IN HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 575 / 2008 COMMISSIONER OF INCOME TAX, JAIPUR-II, JAIPUR ----Appellant Versus M/S GAD FASHION, G-152, RIICO SANGANER INDUSTRIAL AREA JAIPUR. ----Respondent For Appellant(s) : Mr. R.B.Mathur with Mr. Prateek Kedawat and Ms. Meenal Ghiya, Mr. Sameer Jain with Ms. Mahi Yadav, Mr. Daksh Pareek and Mr. Arjun Singh & Mr. Anuroop Singhi with Mr. Aditya Vijay and Mr. Narendra Singh Bhati. For Respondent(s) : Mr. Sanjay Jhanwar with Mr. Atul Saxena, Mr. Ankit Sareen, Mr. Rajat Sharma and Mr. Sanjeev Pandey. HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE M.N. BHANDARI HON BLE MR. JUSTICE INDERJEET SINGH Order Per Hon ble Jhaveri & Inderjeet Singh, JJ. 10th November, 2017. 1. By way of reference, this Court vide order dated 05.07.2017 framed following reference for consideration by larger Bench. Whether Department can take contrary view than circular which has been issued for reduction of arrears in Supreme Court, High Courts and Tribunals and insist for arguing matter on merits. (2 of 89) [ITA-575/2008] 2. statutory provision which is required to be considered by us reads as under: 268A. Filing of appeal or application for reference by income-tax authority.- (1) Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for purpose of regulating filing of appeal or application for reference by any income-tax authority under provisions of this Chapter. (2) Where, in pursuance of orders, instructions or directions issued under sub- section (1), income-tax authority has not filed any appeal or application for reference on any issue in case of assessee for any assessment year, it shall not preclude such authority from filing appeal or application for reference on same issue in case of (a) same assessee for any other assessment year; or (b) any other assessee for same or any other assessment year. (3) Notwithstanding that no appeal or application for reference has been filed by income-tax authority pursuant to orders or instructions or directions issued under sub-section (1), it shall not be lawful for assessee, being party in any appeal or reference, to contend that income- tax authority has acquiesced in decision on disputed issue by not filing appeal or application for reference in any case. (4) Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to orders, instructions or directions issued under sub-section (1) and circumstances under which such appeal or application for reference was filed or not filed in respect of any case. (5) Every order, instruction or direction which has been issued by Board fixing monetary limits for filing appeal or application for reference shall be deemed to have been issued under sub-section (1) and (3 of 89) [ITA-575/2008] provisions of sub-sections (2), (3) and (4) shall apply accordingly. 3. Another statutory provision which is required to be considered reads as under: 119. Instructions to subordinate authorities.- (1) Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for proper administration of this Act, and such authorities and all other persons employed in execution of this Act shall observe and follow such orders, instructions and directions of Board : Provided that no such orders, instructions or directions shall be issued (a) so as to require any income-tax authority to make particular assessment or to dispose of particular case in particular manner; or (b) so as to interfere with discretion of Commissioner (Appeals) in exercise of his appellate functions. (2) Without prejudice to generality of foregoing power, (a) Board may, if it considers it necessary or expedient so to do, for purpose of proper and efficient management of work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of provisions of sections 115P, 115S, 115WD, 115WE, 115WF, 115WG, 115WH, 115WJ, 115WK, 139, 143, 144, 147, 148, 154, 155 , 158BFA, sub-section (1A) 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 fringe benefits or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to guidelines, principles or procedures to be followed by other income-tax authorities in work relating to assessment or collection of revenue or initiation of proceedings for imposition of penalties (4 of 89) [ITA-575/2008] and any such order may, if Board is of opinion that it is necessary in public interest so to do, be published and circulated in prescribed manner for general information; (b) Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income-tax authority, not being Commissioner (Appeals) to admit application or claim for any exemption, deduction, refund or any other relief under this Act after expiry of period specified by or under this Act for making such application or claim and deal with same on merits in accordance with law; (c) Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order for reasons to be specified therein, relax any requirement contained in any of provisions of Chapter IV or Chapter VI-A, where assessee has failed to comply with any requirement specified in such provision for claiming deduction thereunder, subject to following conditions, namely:- (i) default in complying with such requirement was due to circumstances beyond control of assessee; and (ii) assessee has complied with such requirement before completion of assessment in relation to previous year in which such deduction is claimed : Provided that Central Government shall cause every order issued under this clause to be laid before each House of Parliament. 4. circulars which are subject matter of this petition read as under: (5 of 89) [ITA-575/2008] INSTRUCTION NO.3/2011 (F.NO.279/MISC.142/2007-1TJ) SECTION 268A OF INCOME-TAX ACT,1961- APPEALS AND REVISION- FILING OF APPEAL OR APPLICATION FOR REFERENCE BY INCOME-TAX AUTHORITY- REVISION OF MONETARY LIMITS FOR FILING OF APPEALS BY DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT- MEASURES FOR REDUCING LITIGATION Reference is Invited to Board s instruction No. 5/2008 dated 15-5-2008 wherein monetary limits and other conditions for filing departmental appeals (In Income-tax matters) before Appellate Tribunal, High Courts and Supreme Court were specified. 2. In supersession of above instruction, it has been decided by Board that departmental appeals may be filed on merits before Appellate Tribunal, High Courts and Supreme Court keeping in view monetary limits and conditions specified below. 3. Henceforth appeals shall not be filed in cases where tax effect does not exceed monetary limits given hereunder: S. Appeals in Income-tax matters Monetary No. Limit (In Rs.) 1. Appeal before Appellate Tribunal 3,00,000 2. Appeal u/s 260A before High Court 10,00,000 3. Appeal before Supreme Court 25,00,000 It is clarified that appeal should not be filed merely because tax effect in case exceeds monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of case. 4. For this purpose, tax effect means difference between tax on total income assessed and tax that would have been chargeable had such total income been reduced by amount of income in respect of issues against which appeal is intended to be filed (hereinafter referred to (6 of 89) [ITA-575/2008] as disputed Issues ). However tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case chargeability of interest is issue under dispute, amount of interest shall be tax effect. In cases where returned loss is reduced or assessed as income, tax effect would include notional tax on disputed additions. In case of penalty orders, tax effect will mean quantum of penalty deleted or reduced in order to be appealed against. 5. Assessing Officer shall calculate tax effect separately for every assessment year in respect of disputed issues in case of every assessee. If, in case of assessee, disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which tax effect in respect of disputed issues exceeds monetary limit specified in para 3. No appeal shall be filed in respect of assessment year or years in which tax effect is less than monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to tax effect in relevant assessment year. However, in case of composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if tax effect is less than prescribed monetary limits in any of year(s), if it is decided to file appeal in respect of year(s) in which tax effect exceeds monetary limit prescribed. In case where composite order/judgment involves more than one assessee, each assessee shall be dealt with separately. 