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TMI Blog2017 (11) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication for reference by income-tax authority.- (1) The Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal or application for reference by any income-tax authority under the provisions of this Chapter. (2) Where, in pursuance of the orders, instructions or directions issued under sub- section (1), an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of- (a) the same assessee for any other assessment year; or (b) any other assessee for the same or any other assessment year. (3) Notwithstanding that no appeal or application for reference has been filed by an income-tax authority pursuant to the orders or instructions or directions issued under sub-section (1), it shall not be lawful for an assessee, being a party in any appeal or reference, to contend that the income- tax authority has acquiesced in the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information; (b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income-tax authority, not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law; (c) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order for reasons to be specified therein, relax any requirement contained in any of the provisions of Chapter IV or Chapter VI-A, where the assessee has failed to comply with any requirement specified in such provision for claiming deduction thereunder, subject to the following conditions, namely:- (i) the default in complying with such requirement was due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against. 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if the 'tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t entailed is less than the monetary limits specified in para 3 above or there is no tax effect. (a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department. 9. The proposal for filing Special Leave Petition under Article 136 of the Constitution before the Supreme Court should, in all cases, be sent to the Directorate of Income- tax (Legal & Research), New Delhi and the decision to file Special Leave Petition shall be in consultation with the Ministry of Law and Justice. 10. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income-tax, filing of appeals in other direct tax matters shall continue to be governed by relevant provisions of statute and rules. Further, filing of appeal in cases of Income-tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under section 12A of the IT Act, 1961, shall not be governed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against. 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. lf, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect: (a) Where the Constitutional validity of the provision under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department, or (d) Where the addition relates to undisclosed foreign assets/ bank accounts. 9. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevant provisions of statute & rules. Further, filing of appeal in cases of Income Tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under se the IT Act, 1961, shall not be governed by the limits specified in para 3 above and decision to file appeal in such cases may be taken on merits of a particular case. 10. This instruction will apply retrospectively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in his speech that Sub-section (2) was not aimed at perfectly honest and bonafide transactions where the consideration in respect of the transfer was correctly disclosed or declared by the assessee, but was intended to deal only with cases where the consideration for the transfer was under-stated by the assessee and was shown at a lesser figure than that actually received by him. It appears that despite this circular, the Income-tax Authorities in several cases levied tax by invoking the provision in Sub-section (2) even in cases where the transaction was perfectly, honest and bonafide and there was no under-statement of the consideration. This was quite contrary to the instructions issued in the circular which was binding on the Tax Department and the Central Board of Direct Taxes was, therefore, constrained to issue another circular on 14th January, 1974 whereby the Central Board, after reiterating the assurance given by the Finance Minister in the course of his speech pointed out: It has come to the notice of the Board that in some cases the Income-tax Officers have invoked the provisions of Section 52(2) even when the transactions were bonaflde. In this context reference is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [1979]3SCR373 . It is clear from these two circulars that the Central Board of Direct Taxes, which is the highest authority entrusted with the execution of the provisions of the Act, understood Sub-section (2) as limited to cases where the consideration for the transfer has been under-stated by the assessee and this must be regarded as a strong circumstance supporting the construction which we are placing on that sub-section. 