TMI Blog1998 (3) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... nal has not expressed any opinion whether the questions sought to be referred are questions of law arising from the order of the Tribunal. It has referred to the Central Board of Direct Taxes Circular F. No. 319/11/1987, dated July 14, 1987, according to which the Department would not seek reference to the High Court even if a question of law has arisen out of the order of the Tribunal if the tax effect involved is less than Rs. 30,000. The reference was declined solely by relying on the said circular. Disputing the correctness of the abovesaid order of the Tribunal, the Department has filed a petition under section 256(2) of the Income-tax Act before the High Court which is registered as ITC No. 37 of 1994. A petition under article 226 of the Constitution has also been filed on January 31, 1996 (re-filed on April 26, 1996 after removing the objections pointed out by the office), wherein the Department has sought for quashing of the impugned order dated October 4, 1993, passed by the Tribunal under section 256(1), followed by a direction to the Tribunal to hear and decide the petition on the merits. It is averred in the petition that during the course of hearing in ITC No. 37 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Tribunal, require the Appellate Tribunal to state the case and to refer it, and on receipt of any such requisition, the Appellate Tribunal shall state the case and refer it accordingly." With the law laid down by the Supreme Court in the leading authority of CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589, the following principles are well-settled: "1. When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order. 2. When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order. 3. When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order. 4. When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it." If an application under section 256(1) of the Act filed before the Tribunal is rejected, the order of rejection may be founded on very many grounds. The simplest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the correctness of the decision of the Tribunal on any such other issues leading to the rejection of the application or withholding of the reference. A bare perusal of section 256(2) shows that availability of jurisdiction thereunder to the High Court is founded on existence of twin factors : (i) refusal of the Tribunal to state the case on the ground that no question of law arises ; and (ii) satisfaction of the High Court that such decision of the Tribunal was not correct. In all cases other than these, the remedy of the aggrieved party would be to invoke the writ jurisdiction of the High Court asking for the issuance of a writ of mandamus or a writ of certiorari as may be appropriate. The power of judicial superintendence conferred on the High Court by article 227 of the Constitution may be invoked for setting aside an erroneous order of the Tribunal refusing to make a reference or withholding the same on the High Court arriving at a finding that the Tribunal had erroneously refused to exercise the jurisdiction vested in it by the statute. None of the situations, catalogued in para 9.3 above would be covered by the expression "refuses to state the case on the ground that no que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's case [1961] 42 ITR 589 (SC) (see para 8 (page 211 above)). The remedy of the person aggrieved (i.e., the Department) was to invoke the jurisdiction of the High Court under article 226/227 of the Constitution. The remedy under section 256(2) was not available to it. The petitioner was rightly advised to file CWP No. 1725 of 1996. The view taken by us finds support from ample judicial authority. In CIT v. Nopany Education Trust [1986] 159 ITR 367 (Cal) ; CIT v. Poonam Chand Manmal Trust [1988] 171 ITR 153 (Raj) ; Prem Narain Khurana v. CIT [1986] 162 ITR 297 (All) ; S. P. Jaiswal v. CIT [1969] 73 ITR 179 (P H) it has been held that the remedy under section 256(2) is available only if the rejection be referable to the ground set out in section 256(1). In CIT v. Poonam Chand Manmal Trust [1988] 171 ITR 153 (Raj), the application under section 256(1) of the Act was rejected on the ground that requisite copies of documents were not filed. In S. P. Jaiswal's case [1969] 73 ITR 179 (P H), the application under section 256(1) was rejected as barred by time. In CIT v. ITAT [1987] 167 ITR 250 (Mad), the application under section 256(1) was rejected on the ground that it had not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... working out monetary limits the cumulative revenue effect of the issue in the assessee's case for all the years up to 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 cases should be taken into account for the purpose of the monetary limit. While applying the monetary limits the effect of the carry forward effect of consequential addition/deletions in other years should be kept in view. In cases of firms/association of persons the revenue effect in case of partners/members be also taken into account." It is submitted by learned counsel for the Department that the Central Board of Direct Taxes instructions are binding on the income-tax authorities but they do not bind the Tribunal and certainly not the High Court. If the Tribunal or the High Court be satisfied that the question sought to be referred is a question of law and arises from the order of the Tribunal, then a reference has to be made to the High Court. The Central Board of Direct Taxes instructions cannot take away such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceptions carved out in the instructions themselves in that event the denial of reference would be failure to exercise a jurisdiction statutorily vested in the Tribunal. Inasmuch as the Tribunal has not examined the case from that point of view and adequate material is not available before us enabling formation of an opinion either way, we deem the present one to be an appropriate case, which should be sent back to the Tribunal for consideration afresh. For the foregoing reasons, CWP No. 1725 of 1996 is allowed. The impugned order of the Tribunal dated October 14, 1993, passed on RA No. 271/Delhi of 1993 is set aside. The matter is sent back to the Tribunal. The application under section 256(1) of the Act filed by the Department shall be deemed to be pending. After affording the parties an opportunity of hearing, the Tribunal shall examine afresh, if the case is one which does not attract the applicability of the Central Board of Direct Taxes instructions or is one covered by any one of the exceptions carved out in the circular itself. Thereafter, the Tribunal shall proceed to hear and dispose of the application filed by the Department in accordance with law. ITC No. 37 of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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