6. In case where appeal before Tribunal or Court is not filed only on account of (7 of 89) [ITA-575/2008] tax effect being less than monetary limit specified above, Commissioner of Income-tax shall specifically record that even though decision is not acceptable, appeal is not being filed only on consideration that tax effect is less than monetary limit specified in this instruction . Further, in such cases, there will be no presumption that Income-tax Department has acquiesced in decision on disputed issues. Income-tax Department shall not be precluded from filing appeal against disputed issues in case of same assessee for any other assessment year, or in case of any other assessee for same or any other assessment year, if tax effect exceeds specified monetary limits. 7. In past, number of instances have come to notice of Board, whereby assessee has claimed relief from Tribunal or Court only on ground that Department has implicitly accepted decision of Tribunal or Court in case of assessee for any other assessment year or in case of any other assessee for same or any other assessment year, by not filing appeal on same disputed issues. Departmental representatives/counsels must make every effort to bring to notice of Tribunal or Court that appeal in such cases was not filed or not admitted only for reason of tax effect being less than specified monetary limit and, therefore, no inference should be drawn that decisions rendered therein were acceptable to Department. Accordingly, they should impress upon Tribunal or Court that such cases do not have any precedent value. As evidence of not filing appeal due to this instruction may have to be produced in courts, judicial folders in office of CSIT must be maintained in Systemic manner for easy retrieval. (8 of 89) [ITA-575/2008] 8. Adverse judgments relating to following issues should be contested on merits notwithstanding that tax effect entailed is less than monetary limits specified in para 3 above or there is no tax effect. (a) Where Constitutional validity of provisions of Act or Rule are under challenge, or (b) Where Board s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in case has been accepted by Department. 9. proposal for filing Special Leave Petition under Article 136 of Constitution before Supreme Court should, in all cases, be sent to Directorate of Income- tax (Legal & Research), New Delhi and decision to file Special Leave Petition shall be in consultation with Ministry of Law and Justice. 10. monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income-tax, filing of appeals in other direct tax matters shall continue to be governed by relevant provisions of statute and rules. Further, filing of appeal in cases of Income-tax, where tax effect is not quantifiable or not involved, such as case of registration of trusts or institutions under section 12A of IT Act, 1961, shall not be governed by limits specified in para 3 above and decision to file appeal in such cases may be taken on merits of particular case. 11. This instruction will apply to appeals filed on or after 9th February 2011. However, cases where appeals have been filed before 9th February 2011 will be governed by instructions on this (9 of 89) [ITA-575/2008] subject, operative at time when such appeal was filed. 12. This issues under section 268A(1) of Income-tax Act, 1961. Circular No. 21/2015 F No 279/Misc. 142/2007-ITJ (Pt Government of India Ministry of Finance Department of Revenue Central Board Direct Taxes New Delhi 10th December, 2015 Subject: Revision of monetary limits for filing of appeals by Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court - measures for reducing litigation - Reg - Reference is invited to Board's instruction No 5/2014 dated 10.07.2014 wherein monetary limits and other conditions for filing departmental appeals (in Income-tax matters) before Appellate Tribunal and High Courts and SLP before Supreme Court were specified. 2. In supersession of above instruction, it has been decided by Board that departmental appeals may be filed on merits before Appellate Tribunal and High Courts and SLP before Supreme Court keeping in view monetary limits and conditions specified below. 3. Henceforth, appeals/ SLPs shall not be filed in cases where tax effect does not exceed monetary limits given hereunder: - S.No Appeals in Income-tax matters Monetary Limit (in Rs.) 1. Before Appellate Tribunal 10,00,000/- (10 of 89) [ITA-575/2008] 2. Before High Court 20,00,000/- 3. Before Supreme Court 25,00,000/- It is clarified that appeal should not be filed merely because tax effect in case exceeds monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of case. 4. For this purpose, "tax effect" means difference between tax on total income assessed and tax that would have been chargeable had such total income been reduced by amount of income in respect of issues against which appeal is intended to be filed (hereinafter referred to as "disputed issues"). However tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case chargeability of interest is issue under dispute, amount of interest shall be tax effect. In cases where returned loss is reduced or assessed as income, tax effect would include notional tax on disputed additions. In case of penalty orders, tax effect will mean quantum of penalty deleted or reduced in order to be appealed against. 5. Assessing Officer shall calculate tax effect separately for every assessment year in respect of disputed issues in case of every assessee. lf, in case of assessee, disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which tax effect in respect of disputed issues exceeds monetary limit specified in para 3. No appeal shall be filed in respect of assessment year or years in which tax effect is less than monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to tax effect in relevant assessment year. However, in case (11 of 89) [ITA-575/2008] of composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if 'tax effect' is less than prescribed monetary limits in any of year(s), if it is decided to file appeal in respect of year(s) in which 'tax effect' exceeds monetary limit prescribed. In case where composite order/ judgement involves more than one assessee, each assessee shall be dealt with separately. 6. In case where appeal before Tribunal or Court is not filed only on account of tax effect being less than monetary limit specified above, Commissioner of Income-tax shall specifically record that "even though decision is not acceptable, appeal is not being filed only on consideration that tax effect is less than monetary limit specified in this instruction". Further, in such cases, there will be no presumption that Income-tax Department has acquiesced in decision on disputed issues. Income-tax Department shall not be precluded from filing appeal against disputed issues in case of same assessee for any other assessment year, or in case of any other assessee for same or any other assessment year, if tax effect exceeds specified monetary limits. 7. In past, number of instances have come to notice of Board, whereby assessee has claimed relief from Tribunal or Court only on ground that Department has implicitly accepted decision of Tribunal or Court in case of assessee for any other assessment year or in case of any other assessee for same or any other assessment year, by not filing appeal on same disputed issues. Departmental representatives/counsels (12 of 89) [ITA-575/2008] must make every effort to bring to notice of Tribunal or Court that appeal in such cases was not filed or not admitted only for reason of tax effect being less than specified monetary limit and, therefore, no inference should be drawn that decisions rendered therein were acceptable to Department. Accordingly, they should impress upon Tribunal or Court that such cases do not have any precedent value. As evidence of not filing appeal due to this instruction may have to Page 2 of 4 be produced in courts, judicial folders in office of CSIT must be maintained in systemic manner for easy retrieval. 