12. But the construction which is commending itself to us does not rest merely on the principle of contemporanea exposition. The two circulars of the Central Board of Direct Taxes to which we have just referred are legally binding on the Revenue and this binding character attaches to the two circulars even if they be found not in accordance with the correct interpretation of Sub-section (2) and they depart or deviate from such construction. It is now well-settled as a result of two decisions of this Court, one in Navnitlal C. Jhaveri v. K.K. Sen [1965]56ITR198(SC) and the other in Ellerman Lines Ltd. v. Commissioner of Income-tax, West Bengal [1971]82ITR913(SC) that circulars issued by the Central Board of Direct Taxes under Section 119 of the Act are b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 5(8) of the Indian Income Tax Act 1922 on which reliance was placed on behalf of the assessee, this Court observed: Now, coming to the question as to the effect of instructions issued under Section 5(8) of the Act, this Court observed in Navnit Lal C. Jhaveri v. K.K. Shah Appellate Assistant Commissioner, Bombay. It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under Section 5(8) of the Act. This circular pointed out to all the officers that it was likely that some of the companies might have advanced loans to their shareholders as a result of genuine transactions of loans, and the idea was not to affect such transactions and not to bring them within the mischief of the new provision. The directions given in that circular clearly deviated from the provisions of the Act, yet this Court held that circular was binding on the Income-tax Officers. The two circulars of the Central Board of Direct Taxes referred to above must therefore be held to be binding on the Revenue in the administration or implementation of Sub-section (2) and this sub section must be read as appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular. It has to be the revenue authority who has to question that. To lay content with the circular would mean that the valuable right of challenge would be denied to him and there would be no scope for adjudication by the High Court or the Supreme Court. That would be against very concept of majesty of law declared by this Court and the binding effect in terms of Article 141 of the Constitution. (iii) Kalyani Packaging Industry vs. Union of India (UOI) (06.05.2004 - SC), (2004) 6 SCC 719 4. This Court has, in the case of Collector of Central Excise, Vadodara v. Dhiren Chemical Industries reported in MANU/SC/0787/2001, clarified that when an exemption Notification uses the words "has already been paid", the benefit of that Notification would only be available if duty has, as a matter of fact, been paid and has been paid at the appropriate or correct rate. It is held that where the raw material is not liable to excise duty or to "nil" rate of duty then, as a matter of fact, no duty is paid and to such goods benefit of an exemption Notification will not be available. 5. It was however sought to be submitted that in Para 9 of Dhiren Chemical's case (supra) it has been clari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suggested would mean that Courts/Tribunals have to ignore a judgment of this Court and follow circulars of the Board. That was not what was meant by Para 9 of Dhiren Chemical's case. (iv) Commissioner of Income Tax (CNTL), Ludhiana vs. Hero Cycles Pvt. Ltd., Ludhiana (28.08.1997 - SC) [1997] 228 ITR 463 (SC). 13. We have passed similar orders in a large number of cases but in this case on behalf of the assessee it has been contended that there is a circular issued by Central Board of Direct Taxes, New Delhi which should conclude the matter. A copy of the so-called circular dated 9th April, 1981/13th April, 1981 has been handed over in Court. It does not appear that the document handed over in Court is a copy of Circular at all. It is a letter written to one Shri D'Souza with reference to a letter written by his predecessor. 14. Moreover, it is well-settled that circulars can bind the Income-tax Officer but will not bind the appellate authority or the Tribunal or the Court or even the assessee. There is nothing in the alleged circular which supports the contention of the assessee. It merely says that each case has to be examined and the issue would be basically a find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficult to relate the order in G.O. Ms. 383 to the power of the Government under Section 9, apart from the fact that the nature and character of the power under Section 42 is different from the one conferred by Section 9. As exemption under Section 9 has to be granted not only by a notification, it is also required to be published in the Andhra Pradesh Gazette. It is not suggested, nor is it brought to our notice, that G.O. Ms. 383 was published in the Andhra Pradesh Gazette. This does not, however, preclude the Government of Andhra Pradesh from exercising the said power of exemption, in accordance with law, if it is so advised. We need express no opinion on that scores. 6. Mr. Sameer Jain appearing for the department has relied on the following decisions: (i) Commissioner of Central Excise, Bolpur vs. Ratan Melting and Wire Industries, Calcutta (23.02.2005 - SC) 2005 (181) ELT 364 (SC) 3. A disparate view has been taken in CCE v. Maruti Foam Pvt. Ltd. 2004(164 )ELT 394 (SC) and Commissioner of Customs, Calcutta and Ors. v. Indian Oil Corporation Ltd. and Anr. [2004]267ITR272(SC) . It appears to us that the law declared by this Court is binding on the Revenue/Department and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. Accordingly the argument of the learned counsel for the assessee in this regard is also rejected. Taking into consideration the above judgments, the question of law is answered in favour of the Revenue and against the assessee. 