TMI Blog2004 (2) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... With a view to reducing the pendency of appeals in the Tribunal, High Court and Supreme Court and also to redress the difficulties of Small assessees in meeting the cost of litigation, the Board has been issuing instructions to the field officers of the Income Tax Department prescribing the monetary limit for filing appeals before the various appellate forums including the Tribunal. In the year 1980, the CBDT issued Instruction No. 1328 wherein it was stated that insofar as the Wealth Tax appeals are concerned, appeals to Tribunal should not be filed if the tax effect was less than Rs. 2,000. For appeals arising from Income Tax, such monetary limit was fixed at Rs. 5,000. The main objective was to reduce the litigation and also the costs involved therein. On 6-4-1985 Instruction No. 1612 was issued wherein the monetary limit (tax effect) was fixed at Rs. 5,000 in respect of appeals to be filed under other Direct Taxes and Rs. 10,000 for income tax appeals. On 3rd July, 1984, the CBDT vide F. No. 319/25/84-WT issued a specific Circular with regard to the appeals concerning the applicability of Rules IBB of Wealth-tax Rules where the Departmental officers were directed not to file ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instructions, which were binding. Since the appeal in the case was filed against the instructions of the Board, the same was dismissed on this ground. 4. Thereafter, ITAT, Amritsar Bench by relying on the order of ITAT, Chandigarh Bench in the case of Dharamvir and the judgment of Bombay High Court in the case of CIT v. Cameo Colour Co. [2002] 254 ITR 565 dismissed the appeal in the case of ITO v. Ravinder Kumar [IT Appeal Nos. 404 and 405 (Asr.) of 1997, dated 1-8-2002] for the assessment years 1992-93 and 1993-94 and other cases vide consolidated order. On identical facts and for the same reasons, ITAT, Amritsar Bench also dismissed appeals in the case of ITO v. Bir Engg. Works [IT Appeal Nos. 377, 378 and 379 (Asr.) of 2002, dated 20-1-2003] for the assessment years 1983-84 to 1985-86 and others vide consolidated order. Thereafter, the Revenue filed miscellaneous applications in the case of ITO y. Bir Engg. Works [MA Nos. 21, 26 and 27, dated 21-7-2003] requesting for recall of the order and ITAT, Amritsar Bench vide its order rejected such M.As. The Revenue has again now moved Miscellaneous Applications against the order of Tribunal dismissing the earlier M.As. in this case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e monetary limit of tax effect for filing the appeals before the various appellate forums with a view of minimize pendency of litigation. But there are certain exceptions provided therein where an appeal can be filed even though the tax effect involved is less than the prescribed monetary limit. He submitted that in case the Departmental Authority decides to file appeals on the ground that case is covered by any of the exception, the authority is not duty bound to specify such exception in the grounds of appeal because there is no requirement under the law to do so. He further argued that the Instructions could not substitute any provisions of law. The power for filing an appeal is conferred on the Income-tax Authorities by the statute. He submitted that the Income-tax Authority files an appeal as per powers conferred under the Act. The Board cannot take away such statutory power by way of issue of administrative instructions because these instructions are only administrative in nature. 5.1 The learned DR further relied on the judgment of Hon'ble jurisdictional Punjab Haryana High Court in the case of Rani Paliwal v. CIT [2004] 268 ITR 220 where this issue was considered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even if appeal filed by the Revenue is below a particular limit, the Tribunal is bound to decide the same on merits. He submitted that in view of the judgment of jurisdictional High Court, the Miscellaneous Applications filed by the Revenue in the aforesaid cases deserve to be allowed. He further submitted that relying on the judgment of the Hon'ble Punjab Haryana High Court in the case of Rani Paliwal, the ITAT, Amritsar Bench has allowed the Miscellaneous Applications filed by the Revenue in several cases. He particularly referred to the Misc. Application Nos. 128, 95, 98, 96, 101, 91, 92, 97, 93 and 127 (Asr.)/2004. He, therefore, submitted that present Misc. Applications also deserve to be allowed. 