8. Adverse judgments relating to following issues should be contested on merits notwithstanding that tax effect entailed is less than monetary limits specified in para 3 above or there is no tax effect: (a) Where Constitutional validity of provision under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in case has been accepted by Department, or (d) Where addition relates to undisclosed foreign assets/ bank accounts. 9. monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevant provisions of statute & rules. Further, filing of appeal in cases of Income Tax, where tax effect is not quantifiable or not involved, such as case of registration of trusts or institutions under se IT Act, 1961, shall not be governed by limits specified in (13 of 89) [ITA-575/2008] para 3 above and decision to file appeal in such cases may be taken on merits of particular case. 10. This instruction will apply retrospectively to pending appeals and applications be filed henceforth in High Courts/ Tribunals. Pending appeals below specified tax limits in para 3 above may be withdrawn/ not pressed. Appeals before Supreme Court will be governed by instructions on this subject, operative at time when such appeal was filed. 11. This issue under Section 268A (1) of Income-tax Act 1961. 5. Counsel for Department Mr. R.B. Mathur has relied upon following decisions: (i) K.P. Varghese vs. Income Tax Officer, Ernakulam and Anr.(04.09.1981 SC), [1981]131ITR597(SC) 11. There is also one other circumstance which strongly reinforces view we are taking in regard to construction of Sub-section (2). Soon after introduction of Sub-section (2), Central Board of Direct Taxes, in exercise of power conferred under Section 119 of Act, issued circular dated 7th July, 1964 explaining scope and object of Sub-section (2) in following words: Section 13 of Finance Act has introduced new Sub-section (2) in Section 52 of Income-tax Act with view to countering evasion of tax on capital gains through device of under-statement of full value of consideration received or receivable on transfer of capital asset. provision existing in Section 52 of Income-tax Act before amendment (which has now been remembered as Sub-section (2) enables computation of capital gains arising on transfer of capital asset with reference to (14 of 89) [ITA-575/2008] its fair market value as on date of its transfer, ignoring amount of consideration shown by assessee, only if following two conditions are satisfied: (a) transferee is person who is directly or indirectly connected with assessee, and (b) Income-tax Officer has reason to believe that transfer was effected with object of avoidance or reduction of liability of assessee to tax on capital gains. In view of these conditions, this provision has limited operation and does not apply to other cases where tax liability on capital gains arising on transfer of capital assets between parties not connected with each other, is sought to be avoided or reduced by under-statement of consideration paid for transfer of asset. circular also drew attention of Income- tax Authorities to assurance given by Finance Minister in his speech that Sub-section (2) was not aimed at perfectly honest and bonafide transactions where consideration in respect of transfer was correctly disclosed or declared by assessee, but was intended to deal only with cases where consideration for transfer was under-stated by assessee and was shown at lesser figure than that actually received by him. It appears that despite this circular, Income-tax Authorities in several cases levied tax by invoking provision in Sub-section (2) even in cases where transaction was perfectly, honest and bonafide and there was no under-statement of consideration. This was quite contrary to instructions issued in circular which was binding on Tax Department and Central Board of Direct Taxes was, therefore, constrained to issue another circular on 14th January, 1974 whereby Central Board, after reiterating assurance given by Finance Minister in course of his speech pointed out: It has come to notice of Board that in some cases Income-tax Officers have (15 of 89) [ITA-575/2008] invoked provisions of Section 52(2) even when transactions were bonaflde. In this context reference is invited to decision of Supreme Court in Navnitlal C. Jhaveri v. K.K. Sen [1965]56ITR198(SC) and Ellerman Lines Ltd. v. Commissioner of Income-tax, West Bengal [1971]82ITR913(SC) wherein it was held that circular issued by Board would be binding on all officers and persons employed in execution of Income-tax Act. Thus, Income-tax Officers are bound to follow instructions issued by Board. and instructed Income-tax Officers that "while completing assessments they should keep in mind assurance given by Minister of Finance and provisions of Section 52(2) of Income-tax Act may not be invoked in cases of bonafide trans-actions". These two circulars of Central Board of Direct Taxes are, as we shall presently point out, binding on Tax Department in administering or executing provision enacted in Sub-section (2), but quite apart from their binding character, they are clearly in nature of contemporanea exposition furnishing legitimate aid in construction of Sub-section (2). rule of construction by reference to contemporanea exposition is well established rule for interpreting statute by reference to exposition it has received from contemporary authority, though it must give way where language of statute is plain and unambiguous. This rule has been succinctly and felicitously expressed in Crawford on Statutory Construction (1940 ed) where it is stated in paragraph 219 that "administrative construction (i.e. contemporaneous construction placed by administrative or executive officers charged with executing statute) generally should be clearly wrong before it is overturned; such construction, commonly referred to as practical construction, although non-controlling, is nevertheless entitled to considerable weight; it is highly persuasive." validity of this rule was also recognised in Baleshwar Bagarti v. (16 of 89) [ITA-575/2008] Bhagirathi Dass ILR 35 Cal. 701 where Mookerjee, J. stated rule in these terms: It is well-settled principle of interpretation that courts in construing statute will give much weight to interpretation put upon it, at time of its enactment and since, by those whose duty it has been to construe, execute and apply it. and this statement of rule was quoted with approval by this Court in Deshbandhu Guptu & Co. v. Delhi Stock Exchange Association Ltd. [1979]3SCR373 . It is clear from these two circulars that Central Board of Direct Taxes, which is highest authority entrusted with execution of provisions of Act, understood Sub-section (2) as limited to cases where consideration for transfer has been under-stated by assessee and this must be regarded as strong circumstance supporting construction which we are placing on that sub-section. 