protective order where the substantive order made by the Department is upheld and becomes final. (V) Adverse judgment where Board's prior approval is necessary for further contest: a) Special leave petitions under Article 136 of the Constitution are filed before the Supreme Court only in consultation with Ministry of Law, Delhi and on the advice of senior law officers - AG, SG or ASG. Therefore, where the Chief Commissioner decides to contest the adverse judgment by filing special leave petition before the Supreme Court, they should send the proposal to the Board for further processing. b) Where some Chief Commissioners have already accepted an adverse judgment on an issue but the concerned Chief Commissioner has some reservations about it and wants to contest that view, Board's approval may be obtained. Similarly where other Chief Commissioners are contesting the adverse view but the concerned Chief Commissioner wants to accept that view, Board's prior approval may be obtained. c) Where the assessee involved is a public Sector Undertaking and the Commissioner wants to contest the adverse judgment, he should make a Reference to the Board. If there is no agreement between the undertaking and the Department at the Board's level, the matter will be referred to Ministry of Law whose opinion will be binding on the undertaking and the Department. d) Where the revenue effect of the case is over Rs.5 lakhs and there is disagreement between the Commissioner and the Standing Counsel in regard to acceptance or non-acceptance of the judgment, Board's approval may be obtained. 4. Where for exceptional reasons, the Commissioner wants to deviate from the above guidelines, he must approach the Board well in time keeping the period of limitation in mind. 5. An Integrated Judicial Reference System (ITRS) has been set up in the office of Chief Commissioner, Hyderabad and is now operative. The acceptance or otherwise of adverse judgments of High Court or Special benches of Tribunal should be communicated to this Centre every fortnight so that this information is available to all other Charges and there is uniformity in the approach of the Department in different charges. 6. These instructions will apply to litigation under other direct taxes also e.g. Wealth-tax, Gift-tax, Estate duty etc. 7. These instructions may please be brought to the notice of all the Commissioners in your Charge.