5.3 Shri R.K. Raina, Ld. DR has also filed written submissions vide his letter dated 12-8-2004 reiterating the submissions made by Sh. Ashwani Mahajan already discussed in the preceding paragraphs. He also relied on the judgment of the Apex Court in the case of J.R. Raghupathy v. State of A.P. AIR 1988 SC 1681 where the notification issued by the Andhra Pradesh Government in breach of the guidelines was struck down by the Hon'ble High Court and on appeal, the Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir, the ITAT Amritsar Bench has also followed the judgment of Hon'ble Bombay High Court in the cases of Executors of Late D.T. Udeshi, Cameo Colour Co. He further submitted that the decisions of the ITAT Amritsar Bench have been accepted by the Department. 6.1 Proceeding further, the Id. counsel submitted that Instructions issued by the CBDT are binding on the Income-tax authorities. He relied on the Judgment of Hon'ble Supreme Court in the case of UCO Bank v. CIT [1999] 237 ITR 889, the judgment of Andhra Pradesh High Court in the case of CIT v. Smt. Nayana P. Dedhia [2004] 270 ITR 572, the judgment of Hon'ble Allahabad Court in the case of CIT v. Smt. Parkashwati [1994] 210 ITR 567 and the judgment of Hon'ble Madras High Court in the case of CWT v. S. Annamalai [2002] 258 ITR 675 where by referring to CBDT's Instruction No. 1979, dated 27th March, 2000 and by relying on the judgment of Hon'ble Bombay High Court in the case of Cameo Colour Co., the Hon'ble Madras High Court dismissed the appeal on the ground that the same had been filed contrary to the circular issued by the board prescribing monetary limit of tax effect. Further drawing our attention to the judgment of Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. He submitted that the Hon'ble High Court dismissed the appeal of the assessee on the ground that such plea was not taken before the authorities below. But it does not mean that the Hon'ble High Court has decided the issue on merits. Therefore, this judgment is not binding in nature. 8. Sh. S.K. Bansal, Advocate, appearing for the intervener adopted the same arguments and submitted that the instructions issued by the CBDT were binding on the Income-tax authorities. He relied on 9 judgments of the Hon'ble Supreme Court and 21 judgments of the various High Courts mentioned in Annexure - A of this order, in support of the proposition that the instructions issued by the CBDT were binding on the Income-tax authorities. He further submitted that the observations made by the Hon'ble Punjab Haryana High Court in the case of Rani Paliwal that once the department files an appeal, the Tribunal was bound to decide the same on merits was casual observation and, therefore, circular will not be considered by the Courts. Referring to the contrary decision of the Hon'ble Rajasthan High Court in the case of Rajasthan Patrika Ltd, he submitted that the authors have expressed the view that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: Provided that no such orders, instructions or directions shall be issued- (a) so as to require any income-tax authority 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 (Appeals) in exercise of his appellate functions. (2) Without prejudice to the generality of the foregoing power,- (a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time-to-time [whether by way of relaxation of any of the provisions of sections (139) 143, 144, 147, 148, 154, 155 (sub-section (IA) of section 201, sections 210, 211, 234A, 234B, 234C, 271 and 273 or otherwise], general or special orders in respect of any class of incomes or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular manner. Otherwise, sub-section (1) of section 119 itself mandates that such instructions shall be binding on the Income-tax authorities. Sub-section (2) of section 119 refers to specific orders with reference to any class of income or class of cases either by way of relaxation of any of the provisions of section mentioned therein or with reference to class of income or class of cases. These instructions could be in the form of guidelines, principles or procedure to be followed by the Income-tax authorities in the work relating to assessment, collection of revenue or the initiation of proceedings for the imposition of penalties. The only restriction imposed on the powers of the Board is that those should not be prejudicial to assessee. Here also the Board may if of the opinion that it is necessary in the public interest to do so, publish and circulate such instructions. Therefore, it is not in all cases that instructions/circulars issued by the Board under section 119(2) are published by the Board. Thus, only the difference between sub-section (1) and sub-section (2) of section 119 is that while sub-section (1) deals with the general instructions and directions, sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beneficial power given to the Board for proper administration of Direct Tax Laws so that undue hardship may not be caused