12. But construction which is commending itself to us does not rest merely on principle of contemporanea exposition. two circulars of Central Board of Direct Taxes to which we have just referred are legally binding on Revenue and this binding character attaches to two circulars even if they be found not in accordance with correct interpretation of Sub-section (2) and they depart or deviate from such construction. It is now well-settled as result of two decisions of this Court, one in Navnitlal C. Jhaveri v. K.K. Sen [1965]56ITR198(SC) and other in Ellerman Lines Ltd. v. Commissioner of Income-tax, West Bengal [1971]82ITR913(SC) that circulars issued by Central Board of Direct Taxes under Section 119 of Act are binding on all Officers and persons employed in execution of Act even if they deviate from provisions of Act. question which arose in Navnitlal C. Jhaveri's case (supra) was in regard to constitutional validity of Sections 2(6A)(e) and 12(1B) which were introduced in Indian Income Tax Act 1922 by Finance (17 of 89) [ITA-575/2008] Act 1955 with effect from 1st April, 1955. These two sections provided that any payment made by closely held company to its shareholder by way of advance or loan to extent to which company possesses accumulated profits shall be treated as dividend taxable under Act and this would include any loan or advance made in any previous year relevant to any assessment year prior to assessment year 1955-56, if such loan or advance remained outstanding on first day of previous year relevant to assessment year 1955-56. constitutional validity of these two sections was assailed on ground that they imposed unreasonable restrictions on fundamental right of assessee under Article 19(1)(f) and (g) of Constitution by taxing outstanding loans or advances of past years as dividend. Revenue however relied on circular issued by Central Board of Revenue under Section 5(8) of Indian Income-tax Act 1922 which corresponded to Section 119 of Present Act and this circular provided that if any such outstanding loans or advances of past years were repaid on or before 30th June 1955, they would not be taken into account in determining tax liability of shareholders to whom such loans or advances were given. This circular was clearly contrary to plain language of Section 2(6A)(e) and Section 121(B), but even so this Court held that it was binding on Revenue and since "past transactions which would normally have attracted stringent provisions of Section 12(1B) as it was introduced in 1955, were substantially granted exemption from operation of said provisions by making it clear to all companies and their shareholders that if past loans were genuinely refunded to companies they would not be taken into account under Section 12(1B)" Sections 2(6A)(e) and 12(1B) did not suffer from vice of unconstitutionality. This decision was followed in Ellerman Lives case (supra) where referring to another circular issued by Central Board of Revenue under Section 5(8) of Indian Income Tax Act 1922 on which (18 of 89) [ITA-575/2008] reliance was placed on behalf of assessee, this Court observed: Now, coming to question as to effect of instructions issued under Section 5(8) of Act, this Court observed in Navnit Lal C. Jhaveri v. K.K. Shah Appellate Assistant Commissioner, Bombay. It is clear that circular of kind which was issued by Board would be binding on all officers and persons employed in execution of Act under Section 5(8) of Act. This circular pointed out to all officers that it was likely that some of companies might have advanced loans to their shareholders as result of genuine transactions of loans, and idea was not to affect such transactions and not to bring them within mischief of new provision. directions given in that circular clearly deviated from provisions of Act, yet this Court held that circular was binding on Income-tax Officers. two circulars of Central Board of Direct Taxes referred to above must therefore be held to be binding on Revenue in administration or implementation of Sub-section (2) and this sub section must be read as applicable only to cases where there is under- statement of consideration in respect of transfer. (ii) Commissioner of Central Excise, Bolpur vs. Ratan Melting and Wire Industries (14.10.2008 SC), (2008) 13 SCC 1. 5. Learned counsel for assessee on other hand submitted that once circular has been issued it is binding on revenue authorities and even if it runs counter to decision of this Court, revenue authorities cannot say that they are not bound by it. circulars issued by (19 of 89) [ITA-575/2008] Board are not binding on assessee but are binding on revenue authorities. It was submitted that once Board issues circular, revenue authorities cannot take advantage of decision of Supreme Court. consequences of issuing circular are that authorities cannot act contrary to circular. Once circular is brought to notice of Court, challenge by revenue should be turned out and revenue cannot lodge appeal taking ground which is contrary to circular. 6. Circulars and instructions issued by Board are no doubt binding in law on authorities under respective statutes, but when Supreme Court or High Court declares law on question arising for consideration, it would not be appropriate for Court to direct that circular should be given effect to and not view expressed in decision of this Court or High Court. So far as clarifications/circulars issued by Central Government and of State Government are concerned they represent merely their understanding of statutory provisions. They are not binding upon court. It is for Court to declare what particular provision of statute says and it is not for Executive. Looked at from another angle, circular which is contrary to statutory provisions has really no existence in law. 7. As noted in order of reference correct position vis- -vis observations in para 11 of Dhiren Chemical's case (supra) has been stated in Kalyani's case (supra). If submissions of learned Counsel for assessee are accepted, it would mean that there is no scope for filing appeal. In that case, there is no question of decision of this Court on point being rendered. Obviously, assessee will not file appeal questioning view expressed vis- a-vis circular. It has to be revenue (20 of 89) [ITA-575/2008] authority who has to question that. To lay content with circular would mean that valuable right of challenge would be denied to him and there would be no scope for adjudication by High Court or Supreme Court. That would be against very concept of majesty of law declared by this Court and binding effect in terms of Article 141 of Constitution. (iii) Kalyani Packaging Industry vs. Union of India (UOI) (06.05.2004 SC), (2004) 6 SCC 719 4. This Court has, in case of Collector of Central Excise, Vadodara v. Dhiren Chemical Industries reported in MANU/SC/0787/2001, clarified that when exemption Notification uses words "has already been paid", benefit of that Notification would only be available if duty has, as matter of fact, been paid and has been paid at appropriate or correct rate. It is held that where raw material is not liable to excise duty or to "nil" rate of duty then, as matter of fact, no duty is paid and to such goods benefit of exemption Notification will not be available. 5. It was however sought to be submitted that in Para 9 of Dhiren Chemical's case (supra) it has been clarified that in spite of interpretation given by this Court, if there are any circulars issued by Central Board of Excise and Customs which place different interpretation, that interpretation would be binding upon Revenue. It is submitted that Dhiren Chemical's case thus lays down that interpretation given in Circulars would prevail over interpretation given by Constitution Bench of this Court. In support of this submission reliance is placed on decision dated 22nd January, 2004 in 2004(164)ELT394(SC) [Civil Appeal No. 9924 of 1996] entitled Collector of Central Excise, Meerut v. Maruti (21 of 89) [ITA-575/2008] Foam (P) Ltd. wherein relying upon Para 9 of Dhiren Chemical's case it is held that Circular would be binding on Revenue. 6. We have noticed that Para 9 of Dhiren Chemical's case is being misunderstood. It therefore becomes necessary to clarify Para 9 of Dhiren Chemical's case. One of us (Variava, J.) was party to Judgment of Dhiren Chemical's case and knows what was intention in incorporating Para 9. It must be remembered that law laid down by this Court is law of land. law so laid down is binding on all Courts/Tribunals and Bodies. It is clear that circulars of Board cannot prevail over law laid down by this Court. However, it was pointed out that during hearing of Dhiren Chemical's case because of circulars of Board in many cases Department had granted benefits of exemption Notifications. It was submitted that on interpretation now given by this Court in Dhiren Chemical's case, Revenue was likely to reopen cases. Thus Para 9 was incorporated to ensure that cases where benefits of exemption Notification had already been granted, Revenue would remain bound. purpose was to see that such cases were not reopened. However, this did not mean that even in cases where Revenue/Department had already contended that benefit of exemption Notification was not available, and matter was sub-judice before Court or Tribunal, Court or Tribunal would also give effect to circulars of Board in preference to decision of Constitution Bench of this Court. Where as result of dispute matter is sub-judice Court/Tribunal is, after Dhiren Chemical's case, bound to interpret as set out in that judgment. To hold otherwise and to interpret in manner suggested would mean that Courts/Tribunals have to ignore judgment of this Court and follow circulars of Board. That was not what was meant by Para 9 of Dhiren Chemical's case. (22 of 89) [ITA-575/2008] (iv) Commissioner of Income Tax (CNTL), Ludhiana vs. Hero Cycles Pvt. Ltd., Ludhiana (28.08.1997 SC) [1997] 228 ITR 463 (SC). 