7. Mr. Anuroop Singhi appearing for the Department has relied upon the following decisions: (i) CIT vs. Udaipur Mineral Development Syndicate (P) Ltd.,DB ITR No. 32/1995, decided on 12.11.2014 "12. We would first deal with the preliminary objection of the ld. counsel for the assessee as to whether the tax effect being minimal the reference at the instance of this Court deserve consideration. Although the judgments cited by counsel for the assessee has observed that it is applicable not only to the appeals but the old pending references as well, but the other view is that the position has to be seen and has to be governed at the time when the reference application was moved/filed and is thus inapplicable for the old pending references/reference applications. This Court, in the case of CIT v. Rajasthan Patrika Ltd: [2002] 258 ITR 300/125 Taxman 819 (Raj.), came to the following:- "It is true that in the case of the Supreme Court, which has been refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... group of matters or a large number of matters. In such cases if the attention of the High Court is drawn, the High Court will not apply the circular ipso facto for the purpose. 17. Thus, we are of the view that once reference has been admitted by this Court u/s256(1) or 256(2), then the matter cannot be disposed off merely because the tax effect is minimal. We dissent with the view expressed by the Bombay High Court and M.P. High Court, relied upon by counsel for the assessee as the judgment rendered by this Court in Rajasthan Patrika Ltd. (supra) and Registhan (P.) Ltd. (supra) is binding on us on the self-same issue and we would choose to follow the view rendered by this court. In our view, once a reference application of the Revenue had been allowed by this Court and reference was called at the instance of this Court, the question of law framed has to be answered on merits, thus the preliminary objection of the counsel for the assessee is rejected." (ii) CIT vs. Surya Herbal Ltd., [2013] 350 ITR 300 (SC) "2. Liberty is given to the Department to move the High Court pointing out that the Circular, dt. 9th Feb., 2011, should not be applied ipso facto, particularly, when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssues involved in the litigation and addressing them squarely. Managing and conducting litigation in a cohesive, co-ordinated and time-bound manner. Ensuring that good cases are won and bad cases are not needlessly persevered with. A litigant who is represented by competent and sensitive legal persons: competent in their skills and sensitive to the facts that the Government is not, an ordinary litigant and that a litigation does not have to be won at any cost. "Responsible litigant" means That litigation will not be resorted to for the sake of litigating. That false pleas and technical points will not be taken and shall be discouraged. Ensuring that the correct facts and all relevant documents will be placed before the court. That nothing will be suppressed from the court and there will be no attempt to mislead any court or tribunal. That nothing will be suppressed from the court and there will be no attempt to mislead any court or tribunal. 2. The Government must cease to be a compulsive litigant. The philosophy that matters should be left to the courts for ultimate decision has to be discarded. The easy approach, "Let the court decide" must be eschewed and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which are found without merit withdrawn. This must be done in a time bound fashion." 6. This policy was formulated with the purpose that the Central Government would be a responsible litigant and would not be involved in frivolous litigation, especially where the stakes were not high. The policy aimed to transform the government into an efficient and responsible litigant and urged every State Government to evolve similar policies. The policy defined the efficient litigant to mean that the litigation should not be resorted to for the sake of litigating and that the government ceases to a compulsive litigant. The underlying purpose of the policy was to reduce the government litigation in Courts so that valuable court time was spent in resolving other pending issues to enable the average pendency of a case in a court reduced from 15 years to 3 years. The policy, therefore, provided that the government would identify bottlenecks and that the appeals would not be filed where the stakes are not so high and was less than by the amount fixed by the revenue authorities. The policy also formulated that all pending cases involving the government would be reviewed to filter frivolous and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections (2), (3) and (4) shall apply accordingly." 12. Sub-clause (4) of Section 268A of the Act clearly indicates that the Tribunal and the Court shall have regard to all instructions issued under sub-section (1) of the Act by CBDT and the circumstances under which such appeal or application for reference was filed or not filed in respect of any case. Sub-clause (5) indicates that instructions issued by CBDT shall be deemed to have been issued under Section 268 of the Act. 13. The object of introduction of Section 268A of the Act was to regulate the filing of the appeals by the government. The said object is extracted hereunder:- "The proposed section seeks to provide that the Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal or application for reference by any income tax authority under the provisions of Chapter XX. It is further proposed to provide that where, in pursuance of the orders, instructions or directions issued under sub-section (1), an income tax authority has not filed any appeal or application for reference on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the courts "to fill in such gaps as Parliament may choose to leave in its enactments". 19. In the instant case, the question is not what the words in the relevant provision mean but what the national litigation policy meant requiring the Courts to interfere and fill in the gaps which was excluded by the legislature. In our view, it is permissible for the Courts to look into the legislative intention and go behind the enactment and take other factors into consideration in order to give effect to the legislative intent and to the purpose of the national litigation policy. 