to the assessee and such laws are correctly applied. Such circulars are binding on the tax authorities. In the case of CCE v. Dhiren Chemical Industries [2002] 254 ITR 554, the Hon'ble Supreme Court has gone to the extent of saying that regardless of the interpretation that the Hon'ble Supreme Court has placed on the phrase, if there were circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue. In simple words, it means that even if the Board has issued instructions which are contrary to the interpretation of the Supreme Court, the instructions of the Board placing a different interpretation would be binding on the Revenue authorities. In the case of Union of India v. Azadi Bachao Andolan [2003] 263 ITR 707 the Hon'ble Supreme Court has held that a notification issued by the Central Government under section 90 for implementation of the terms of Double Taxation Avoidance Agreement, the provisions of sub-section (2) of section 90 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar statutory provision. This was also not argued by the appellant." From the above, it is clear that Hon'ble Apex Court has not only referred to the binding nature of the circulars of the Board, but even the instructions issued by the Board. The Hon'ble Apex Court has also referred to the provisions of section 151A of the Customs Act, section 37V of the Central Excise Act and equated these provisions with section 119 of the Income-tax Act. The Hon'ble Supreme Court has emphatically held that it is not open to the Revenue to advance an argument or file an appeal contrary to the circulars of the Board. Thus, it does not leave any doubt in our mind that both instructions issued under section 119(1) and circulars issued by the Board under section 119(2) have equal force and are binding on all the Income-tax Authorities. Various High Courts including the Hon'ble Andhra Pradesh High Court in the case of Smt. Nayana P. Dedhia has expressed the same view. In the preceding paragraph, we have referred to the provisions of section 119 of the Income-tax Act and the various judgments where it has held that the instructions/circulars issued by the CBDT are binding on the Income-tax auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a law, the same would relate back to the date when provisions were introduced in the Act. This would be a mistake of law apparent from record, which could be rectified under section 154. However, the Hon'ble High Court referred to the Instructions issued by the Board prescribing the monetary limit of filing an appeal before the High Court which provided that an appeal should not be normally filed. Taking into account these facts, the High Court declined to interfere with the order of the ITAT though on merits, the matter was held to be in favour of the Revenue. 11.4 Contrary view has been taken by the Hon'ble Rajasthan High Court in the case of Rajasthan Patrika Ltd., where it was held that once the appeal is filed against the instructions of the Board, the High Court ought not to dismiss the appeal or reject the reference. These were only administrative instructions, which were not binding on the court. 11.5 Apart from the various judgments of the Hon'ble Supreme Court and the High Courts, various Benches of the Tribunal has also dismissed the appeals filed against the instructions of the CBDT prescribing monetary limit of tax effect on the ground that instructions issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities. The law does not draw any distinction between instructions/circulars issued under sections 119(1) and 119(2) of the Income-tax Act. Both are binding on the Departmental Officers. We hold accordingly. Therefore, this question is decided accordingly. 12. The next aspect of the case that requires to be considered by this Bench is about the nature of observations made by the Hon'ble Punjab Haryana High Court in the case of Rani Paliwal. Whether the observations made therein forms part of ratio decidendi and are, therefore, binding in nature as canvassed by the learned DR or the same are only passing remarks which are not binding in nature. We are in full agreement with the learned DR that the ratio of the decision of the jurisdictional High Court is binding on all the authorities falling in its territorial jurisdiction including the Tribunal. However, it would depend upon the fact whether such observations are in the nature of ratio decidendi or mere passing remarks. We have carefully and respectfully gone through the judgment of Hon'ble Punjab Haryana High Court in the aforesaid cases. In order to appreciate the judgment of the Hon'ble High Court, it would be appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that the Hon'ble High Court dismissed the appeal of the