13. We have passed similar orders in large number of cases but in this case on behalf of assessee it has been contended that there is circular issued by Central Board of Direct Taxes, New Delhi which should conclude matter. copy of so-called circular dated 9th April, 1981/13th April, 1981 has been handed over in Court. It does not appear that document handed over in Court is copy of Circular at all. It is letter written to one Shri D'Souza with reference to letter written by his predecessor. 14. Moreover, it is well-settled that circulars can bind Income-tax Officer but will not bind appellate authority or Tribunal or Court or even assessee. There is nothing in alleged circular which supports contention of assessee. It merely says that each case has to be examined and issue would be basically find of fact. assessee had not made his claim before Income-tax Officer by relying on this Circular. (v) Bengal Iron Corporation and another vs. Commercial Tax Officer and others (27.04.1993 SC), AIR 1993 SC 2414. 18. So far as clarifications/circulars issued by Central Government and/or State Government are concerned, they represent merely their understanding of statutory provisions. They are not binding upon Courts. It is true that those clarifications and circulars were communicated to concerned dealers but even so nothing (23 of 89) [ITA-575/2008] prevents State from recovering tax, if in truth such tax was leviable according to law. There can be no estoppel against statute, understanding of government, whether in favour or against assessee, is nothing more than its understanding and opinion. It is doubtful whether such clarifications and circulars bind quasi-judicial functioning of authorities under Act. while acting in quasi-judicial capacity, they are bound by law and not by any administrative instructions, opinions, clarifications or circulars. Law is what is declared by this Court and High Court - to wit, it is for this Court and High Court to declare what does particular provision of statute say, and not for executive. Of course, Parliament/Legislature never speaks or explains what does provision enacted by it mean. (See Sanjeev Coke Manufacturing Company v. Bharat Coking Coal Ltd. and Anr. : [1983]1SCR1000 ). 19. Now coming to G.O. Ms. 383, it is undoubtedly of statutorily character but, as explained hereinbefore power under Section 42 cannot be utilised for altering provisions of Act but only for giving effect to provisions of Act. Since goods manufactured by appellant are different and distinct goods from cast iron, their sale attracts levy created by Act. In such case, government can not say, in exercise of its power under Section 42(2) that levy created by Act shall not be effective or operative. In other words, said power cannot be utilised for dispensing with levy created by Act, over class of goods or class of persons, as case may be. For doing that, power of exemption conferred by Section 9 of A.P. Act has to be exercised. Though it is not argued before us, we tried to see possibility but we find it difficult to relate order in G.O. Ms. 383 to power of Government (24 of 89) [ITA-575/2008] under Section 9, apart from fact that nature and character of power under Section 42 is different from one conferred by Section 9. As exemption under Section 9 has to be granted not only by notification, it is also required to be published in Andhra Pradesh Gazette. It is not suggested, nor is it brought to our notice, that G.O. Ms. 383 was published in Andhra Pradesh Gazette. This does not, however, preclude Government of Andhra Pradesh from exercising said power of exemption, in accordance with law, if it is so advised. We need express no opinion on that scores. 6. Mr. Sameer Jain appearing for department has relied on following decisions: (i) Commissioner of Central Excise, Bolpur vs. Ratan Melting and Wire Industries, Calcutta (23.02.2005 - SC) 2005 (181) ELT 364 (SC) 3. disparate view has been taken in CCE v. Maruti Foam Pvt. Ltd. 2004(164)ELT394(SC) and Commissioner of Customs, Calcutta and Ors. v. Indian Oil Corporation Ltd. and Anr. [2004]267ITR272(SC) . It appears to us that law declared by this Court is binding on Revenue/Department and once position in law is declared by this Court, contrary view expressed in circular should per force lose its validity and becomes non est. 4. Though view expressed in Kalyani's case (supra), and our view about invalidation might clarify observations in para 11 of Dhiren Chemical's case (supra), we feel that earlier judgment in Dhiren Chemical's case (supra),) being by Bench of five Judges, it would be appropriate for bench of similar strength to clarify position. In circumstances, we refer matter to larger bench of five Hon'ble (25 of 89) [ITA-575/2008] Judges. Let papers be placed before Hon'ble Chief Justice of India for constituting appropriate Bench. (ii) CIT, Jaipur-III vs. M/S Saraf Exports, ITA No. 7/2014, 04.02.2016 17. We may reiterate and also hasten to add that if initial assessment order is legally unsustainable & perverse, it need not be followed though for diverse reasons may have attained finality. It may be true that consistency in order is required to be maintained but in our view claim allowed by Tribunal in assessment year 2005-06 and 2006-07 is not sustainable and Tribunal has decided contrary to law laid down by Apex Court in Liberty India (Supra) and as said judgment was available before ITAT who decided appeals for Assessment Year 2005-06 and 2006-07. this also highlights that it requires extra cautious approach by authorities (Revenue) and standing counsels which should not sweep matters under carpet taking advantage of monetary limits fixed by CBDT. This Court in Commissioner of Income Tax vs, M/s Garment Cradts in DB ITA No.42/2008 decided on 12.01.2016 held that if substantial question is covered by judgment of Apex Court and this Court and is no more res integra then circular of Central Board of Direct Taxes about tax effect may not be binding to non-suit Revenue. (iii) CIT vs. M/s Gad Fashion, DB ITA No. 937/2008 decided on 26.04.2016 7. Insofar as argument of learned counsel for assessee about appeals involving tax effect being less than Rs. 20 lac is concerned, this bCOurt in Garment Crafts (supra) and M/s Saraf Exports (supra), has already taken view that if issue/question issqarely covered by judgment of Apex Court (26 of 89) [ITA-575/2008] and of this Court directly, then Circular is inapplicable. Accordingly argument of learned counsel for assessee in this regard is also rejected. Taking into consideration above judgments, question of law is answered in favour of Revenue and against assessee. 7. Mr. Anuroop Singhi appearing for Department has relied upon following decisions: (i) CIT vs. Udaipur Mineral Development Syndicate (P) Ltd., DB ITR No. 32/1995, decided on 12.11.2014 12. We would first deal with preliminary objection of ld. counsel for assessee as to whether tax effect being minimal reference at instance of this Court deserve consideration. Although judgments cited by counsel for assessee has observed that it is applicable not only to appeals but old pending references as well, but other view is that position has to be seen and has to be governed at time when reference application was moved/filed and is thus inapplicable for old pending references/reference applications. This Court, in case of CIT v. Rajasthan Patrika Ltd: [2002] 258 ITR 300/125 Taxman 819 (Raj.), came to following: "It is true that in case of Supreme Court, which has been referred to by Mr. Ranka, learned counsel for assessee, their Lordships held that circular, which interprets statute for uniformity of decisions in Department. But circular before us is as to whether appeal is to be filed or not ? These are administrative instructions and in spite of (27 of 89) [ITA-575/2008] these administrative instructions if department prefers to file appeal or make reference to this Court, in our view, on such administrative instructions appeal of Department should not be dismissed or reference should not be rejected. We do not find any infirmity in disposing of appeal on merits." 