20. The process of construction, therefore, combines both literal and purposive approaches, namely, the true meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed. Once this is achieved, it would be called "the cardinal principle of construction". 23. The rule is equally applicable to a large extent. In order to properly interpret the provisions of the instructions, it is, therefore necessary to consider how the matter stood immediately before the circular came into existence, what was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuing instructions under Section119 of the Act was apparent and obvious, namely, to alleviate unnecessary hardship to the assessee and also to avoid financial hardship and long drawn appellate proceedings even for the department. The objects recorded in the bill while introducing Section 268A into the Act was aimed at alleviating and remedying the hardship being caused to the assessee as well as to reduce the financial burden upon the income tax department in pursuing appeals where the tax effect was negligible. A perusal of sub-section (1) of Section 268A of the Act indicates that CBDT was authorized to issue orders, instructions or directions to income tax authorities laying the monetary limits for the purpose of filing appeals. As a consequence of the insertion of Section 268A in the Act, the orders and instructions or directions issued on the subject of monetary limits for filing appeals has attained a statutory status and it has become mandatory for the department to comply with the requirement on the subject of monetary limits for filing appeals. Sub- section (5) of Section 268A of the Act indicates that earlier instructions issued by CBDT fixing monetary limits for fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated Electrical Agencies (16.08.2007 - MADHC) : (2007) 295 ITR 496 10. We are of the considered view that none of the exceptions stated in the circular are applicable to the facts of the present case. The circular was stated to be issued by invoking the statutory power under Section 119 of the IT Act. The appeal is filed under Section 260A of the IT Act. It is well-settled principle of law that each and every provision of a statute has to be given the same importance. One provision cannot be alleviated to a higher pedestal than the other provision, of course, unless or otherwise specifically stated either in the scheme, the Act or in the provision itself that a particular provision is subjected to or qualified by any other provision or the provision can be given effect to notwithstanding anything contained in any other provisions by assigning overriding effect. Hence, the contention that notwithstanding the circular, which was issued under Section 119 of the IT Act, the appeal could be filed by the Revenue under Section 260A has to be rejected for the reason that if the contention is accepted, one of the sections would become virtually otiose and that cannot be the intention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the Revenue to file or not to file an appeal under section 260A. Consequently, there is an inherent limitation on the Revenues right to file appeal tinder section 260A inasmuch as the condition precedent for preferring an appeal is existence of a substantial question of law. Section 260A does not, however, contemplate any monetary limit. This monetary limit has been imposed a indicated above by the Central Board of Direct Taxes in exercise of its power under section 268A. 14. It is worth pointing out that section 268A enjoys the same legislative status as section 260A, both having been enacted by Parliament. Undisputedly, section 268A is later in point of time. Having known and being conscious of the right of appeal, which has been provided to the Revenue under section 260A, Parliament has nevertheless deemed it necessary to vest in the Central Board of Direct Taxes, by enacting section 268A, the power to regulate appeal by prescribing the monetary limit. 15. When, thus, the Central Board of Direct Taxes has prescribed a monetary limit, no appeal under section 260A can be filed by the Revenue except in the circumstances, which we have indicated above. The mere fact that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Lines Ltd. v. C1T [1971]82ITR913(SC) and K. P. Varghese v. ITO [1981]131ITR597(SC) to contend that the circular issued by the Central Board of Direct Taxes is binding on all the officers and Commissioners and in terms of which he sought to examine the question of necessity of filing of the present appeal. 5. In appears that despite the above circular, the Revenue has chosen to file the present appeal knowing fully well that the corridors of the courts are flooded with pending litigations. The presentation of this appeal is quite contrary to the instruction issued in the circular which is binding on the Revenue. 