assessee on the ground that the issue raised did not involve any question of law much less of substantial question of law. As stated earlier, an appeal against the order of the Tribunal lies to the High Court only if there is substantial question of law. Further, the Hon'ble High Court has also observed that the assessee could not be allowed to raise such plea because no such plea was taken before the Tribunal. Thus, the findings of the Tribunal are based on these reasons. As regards the observations made by the Hon'ble High Court that the instructions of the Board are not binding on the Tribunal, there is no quarrel with such proposition. As it is settled position under the law that the instructions of the Board are not binding on the Courts including the Tribunal. However, the Courts including the Tribunal can certainly refer to these instructions and decide the matters in favour of the parties, if these instructions favour them. This has been done in a number of cases where the Hon'ble Supreme Court, High Courts and the various Benches of the Tribunal have decided the matters in favour of the assessee by relying o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter was referred to a Full Bench for reconsidering that decision. The Full Bench held that, appeals from the decision in Varadaraja Pillai's case having been dismissed, though on a technical ground, that decision stood merged in the decision of the Supreme Court, and according to the doctrine of merger it was not open to the Full Bench to reconsider that decision. On appeal to the Supreme Court, the Hon'ble Apex Court reversed the decision of the Full Bench of the High Court and held that the Supreme Court had dismissed the appeals from the decision of the Madras High Court in Varadaraja Pillai's case, only a technical ground without any law being laid down by the Supreme Court. Neither the merits of the judgment in Varadaraja Pillai's case nor the reasons recorded therein were gone into by the Supreme Court. The Full Bench of the Madras High Court was fully entitled to go into the merits and decide all controversies and was not to feel inhibited by the fact that the appeals against the decision in Varadaraja Pillai's case were dismissed by the Supreme Court. The Hon'ble Supreme Court further observed that a summary dismissal by the Supreme Court, without laying down any law, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not is dealt within the succeeding paragraphs. 13. As per provisions of section 254(2) of the Income-tax Act, the Tribunal is vested with the powers to rectify the mistakes of law or facts, which are obvious, patent and glaring from the records. All those issues, which involve prolonged discussions, arguments, debatable and where two conceivable views are possible fall outside the purview of the provisions of section 254(2) of the Income-tax Act. The Tribunal does not have power-to review its own decision. The powers conferred under section 254(2) are analogous to powers conferred on the Income-tax authorities under section 154 of the Income-tax Act. In the case of T.S. Balaram, the Hon'ble Supreme Court considered the issue as to what constitutes a mistake apparent from record. The Hon'ble Supreme Court observed that a mistake apparent on the record must be obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. The ratio of this judgment would equally apply to the powers of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .4 Now when we examine the present case in the light of above legal position, we find that the ITAT Amritsar Bench has taken a possible view by relying on the Board's Instruction No. 1979, dated 27th March, 2000. This view is also supported by three judgments of Hon'ble Bombay High Court in the cases referred to above, judgment of Hon'ble Madhya Pradesh High Court and Hon'ble Madras High Court in the cases referred to above and there is only one contrary view taken by the Hon'ble Rajasthan High Court. Besides, the view that instructions issued by the Board from time-to-time are binding on the Income-tax authorities is supported by several judgments of the Hon'ble Supreme Court and the High Courts. Thus, the view taken by the ITAT Amritsar Bench was possible view, which could not be substituted by way of miscellaneous petitions. Besides, the issue whether the instructions of the Board are binding or not and whether the appeals could be dismissed by relying on Board's Instruction No. 1979, dated 27th March, 2000 due to smallness of tax effect or not and also whether the judgment of the Hon'ble jurisdictional Punjab Haryana High Court in the case of Rani Paliwal was only an observat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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