13. This Court again, in case of CIT v. Registhan (P.) Ltd [2003] 132 Taxman 894 (Raj.) also came to said conclusion of disposal on merits. 14. This Court, in case of CIT v. Registhan (P.) Ltd: [2004] 186 CTR 260 (Raj.), again held that if department wants to file reference application, this Court should entertain despite tax amount involved being minimal and directed Tribunal to refer question at instance of this Court. 15. Punjab and Haryana High Court (Full Bench) also, in case of CIT v. Varindera Construction Co.: [2011] 331 ITR 449/, after analysing judgments and circular of CBDT, came to conclusion that circular, laying down monetary limit, controls filing of appeals but not their hearing. appeals, filed as per applicable limit, at time of filing, cannot be governed by circular applicable at time of hearing and Punjab and Haryana High Court dissented from view of Bombay High Court and observed that object of section 268A is to govern monetary limit for filing of appeals and there is no scope of reaching circular as being applicable to pending appeals. It further expressed that even Bombay High Court held that circular was not retrospective and it only observed that having regard to falling money value and chocking court docket, policy of monetary limit was needed to be adopted for pending matters. (28 of 89) [ITA-575/2008] 16. Hon'ble Apex Court, in case of CIT v. Surya Herbal Ltd: [2013] 350 ITR 300 has expressed that circular dt. 09/02/2011 issued by Board should not be applied ipso facto, though it also observed that when matter has cascading effect in which common principle may be involved in subsequent group of matters or large number of matters. In such cases if attention of High Court is drawn, High Court will not apply circular ipso facto for purpose. 17. Thus, we are of view that once reference has been admitted by this Court u/s256(1) or 256(2), then matter cannot be disposed off merely because tax effect is minimal. We dissent with view expressed by Bombay High Court and M.P. High Court, relied upon by counsel for assessee as judgment rendered by this Court in Rajasthan Patrika Ltd. (supra) and Registhan (P.) Ltd. (supra) is binding on us on self-same issue and we would choose to follow view rendered by this court. In our view, once reference application of Revenue had been allowed by this Court and reference was called at instance of this Court, question of law framed has to be answered on merits, thus preliminary objection of counsel for assessee is rejected. (ii) CIT vs. Surya Herbal Ltd., [2013] 350 ITR 300 (SC) 2. Liberty is given to Department to move High Court pointing out that Circular, dt. 9th Feb., 2011, should not be applied ipso facto, particularly, when matter has cascading effect. There are cases under IT Act, 1961, in which common principle may be involved in subsequent group of matters or large number of matters. In our view, in such cases if attention of High Court is drawn, High Court will not apply (29 of 89) [ITA-575/2008] circular ipso facto. For that purpose, liberty is granted to Department to move High Court in two weeks. 8. Mr. Sanjay Jhanwar appearing on behalf of assessee has relied upon following decisions: (i) Commissioner of Income Tax-II and Ors. vs. Shyam Biri Works (06.05.2015 - ALLHC) 5. In 2009, Central Government formulated National Litigation Policy to reduce cases pending in various Courts of India in attempt to reduce average pendency time from 15 years to 3 years. National Litigation Policy reads as under:- "National Litigation Policy In this background, it is necessary to notice 'National Litigation Policy Document Released'. Centre has formulated National Litigation Policy to reduce cases pending in various courts in India under National Legal Mission to reduce average pendency time from 15 years to 3 years. It reads as under: 'Introduction Whereas at National consultation for strengthening judiciary toward reducing pendency and delays held on October 24/25, 2009, Union Minister of Law and Justice, presented resolutions which were adopted by entire conference unanimously. And wherein said resolution acknowledged initiative undertaken by (30 of 89) [ITA-575/2008] Government of India to frame National Litigation Policy with view to ensure conduct of responsible litigation by Central Government and urges every State Government to evolve similar policies. National Litigation Policy is as follows: Vision/Mission 1. National Litigation Policy is based on recognition that Government and its various agencies are pre-dominant litigants in courts and Tribunals in country. Its aim is to transform Government into efficient and responsible litigant. This policy is also based on recognition that it is responsibility of Government to protect rights of citizens, to respect fundamental rights and those in charge of conduct of Government litigation should never forget this basic principle. "Efficient litigant" means Focusing on core issues involved in litigation and addressing them squarely. Managing and conducting litigation in cohesive, co-ordinated and time-bound manner. Ensuring that good cases are won and bad cases are not needlessly persevered with. litigant who is represented by competent and sensitive legal persons: competent in their skills and sensitive to facts that Government is not, ordinary litigant and that litigation does not have to be won at any cost. "Responsible litigant" means That litigation will not be resorted to for sake of litigating. (31 of 89) [ITA-575/2008] That false pleas and technical points will not be taken and shall be discouraged. Ensuring that correct facts and all relevant documents will be placed before court. That nothing will be suppressed from court and there will be no attempt to mislead any court or tribunal. That nothing will be suppressed from court and there will be no attempt to mislead any court or tribunal. 2. Government must cease to be compulsive litigant. philosophy that matters should be left to courts for ultimate decision has to be discarded. easy approach, "Let court decide" must be eschewed and condemned- 3. purpose underlying this policy is also to reduce Government litigation in courts so that valuable court time would be spent in resolving other pending cases so as to achieve goal in National Legal Mission to reduce average pendency time from 15 years to 3 years. Litigators on behalf of Government have to keep in mind principles in corporated in National mission for judicial reforms which includes identifying bottlenecks which Government and its agencies may be concerned with and also removing unnecessary Government cases. Prioritization in litigation has to be achieved with particular emphasis on welfare legislation, social reform, weaker sections and senior citizens and other categories requiring assistance must be given utmost priority. In respect of filing of appeals in revenue matter it is stated as under: "(G) Appeals in revenue matters will not be filed: (a) if stakes are not high and are less than that amount to be fixed by Revenue authorities: (32 of 89) [ITA-575/2008] (b) if matter is covered by series of judgments of Tribunal or of High Court which have held field and which have not been challenged in Supreme Court: (c) where assessee has acted in accordance with long standing industry practice: (d) merely because of change of opinion on part of jurisdictional officers. Review of pending cases (A) All pending cases involving Government will be reviewed. This due diligence process shall involve drawing upon statistics of all pending matters which shall be provided for by all Government departments (including public sector undertakings). Office of Attorney General and Solicitor General shall also be responsible for reviewing all pending cases and filtering frivolous and vexatious matters from meritorious ones. (B) Cases will be grouped and categorized. practice of grouping should be introduced whereby cases should be assigned particular number of identity according to subject and statute involved. In fact, further sub-grouping will also be attempted. To facilitate this process, standard forms must be devised which lawyers have to fill up at time of filing of cases. Panels will be set up to implement categorization, review such cases to identify cases which can be withdrawn. These include cases which are covered by decisions of courts and cases which are found without merit withdrawn. This must be done in time bound fashion." 