6. In the above view of the matter, considering the instructions issued by the Central Board of Direct Taxes, we are satisfied that the Board has taken a policy decision not to file appeal in a type of case in hand and the same is binding on the Revenue (appellant herein). In the result, we dismiss this appeal on this count in limine with no order as to costs." (vi) Commissioner of Income Tax vs. Abhinash Gupta (11.12.2009 - PHHC) [2012] 327 ITR 619 (P&H) "7. After hearing the arguments of the learned Counsel for the parties, we find force in the preliminary objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding appeals, irrespective of the fact whether the same were filed before or after May 15, 2008. In this regard the Bombay High Court made the following observations (page 150): It cannot be disputed that the Central Board of Direct Taxes Circular dated May 15, 2008, has no retrospective effect. It operates from the date of its issuance. As a corollary thereof, the appeals which come on board for consideration after the issuance of the Central Board of Direct Taxes Circular dated May 15, 2008, needs to be considered in the light of the said Circular. Application of the said Circular to the cases coming on board after May 15, 2008, by no stretch of imagination can be said to be an application of Circular with retrospective effect. In order to consider the issue in its right perspective, it is necessary to refer to the Circular of the Central Board of Direct Taxes dated May 15, 2008, paragraph 5 of which reads as under: 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issue in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of recurring nature even then, the Revenue is not expected to file appeals in such cases, if the tax impact is less than the monetary limit fixed by the Central Board of Direct Taxes. One fails to understand how the Revenue, on the face of the above clear instructions of the Central Board of Direct Taxes, can contend that the Circular dated May 15, 2008, issued by the Central Board of Direct Taxes is applicable to the cases filed after May 15, 2008, and in compliance thereof, they do not file appeals, if the tax effect is less than Rs. 4 lakhs; but the said circular is not applicable to the cases filed prior to May 15, 2008, i.e., to the old pending appeals; even if the tax effect is less than Rs. 4 lakhs. In our view, there is no logic behind this belief entertained by the Revenue. This court can very well take judicial notice of the fact that by passage of time money value has gone down, the cost of litigation expenses has gone up, filing of cases at the instance of the Revenue has increased; consequently, the burden on the Department has also increased to a tremendous extent. The corridors of the superior courts are choked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he newly inserted provision takes care of the adverse eventuality which could have been put against the Revenue. While agreeing with the view taken by the Bombay High Court, we are of the view that Circular No. 5 of 2008 would be applicable to the cases pending before this Court either for admission or for final disposal and that the said Circular is binding on the Revenue. Since admittedly the tax effect in this appeal is less than Rs. 4 lakhs, therefore, in our opinion, the appeal filed by the Revenue is not maintainable and the same is hereby dismissed with no order as to costs." (vii) CIT vs. Sherno Ltd. (28.03.2013 - GUJHC) [2013] 33 taxmann.com 45 (Gujarat) 4. Revenues case as can be discerned from question No. 2 noted above is that since Constitutional validity of the provisions of the Act ore the Rule are under challenge the appeal may be entertained. Learned counsel Shri Parikh for the Revenue was at a loss to explain in what manner the validity of statutory provision is involved in the present appeal. Admittedly vires of statutory provision is nowhere in question. He however, strenuously urged that decision of the Tribunal is palpably erroneous. 5. This in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal neither involves any question which had a far reaching effect nor was of recurring in nature. 8. None of the above conditions applies in the present case. In this view of the matter we are of the considered opinion that the circular dated 27th March, 2000 issued by the Central Board of the Direct Taxes was binding upon the Department and, therefore, the appeal preferred by it against the order of the Commissioner of Income Tax (Appeals) dated 4th November, 2008 wherein tax effect was less than rupees two lac ought not to have been filed. The order of the Tribunal does not call for any interference." (x) Commissioner of Income Tax vs. Ramkishore Nandkishore (12.02.2013 - MPHC) 5. A Division Bench of this Court in Suresh Chand Goyal (supra) has considered this aspect and held thus:- The another question raised by learned counsel for the respondent is about the filing of appeal contrary to the circular issued by the Central Board of Direct Taxes, according to which, the appeal under section 260A of the Income-Tax Act on the tax effect of less than Rs. 2 lakhs should not be filed by the Revenue and placed reliance on the decision of the Bombay High Court in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding with the old references wherein the tax impact is minimal. Thus, there is no justification to proceed with decades old references having negligible tax effect Judged from both angles we would answer the reference in the negative in favour of the assessee and against the Revenue. 7. A Division Bench of Bombay High Court in Commissioner of Income Tax vs. Pithwa Engg. Works [276 ITR 519] held thus:- 3. This Court in the case of Commissioner of Income Tax V/s. Cameo Colour Co.(2002) 254 ITR 565 ruled that the instructions issued by the Central Board of Direct Taxes, New Delhi, dated 27th March, 2000; wherein monetary limit for the department for filing reference to the High Court earlier fixed for Rs. 50,000/- came to be revised and fresh instructions are issued to file references only in cases where tax effect exceeds Rs. 2,00,000/-, are binding on the Department. 4. The above instructions dated 27th March, 2000 reflect the policy decision taken by the Board not to raise questions of law where the tax effect is less than the amount prescribed in the above circular with a view to reduce litigations before High Courts and Supreme Court. