TMI Blog2007 (11) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... l Board of Direct Taxes (for short "the Board") and the instructions which are the subject-matter of these appeals were first issued on March 27, 2000, being Instruction No. 1979 and, thereafter, they were updated and the instructions were issued on June 29, 2000, being Instruction No. 1985 and the latest for the purposes of the present cases are Instruction No. 2 of 2005 issued on October 24, 2005. 3. The contention of Mr. N. R. Siva Swamy, learned counsel for the respondents, is that these instructions are enforceable by courts of law and if courts of law do not enforce them, then the instructions would become redundant and the Department can use the instructions with arbitrariness holding in some cases that appeals should be filed and holding in some cases that appeals should not be filed. These instructions, as a matter of fact, have been issued with a view to reduce the litigation at various fora where the amounts claimed by the Revenue do not exceed a particular limit. The instructions issued on March 27, 2000, laid down that appeal shall be filed only in cases where the tax effect exceed Rs. 1,00,000 if appeals were to be filed before the Appellate Tribunal and it should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered by exceptions. 6. Now, dealing with the first argument of Mr. S. R. Ashok that the circulars do not come under section 119 of the Act, he submits that under section 119(2) of the Act, all circulars issued by the Board must be published and circulated in the prescribed manner for general information. Mr. N. R. Siva Swamy submits that there is nothing on the record that these circulars were neither published nor were circulated for general information. As a matter of fact, all these circulars were publicly known to everybody and, therefore, they cannot be held to be non-enforceable as they were not published. In any case, there is no restriction imposed by section 119(2) of the Act that these circulars should be published in the Official Gazette. He also contends that if these instructions do not come under sections 119 and 120 of the Act, then there is no power with the Department to issue such instructions and these instructions, if held to be unenforceable, that will give power to the income-tax authorities to use these circulars selectively. In some cases, they will not file appeals on the ground that the tax effect does not exceed the monetary limit prescribed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment to file an appeal against the correctness or the binding nature of the circulars. Therefore, it is clear that so far as the Department is concerned, whatever action it has to take, the same will have to be consistent with the circular which is in force at the relevant point of time." 8. To the same effect, there is a judgment of this High Court reported in CIT v. Andhra Pradesh State Road Transport Corporation [2006] 285 ITR147, where this court held (headnote): "The Department has no right to challenge a circular issued by the Board on any ground whatsoever, including the ground that it was inconsistent with the statutory provision." 9. Reliance has also been placed by Mr. Swamy on the judgment reported in Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC). While dealing with the powers of the Central Board of Direct Taxes, the Supreme court, in this judgment, considered the effect of circular under section 119 of the Act and was of the view (page 727): "Section 119, strategically placed in Chapter XIII which deals with "income-tax authorities" is an enabling power of the Central Board of Direct Taxes, which is recognis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Board of Direct Taxes unless they are held contrary to the statute, are binding upon the Departmental authorities." 11. To the same effect, there is a judgment of the Calcutta High Court reported in CIT v. Savoy Enterprises Ltd . [1995] 211 ITR 192 (Cal). 12. Learned senior counsel appearing for the appellants, on the other hand, submits that though the courts have consistently held that the instructions laid down by the Board are binding on the Department, but the question of enforceability of the circulars in question has come directly before various High Courts and there is a consistent view of various High Courts that these circulars do not take away the power of the Department to file appeals if the appeals do not fill up the monetary criteria laid down by those circulars. In this connection, he refers to a judgment of the Delhi High Court reported in CIT v. Blaze Advertising (Delhi) Pvt. Ltd . [2002] 255 ITR 460 (Delhi). This judgment was pronounced in altogether a different context where a circular was not in conformity with the judgment and, therefore, the Delhi High Court held, (page 466): "Circulars issued under section 119 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion whether the Income-tax Department could file an appeal in view of the applicability of circular to them. We are not concerned with whether the Tribunal should have entertained the appeal or not. Therefore, even this judgment would not help the appellants. 16. Another judgment on which reliance has been placed by Mr. S. R. Ashok is from the Allahabad High Court reported in Jugal Kishore Arora v. DCIT [2004] 269 ITR 133. This judgment has not dealt with the questions which have been raised during the arguments before this court. It is true that it was considering the effect of a circular which laid down that no appeal could be filed where the tax effect was not more than Rs. 1,00,000. But what the High Court said was (page 140) "AS regards the contention that the appeal should not have been entertained in view of the direction of the Central Board of Direct Taxes dated March 27, 2000, we are of the opinion that the instructions of the Central Board of Direct Taxes regarding filing of appeals are only internal matters of the Department. and the assessee cannot object to filing of an appeal despite such an instruction. The appeal is clearly maintainable before the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 119 of the Act will not be of any assistance to the respondents in support of their contentions." 20. But, in the present case, we do not have any material before us and no material was placed even before the Tribunal to come to a conclusion that the circulars, which have been mentioned as "circulars" by the Board itself were not circulars under section 119 of the Act. 21. Mr. S. R. Ashok has also relied on a judgment of the Supreme Court reported in J. R. Raghupathy v. State of A.P ., AIR 1988 SC 1681. This judgment is relied on for canvassing the principle of law that under article 226 of the Constitution, the High Courts could not issue writs to enforce administrative rules, regulations and instructions which have no statutory force. In the absence of exceptional circumstances, the Supreme Court held (page 1691) "It is well-settled that mandamus does not lie to enforce departmental manuals or instructions not having any statutory force, which do not give rise to any legal right in favour of the petitioner." 22. There is no quarrel with the principle laid down by the Supreme Court in this judgment, but, in the present cases, we are dealing with appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the adverse judgment should be contested only if the prosecution proceedings contemplated relates to point under appeal and not on points unrelated to the issues in appeal." 27. In Instruction No. 2 of 2005 issued on October 24, 2005, in paragraph 3, it was also decided that in cases involved substantial questions of law of importance as well as in cases where the same question of law will repeatedly arises either in the cases concerned or in similar cases, should be separately considered on the merits without being hindered by the monetary limits. All these exceptions which have been created in these circulars, require consideration by the Department with reference to each case and after consideration, they should come to a conclusion that though the case was falling under the monetary limits, it was also covered by an exception. No such exercise appears to have been done and, therefore, this argument would not be available at this stage to the Department. Even such an exercise was not made at the Tribunal. The Tribunal found "No evidence, whatsoever, has been furnished before us to show that the appeals fall in 'exceptions' provided in paragraph 3 of the instruction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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