6. This policy was formulated with purpose that Central Government would be responsible litigant and would not be involved in frivolous litigation, especially (33 of 89) [ITA-575/2008] where stakes were not high. policy aimed to transform government into efficient and responsible litigant and urged every State Government to evolve similar policies. policy defined efficient litigant to mean that litigation should not be resorted to for sake of litigating and that government ceases to compulsive litigant. underlying purpose of policy was to reduce government litigation in Courts so that valuable court time was spent in resolving other pending issues to enable average pendency of case in court reduced from 15 years to 3 years. policy, therefore, provided that government would identify bottlenecks and that appeals would not be filed where stakes are not so high and was less than by amount fixed by revenue authorities. policy also formulated that all pending cases involving government would be reviewed to filter frivolous and vexatious matters from meritorious one. Such cases so identified would be withdrawn, which would also include cases, which are covered by previous decisions of Courts. Such withdrawal of cases would be done in time bound fashion. ______ 11. Previously, only instructions were issued by CBDT under Section 119 of Act and, in order to give it legislative measure, new Section 268A was inserted by Finance Act, 2008 with retrospective effect from 1st April, 1999 in Income Tax Act, 1961. For ready reference, said provision is extracted hereunder:-- "Filing of appeal or application for reference by income-tax authority. 268A. (1) Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for (34 of 89) [ITA-575/2008] purpose of regulating filing of appeal or application for reference by any income-tax authority under provisions of this Chapter. (2) Where, in pursuance of orders, instructions or directions issued under sub- section (1), income-tax authority has not filed any appeal or application for reference on any issue in case of assessee for any assessment year, it shall not preclude such authority from filing appeal or application for reference on same issue in case of- (a) same assessee for any other assessment year; or (b) any other assessee for same or any other assessment year. (3) Notwithstanding that no appeal or application for reference has been filed by income-tax authority pursuant to orders or instructions or directions issued under sub-section (1), it shall not be lawful for assessee, being party in any appeal or reference, to contend that income- tax authority has acquiesced in decision on disputed issue by not filing appeal or application for reference in any case. (4) Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to orders, instructions or directions issued under subsection (1) and circumstances under which such appeal or application for reference was filed or not filed in respect of any case. (5) Every order, instruction or direction which has been issued by Board fixing monetary limits for filing appeal or application for reference shall be deemed to have been issued under sub-section (1) and provisions of sub-sections (2), (3) and (4) shall apply accordingly." 12. Sub-clause (4) of Section 268A of Act clearly indicates that Tribunal and Court shall have regard to all (35 of 89) [ITA-575/2008] instructions issued under sub-section (1) of Act by CBDT and circumstances under which such appeal or application for reference was filed or not filed in respect of any case. Sub-clause (5) indicates that instructions issued by CBDT shall be deemed to have been issued under Section 268 of Act. 13. object of introduction of Section 268A of Act was to regulate filing of appeals by government. said object is extracted hereunder:- "The proposed section seeks to provide that Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for purpose of regulating filing of appeal or application for reference by any income tax authority under provisions of Chapter XX. It is further proposed to provide that where, in pursuance of orders, instructions or directions issued under sub-section (1), income tax authority has not filed any appeal or application for reference on any issue in case of assessee for any assessment year, it shall not preclude such authority from filing appeal or application for reference on same issue in case of-- (a) same assessee for any other assessment year, or (b) any other assessee for same or any other assessment year. It is also proposed to provide that notwithstanding that no appeal or application for reference has been filed by income-tax authority pursuant to orders, instructions or directions issued under sub-section (1), it shall not be lawful for assessee, being party in any appeal or reference, to contend that income tax authority has acquiesced in decision (36 of 89) [ITA-575/2008] on disputed issue by not filing appeal or application for reference in any case. It is also proposed to provide that Appellate Tribunal or Court, hearing any appeal or reference had filed under this Chapter, shall have regard to orders, instructions or directions issued by Board from time to time either before or after insertion of this section and circumstances in which such appeal or application for reference was filed or was not filed in any case; and accordingly Tribunal or Court shall decide appeal or reference on merits of issue under consideration. It is also proposed to provide that every order or instruction or direction which has been issued by Board fixing monetary limits for filing appeal or application for reference shall be deemed to have been issued under sub-section (1) and provisions of sub-sections (2), (3) and (4) shall apply accordingly. This amendment will take effect retrospectively from 1st April, 1999." 15. Numerous rules of interpretation have been formulated by courts. If statutory provision is open to more than one interpretation, Court has to choose that interpretation which represents true intention of legislature. duty of Court is to expound and not to legislate. However, at times, there is marginal area in which Court could mould or creatively interpret legislation. Court in such situation are called refiners or polishers of legislation. At times there are gaps in legislation and Courts are called upon to fill in gaps. Lord Due Parco in Cutler Vs. Wandsworth Stadium Ltd. (1949) 1 All ER 544 was of view that in some cases it becomes necessary for courts "to fill in such gaps as Parliament may choose to leave in its enactments". (37 of 89) [ITA-575/2008] 19. In instant case, question is not what words in relevant provision mean but what national litigation policy meant requiring Courts to interfere and fill in gaps which was excluded by legislature. In our view, it is permissible for Courts to look into legislative intention and go behind enactment and take other factors into consideration in order to give effect to legislative intent and to purpose of national litigation policy. 20. process of construction, therefore, combines both literal and purposive approaches, namely, true meaning of words used in enactment in light of any discernible purpose or object which comprehends mischief and its remedy to which enactment is directed. Once this is achieved, it would be called "the cardinal principle of construction". 