COMMISSIONER OF INCOME TAX Vs. KATARIA WIRES LTD

JUDGEMENT

(1.) Learned senior counsel with Ms. Veena Mandlik, learned counsel for the appellant.

(2.) By Circular dated 24-10-2005, the Central Board of Direct Taxes laid down certain monetary limits to emphasise upon the Department that if the tax effect of the case was below the monetary limits prescribed in Clause 2 of the said Circular, the Department should not file any appeal. An exception was, however, carved out in the cases covered by paragraph 3 of the said Circular, which reads as under:--

(3.) This appeal has been filed against the order of the Income-tax Appellate Tribunal declining to decide the appeal on merit on the ground that the tax effect in the case was less than Rs. 2,00,000 and, therefore, the appeal was contrary to the explicit instructions of the Board of Direct Taxes to the effect that where the tax effect was less than 2,00,000, appeal should not be filed. In dismissing the appeal on the said technical ground, the Tribunal took into account the decision of the Bombay High Court in CIT v. Pithwa Engg. Works, 2005 276 ITR 519 to the effect that the Circular of the Board also applies to the pending cases. Learned senior counsel for the revenue has, however, pointed out that Rajasthan High Court in decision in CIT v. Rajasthan Patrika Ltd, 2002 258 ITR 300 has held that the High Court ought not to have dismissed appeal or rejected the reference merely on account of the pecuniary limits fixed with regard to the tax effect. Reference has also been made to the decision of the Supreme Court in CIT v. Hero Cycles (P.) Ltd, 1997 228 ITR 463 to the effect that Circulars are not binding on Appellate Authorities, Court, Tribunal or assessee. However, we may point out that Their Lordships were not considering any question involving interpretation of the Circular issued by the CBDT. Learned senior counsel has further pointed out a decision of the Punjab and Haryana High Court in CIT v. Abhishek Industries Ltd., 2006 286 ITR 1 . Our attention was, in particular, invited to the discussion contained in paragraph 29 of the said report. However, we find that the said decision follows the case of the Supreme Court in Hero Cycles (P.) Ltd. s case and holds that Circular issued by the Central Board of Direct Taxes can bind the Income-tax Officer but not the Appellate Authority or the Tribunal or the Court or even the assessee.