Bombay H.C : No appeal tax effect is less than the limit prescribed in the circulars issued by the CBDT

High Court Of Bombay

CIT Vs. Vitessee Trading Ltd.

Section 260A

Dr. S. Radhakrishnan And V.C. Daga, JJ.

IT Appeal (L) No. 1118 Of 2003

Notice Of Motion No. 3369 Of 2003

April  23, 2007 

JUDGMENT

1. Heard the learned counsel for the appellant. Perused the petition.

2. We, during the course of exercising our appellate jurisdiction under section 260A of the Income-tax Act, 1961, (for short “the Act”) noticed that in a quite few matters in spite of the circulars Instructions of the Central Board of Direct Taxes (Ministry of Finance Department), one of them being dated 24-10-2005, (which clearly stipulates that the Income-tax Department should not file appeals under section 260A of the Act, wherein the tax effect is less than Rs. 4 lakhs), the Department is filing appeals without following the guidelines laid down in the said circular.

3. At this juncture, it will also be relevant to note that through our two judgments in the case of CIT v. Camco Colour Co. [2002] 254 ITR 565 / 122 Taxman 336 (Bom.) and another in the case of CIT v. Pithwa Engg. Works [2005] 276 ITR 519 (Bom.), it is categorically ruled that the circulars issued by the Central Board of Direct Taxes, from time to time, are binding on the Income-tax Department, since they have a statutory force. The said judgments clearly lay down that the Department is not expected to file appeals wherein the tax effect is less than Rs. 2 lakhs, now revised to Rs. 4 lakhs.

4. In view of the circulars of the Central Board of Direct Taxes and our judgments referred to hereinabove, we expect from the Income-tax Department that wherever tax effect is less than the limit prescribed in the circulars issued by the Central Board of Direct Taxes, the Department should not file appeal or reference and should proceed to withdraw the same, if already filed, so that proportionate court fee can be refunded to the Department.

5. Since we have noticed that the guidelines issued in the circular by the Central Board of Direct Taxes and the law laid down by this court is being followed in the breach by the Department, we are constrained to direct the Commissioner of Income-tax No. VII, Mumbai City, Mumbai, who is personally present in the court pursuant to our notice, to move the Central Board of Direct Taxes with a request to issue appropriate circular in this behalf to all the Chief Commissioners of the Income-tax Department operating in the region directing them to instruct their respective advocates to withdraw pending appeals wherein the tax effect is less than Rs. 4 lakhs, unless the question of law involved or raised in the appeal or referred to this court is of a recurring nature, required to be settled by this court.

6. In the case at hand, since the Commissioner of Income-tax has already filed an affidavit tendering apology and has moved a motion to seek withdrawal of the instant appeal, we do not propose to pursue the matter further. The show-cause notice stands discharged.

7. However, this matter shall appear on board after four weeks to ensure compliance with this order with regard to the implementation of the circular issued by the Central Board of Direct Taxes and the law laid down by this court in the cases referred herein above.

8. Needless to mention that in view of the withdrawal of the appeal, the notice of motion does not survive. The Revenue shall be entitled to refund of the proportionate court fee as per rules.

9. No order as to costs.

[Citation : 331 ITR 433 ]

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