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reference below Rs. 2 lakhs, could not have been filed. The instructions of the Board are binding to all the authorities working under the Board including the appellant. This appeal which was filed on 10.1.2005 is fully covered by the instructions issued by the Board on 27.3.2000, and this appeal could not have been filed. The aforesaid position has been clarified by two Division Bench of this Court in Suresh Chand and Ashok Manibhai (supra). In the result, this appeal is found incompetent and is dismissed with no order as to costs." (xi) Commissioner of Income Tax vs. Ramkishore Nandkishore (12.02.2013 - MPHC), [2013] 32 taxmann.com 89 5. A Division Bench of this Court in Suresh Chand Goyal (supra) has considered this aspect and held thus:- The another question raised by learned counsel for the respondent is about the filing of appeal contrary to the circular issued by the Central Board of Direct Taxes, according to which, the appeal under section 260A of the Income-Tax Act on the tax effect of less than Rs. 2 lakhs should not be filed by the Revenue and placed reliance on the decision of the Bombay High Court in the case of CIT vs. Cameo Colour Co. [2002] 254 ITR 565]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to proceed with decades old references having negligible tax effect Judged from both angles we would answer the reference in the negative in favour of the assessee and against the Revenue. 7. A Division Bench of Bombay High Court in Commissioner of Income Tax vs. Pithwa Engg. Works [276 ITR 519] held thus:- 3. This Court in the case of Commissioner of Income Tax V/s. Cameo Colour Co. (2002) 254 ITR 565 ruled that the instructions issued by the Central Board of Direct Taxes, New Delhi, dated 27th March, 2000; wherein monetary limit for the department for filing reference to the High Court earlier fixed for Rs. 50,000/- came to be revised and fresh instructions are issued to file references only in cases where tax effect exceeds Rs. 2,00,000/-, are binding on the Department. 4. The above instructions dated 27th March, 2000 reflect the policy decision taken by the Board not to raise questions of law where the tax effect is less than the amount prescribed in the above circular with a view to reduce litigations before High Courts and Supreme Court. The said circular is binding on the Revenue though learned Counsel tried to contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Board are binding to all the authorities working under the Board including the appellant. This appeal which was filed on 10.1.2005 is fully covered by the instructions issued by the Board on 27.3.2000, and this appeal could not have been filed. The aforesaid position has been clarified by two Division Bench of this Court in Suresh Chand and Ashok Manibhai (supra). (XII) Commissioner of Income Tax vs. Smt. Madhu Bai Lodha (13.09.2007 - MPHC) (2008)_ 169 Taxmann 147 (Madhya Pradesh) 4. We have considered the contention raised by the learned senior counsel. Before considering the cases: cited by the learned senior counsel, we may point out that a Division Bench of [this Court has held in CIT v. Suresh Chand Goyal (2007) 209 CTR (MP) 410 that in cases where tax effect is below Rs. 2,00,000, Revenue cannot file appeal contrary to the terms of circular which is binding on the Department. The relevant discussion contained in para 16 of the said Report reads as extracted below: 16. The another question raised by learned Counsel for the respondent is about the filing of appeal contrary: to the circular issued by the CBDT, according to which, the appeal under Section 260A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adherence of the circular, the Department would place material before the appellate forum that the case falls within the excepted category and, therefore, is not covered by the restraint contained in the circular. The learned senior counsel for the appellants has also invited attention to the decision of the Punjab & Haryana High Court in Rani Paliwal v. CIT MANU/PH/0780/2003, of Delhi High Court in CIT v. Blaze Advertising (Delhi) (P) Ltd. (2002) 173 CTR 482 : (2002) 255 ITR 460 and of Madras High Court in CIT v. Kodananad Tea Estates Co. [2005]275ITR244(Mad) . We are, however, of the view that, as held by this Court in CIT v. Suresh Chand Goyal (supra), where tax liability of the assessee is below the monetary limit prescribed, Revenue cannot file an appeal in transgression of the circular by which it is bound. However, we may add that in a case which falls within the excepted category, it would always be open to the Department to bring it to the notice of the forum approached and to insist that the question being covered by the exceptions contained in Clause 3 of the Circular dt. 24th Oct., 2005 as modified by the Instruction No. 5 of 2007, dt. 16th July, 2007, the same de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resolution is to reduce litigation in similar cases with a view to bring the Revenue's right to file or not to file appeal. The new Section 268A of the Income Tax Act was inserted by Finance Act, 2008 with retrospective effect from 01.04.1999. The said provision reads as under: 268A. Filing of appeal or application for reference by income-tax authority. (1) The Board may from time to time, issue orders, instructions or directions to other income- tax authorities, fixing such monetary limits as it may deem fit for the purpose of regulating filing of appeal or application for reference by any income-tax authority under the provisions of this Chapter. (2) Where, in pursuance of the orders, instructions or directions issued under sub- section (1), an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of. (a) the same assessee for any other assessment year; or (b) any other assessee for the same or any other assessment year. (3) Notwithstanding