COMMISSIONER OF INCOME TAX Vs. MADHU BAI LODHA

JUDGEMENT

(1.) THIS appeal as also the connected appeals are being decided by this common order as they raise the following substantial question of law: Whether the Tribunal committed an illegality in not deciding the appeal on merits merely on account of the fact that the tax effect was less than Rs. 2,00,000 in which case the CBDT had issued instructions to the Department, not to file appeals ?

(2.) BY Circular dt. 24th Oct., 2005 (2005) 198 CTR (St) 41 the CBDT 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 para 3 of the said circular, which reads as under:

(3.) WE have considered the contention raised by the learned senior counsel. Before considering the cases: cited by the learned senior counsel, we may point out that a Division Bench of [this Court has held in CIT v. Suresh Chand Goyal (2007) 209 CTR (MP) 410 : 2007 (3) M.P.L.J. 60 that in cases where tax effect is below Rs. 2,00,000, Revenue cannot file appeal contrary to the terms of circular which is binding on the Department. The relevant discussion contained in para 16 of the said Report reads as extracted below: 16. The another question raised by learned Counsel for the respondent is about the filing of appeal contrary: to the circular issued by the CBDT, according to which, the appeal under Section 260A of the IT Act on the tax effect of less than Rs. 2 lacs should not be filed by the Revenue and placed reliance on the decision of the Bombay High Court in the case of CIT v. Camco Colour Co. : [2002]254ITR565(Bom) . Learned Counsel for the respondent also relied upon the decision of the Supreme Court in the cases of Navnit Lal C. Javeri v. K.K. Sen, AAC : [1965]56ITR198(SC) ; Ellerman Lines Ltd. v. CIT : [1971]82ITR913(SC) and K.P. Varghese v. ITO : [1981]131ITR597(SC) , to contend that the circular issued by the CBDT is binding on all the officers and CITs and appeal or reference contrary to the instructions issued in the circular will not be considered by the Courts and the Division Bench of the Bombay High Court was satisfied that the Board has taken a policy decision not to file appeal in a type of case in hand and the same is binding on the Revenue and in the result the appeal was dismissed following the circular. The similar view was taken by the Division Bench of the High Court of Madhya Pradesh in; the case of Asstt. CIT v. Aradhana Oil Mills (2002) 30 ITC 446 (MP) and following the circular of CBDT, the appeal was dismissed.