that no appeal or applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year; or (b) any other assessee for the same or any other assessment year. It is also proposed to provide that notwithstanding that no appeal or application for reference has been filed by an income-tax authority pursuant to the orders or instructions or directions issued under sub-section (1), it shall not be lawful for an assessee, being a party in any appeal or reference, to contend that the income- tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case. It is also proposed to provide that the Appellate Tribunal or Court, hearing any appeal or reference had filed under this Chapter, shall have regard to the orders, instructions or directions issued by the Board from time to time either before or after the insertion of this section and the circumstances in which such appeal or application for reference was filed or was not filed in any case; and accordingly the Tribunal or Court shall decide the appeal or the reference on the merits of the issue consideration. It is also proposed to provide that every order, instruction or direction which has been issued by the Board fixing monetary limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge orders passed in favour of assessee cannot be heard to deviate there from when the Revenue itself lays down the monetary limits. A harmonious construction of sub- section (1) of section 260A of the 1961 Act, and sub-section (1) of section 268A of the 1961 Act would inevitably lead to the conclusion that the Revenue can prefer an appeal if a case raises a substantial question of law, subject to the monetary limits stipulated by the Central Board of Direct Taxes. It is open to the Revenue to prefer an appeal only on the four grounds specified in paragraph 3 of the instruction dated March 27, 2000, and on no other ground, in cases where the tax effect was less than that prescribed therein. 29. It is also not out of place to mention herein that the Parliament wanted to grant statutory recognition to these Orders/Instructions/Circulars, issued by the Department from time to time retrospectively to take care to protect the interest of the Revenue by introducing sub- section (2) and (3) in Section 268A of the Act. This benefit conferred on these assessees would be only in the nature of one time settlement because if the same issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... One provision cannot be elevated to a higher pedestal than the other provision, of course, unless or otherwise specifically stated either in the scheme, the Act or in the provision itself that a particular provision is subjected to or qualified by any other provision or the provision can be given effect to notwithstanding anything contained in any other provisions by assigning overriding effect. Hence, the contention that notwithstanding the circular, which was issued under Section 119 of the Income Tax Act, the appeal could be filed by the Revenue under Section 260A has to be rejected for the reason that if the contention is accepted, one of the sections would become virtually otiose and that cannot be the intention of the law makers. 12. Thus, following the long line of case law reported in CIT v. Rajasthan Patrika Limited MANU/RH/0420/2002 and CIT v. P.S.T.S. Thiruvirathnam [2003]261ITR406(Mad) to which one of us is a party (K. Raviraja Pandian J.), CIT v. Digvijay [2007]292ITR314(MP) and CIT v. Camco Colour Co. [2002]254ITR565(Bom) , this court held that the uniform line of judicial opinion is that if the tax effect is less than what is stated in the circular, the Revenue nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Department, or (d) Where the addition relates to undisclosed foreign assets/bank accounts. 9. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevant provisions of statute & rules. Further, filing of appeal in cases of Income Tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under section 12A of the IT Act, 1961, shall not be governed by the limits specified in para 3 above and decision to file appeal in such cases may be taken on merits of a particular case. 10. This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed." The extract of the paragraphs referred to supra, clearly indicates that the limits specified in para 3 may not apply to certain excepti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bound by the judgment of the Hon'ble Apex Court and bound to follow such an issue/question which is squarely and directly covered on the issue being law of the land, and the Circular may not be applicable at-least in such matters and even otherwise the Circular of CBDT is not binding on this Court. Thus, we hold that when an issue/question is directly covered by a binding judgment of the Hon'ble Apex Court or of this Court, the Circular supra insofar as such an issue/question is concerned, is not binding on this count and in our opinion if an issue/question is directly or squarely covered as aforesaid by a judgment and is no more res integra, the Circular (supra) would be inapplicable." 9. Mr. Pandey has relied on the following decisions: (i) 2008(3) SCC 582 State of Kerala and Ors. vs. Kurian Abraham Pvt. Ltd. and Anr. (08.02.2008 - SC) 23. Tax administration is a complex subject. It consists of several aspects. The Government needs to strike a balance in the imposition of tax between collection of revenue on one hand and business-friendly approach on the other hand. Today, Governments have realized that in matters of tax collection, difficulties faced by the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 119 of the Act." (iii) Union of India & others Vs. Arviva Industries India Limited and others- 2014 (3) SCC 159 "4. This Court in Commr. Of Customs Vs. Indian Oil Corpn. Ltd.- (2004)3 SCC 488, after examining the entire case law, culled out the following principles: (SCC p.497, para 12) "(1) Although a circular is not binding on a court or an assessee, it is not open to the Revenue to raise a contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show-cause notice and demand contrary to the existing circulars of the Board are ab inititio bad. (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars." 5. In this particular case, the Board's Circular No.39/99- Cus. Dated 25.6.1999 extends the benefit of the brand rate of drawback to compensate exporters for the re-rolled steel products and processed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court shall be excluded. 10.3 Section 154 of the Income Tax Act "154. Rectification of mistake.- (1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,- (a) amend any order passed by it under the provisions of this Act ; (b) amend any intimation or deemed intimation under sub-section (1) of section 143. (1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided. (2) Subject to the other provisions of this section, the authority concerned- (a) may make an amendment under sub- section (1) of its own motion, and (b) shall make such amendment for rectifying any such mistake which has been brought to its notice by the assessee, and where the authority concerned is the Commissioner (Appeals), by the Assessing Officer also. (3) An amendment, which has the effect of enhancing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to interfere with the discretion of the Collector of Customs (Appeals) in the exercise of his appellate functions.]" 10.5 Section 37-B of the Excise Act [37B. Instructions to Central Excise Officers. -The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board: Provided that no such orders, instructions or directions shall be issued- (a) so as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the [Commissioner of Central Excise (Appeals)] in the exercise of his appellate functions." 11. While inaugurating a five day National Legal Workshop on 23.12.2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced, reads as under: "The underlying objective of the Board's instruction is to reduce litigation in small cases. With a view to protecting the Revenue's right to file or not to file an appeal, a new Section 268A of the Income- tax Act has been inserted so as to provide that- The Board may issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit. Such fixing of monetary limit is to be for the purpose of regulating filing of appeal or application for reference by any income tax authority under the provisions of this Chapter. Where an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, due to abovementioned order/instruction/direction of the Board, such authority shall not be precluded from filing an appeal or application for reference on the same issue in the case of - (a) the same assessee for any other assessment year; or (b) any other assessee for the same or any other assessment year. Where no appeal or application for reference has been filed by an income tax authority pursuant to the above mentioned orders/ instr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the assessee is required to be upheld and the same is upheld. 21. The contention which has been envisaged is of the decision of the Supreme Court. There are ample powers under Section 263 and 154, which will meet the ends of justice and it will not be out of place to mention that the writ can also be filed by the department if it is a gross case decided by any officer or authority but to that extent the appeal is not maintainable and would amount to give over riding effect to the statutory provisions. 22. It is well known that the Courts are flooded with litigation where the State Government and Central Government or the Department or Corporation are the largest litigants, therefore, frivolous litigation is curb for larger interest of avoiding more Tribunals or Courts to decide the matters on merits. 23. In that view of the matter, when the legislation had thought it fit to put some prohibition on the department, in our considered opinion the issue is required to be answered in favour of the assessee and against the department inasmuch as the circular of the CBDT is binding on the subordinate officers. Per Hon'ble M.N. Bhandari, J. 24. The issue for our considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 of the Constitution of India. If an issue has been decided by the Apex Court then the ratio propounded therein is to be applied as a precedence. If the Tribunal or the CIT (Appeals) takes a view contrary to the settled law then rider imposed by the CBDT on filing of appeal cannot be applied. If we hold that appeal would not be maintainable even if the Tribunal or the CIT (Appeals) has taken view contrary to the judgment of the Supreme Court then Article 141 of the Constitution of India would be violated. No statutory provision can stand or be read contrary to the constitutional provision. 30. In view of the above, theory of reading down needs to be applied for making Circular of the CBDT in consonance to the provisions of the Constitution of India otherwise it would not only cause judicial indiscipline but give rise to the anarchy, leading to serious consequences. 31. Accordingly, the Circular issued by the CBDT under Section 268A of the Act of 1961 is held binding on the Department thus appeal cannot be filed, if it is barred. It is, however, with a clarification that if the issue decided by the CIT (Appeals) or Tribunal is contrary to the judgments of the Supreme Court, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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