23. rule is equally applicable to large extent. In order to properly interpret provisions of instructions, it is, therefore necessary to consider how matter stood immediately before circular came into existence, what was intention and object necessitating legislature to issue impugned circular and defect which circular did not provide. Consequently, we are of opinion that courts should adopt purposive approach in order to give effect to true purpose of legislation by looking at National Litigation Policy which is relevant material on basis of which circular was issued. 25. Bombay High Court, being conscious of instructions issued by CBDT dismissed large number of appeals on ground that instructions issued by CBDT from time to time were not being adhered to and that appeals were being filed in utter disregard to monetary limits. Bombay High Court insisted that all appeals filed by department (38 of 89) [ITA-575/2008] where tax effect was below Board's prescribed limit should be withdrawn forthwith. In this regard, CBDT issued instruction dated 5th June, 2007 directing department to examine all appeals pending before Bombay High Court on case to case basis with further direction to withdraw cases wherein criteria of monetary limits as per prevailing instruction was not satisfied unless question of law involved or raised in appeal or referred to High Court for opinion was of recurring nature requiring it to be settled by High Court. 35. legislature in its wisdom clearly desired to give effect to all instructions issued on subject of monetary limits for regulating filing of appeals retrospectively. Accordingly, all instructions laying down monetary limits for filing appeals issued on or after 1st April, 1999 by deeming fiction has to be treated as having been issued under Section 268(1) of Act. 36. contention of department that Section 260A of Act authorises department to prefer appeal to High Court from every order passed in appeal by appellate authority subject to condition that department should satisfy High Court that case involves substantial question of law and, consequently, this substantive right cannot be curtailed by provision of Section 268A of Act or by instructions issued by CBDT under Section 119 of Act cannot be accepted. At outset, instructions issued by CBDT are binding on department. Prior to introduction of Section 268A in Act, object of issuing instructions under Section 119 of Act was apparent and obvious, namely, to alleviate unnecessary hardship to assessee and also to avoid financial hardship and long drawn appellate proceedings even for department. objects recorded in bill while introducing (39 of 89) [ITA-575/2008] Section 268A into Act was aimed at alleviating and remedying hardship being caused to assessee as well as to reduce financial burden upon income tax department in pursuing appeals where tax effect was negligible. perusal of sub-section (1) of Section 268A of Act indicates that CBDT was authorized to issue orders, instructions or directions to income tax authorities laying monetary limits for purpose of filing appeals. As consequence of insertion of Section 268A in Act, orders and instructions or directions issued on subject of monetary limits for filing appeals has attained statutory status and it has become mandatory for department to comply with requirement on subject of monetary limits for filing appeals. Sub- section (5) of Section 268A of Act indicates that earlier instructions issued by CBDT fixing monetary limits for filing appeal shall be deemed to have been issued under Section 268A of Act. After introduction of Section 268A into Act, Section 260A of Act cannot be read independently. Both Section 260A and 268A of Act will have to be interpreted by reading two provisions harmoniously. Section 268A was inserted in Act with retrospective effect from 1st April, 1999. legislature desired to give statutory effect to all instructions issued on subject of monetary limits in regulating filing of appeals retrospectively. 37. We are of view that instructions issued by CBDT laying down monetary limits for filing appeal is mandatory and binding on Revenue. contention of department that right to file appeal under Section 260A of Act by department cannot be restricted or carved by any instructions of CBDT or by Section 268A is patently erroneous and cannot be accepted. Similar view was also given by Punjab and Haryana High Court in Oscar Laboratories case (supra). (40 of 89) [ITA-575/2008] 47. In light of aforesaid, we find that since CBDT while issuing Instruction No. 3 of 2011 had not kept in mind object and intention sought to be achieved by National Litigation Policy and, in order to bring harmony with National Litigation Policy, we are of opinion that Instruction No. 3 of 2011 would also apply to pending appeals in various Courts or Tribunals unless it is pointed out by department that appeal would have cascading effect in other assessment years of assessee or that it is within exception provided in instructions that was issued at time when appeal was presented. (ii) CIT, Tamil Nadu-IV, MADras vs. G.K.Enterprises,(2016) 73 Taxmann.com 56 (Madras) 6. It is appropriate to notice that Central Board of Direct Taxes has issued instructions contained in said Circular in exercise of its power available to it under Section 268A(i) of Income-tax Act, 1961 and hence, Circular has statutorily enforceable character. In that view of matter, we treat this appeal as not pressed and dismiss it as such. However, it goes without saying that questions of law raised in this appeal for consideration of this Court in this appeal, are kept open to be decided on merits in appropriate case. No costs. (iii) Commissioner of Income Tax vs. Associated Electrical Agencies (16.08.2007 - MADHC) : (2007) 295 ITR 496 10. We are of considered view that none of exceptions stated in circular are applicable to facts of present case. circular was stated to be issued (41 of 89) [ITA-575/2008] by invoking statutory power under Section 119 of IT Act. appeal is filed under Section 260A of IT Act. It is well-settled principle of law that each and every provision of statute has to be given same importance. One provision cannot be alleviated to higher pedestal than other provision, of course, unless or otherwise specifically stated either in scheme, Act or in provision itself that particular provision is subjected to or qualified by any other provision or provision can be given effect to notwithstanding anything contained in any other provisions by assigning overriding effect. Hence, contention that notwithstanding circular, which was issued under Section 119 of IT Act, appeal could be filed by Revenue under Section 260A has to be rejected for reason that if contention is accepted, one of sections would become virtually otiose and that cannot be intention of law makers. Hence, above judgments cannot be taken in aid for non- suiting respondent/assessee from taking shelter under Government order. 11. In this case, not only tax effect involved is nearly Rs. 5,000, b also other qualifications prescribed in circular were also not available or in existence to carve out case to bring outside purview of circular. Even de hors circular, if facts are considered, assessee is entitled to claim benefit for next assessment year if same was negatived for assessment year in question. Further, point in issue is whether bonus as claimed by respondent has been paid within 31st Oct., 1991 or subsequent to that date, can by no stretch of imagination be considered as question of law rather than substantial question of law as provided under Section 260A of IT Act. (42 of 89) [ITA-575/2008] (iv) CIT vs. Jugal Kishore Mahanta (09.05.2013 - GUHC) [2013] 355 ITR 432 10. We have given our anxious consideration to rival submissions made before us. There is no dispute that Instruction No. 5 of 2008, dated 15-5-2008, imposes monetary limit of Rs. 4,00,000 for preferring appeal under section 260A of Act nor is it in dispute before us that net tax effect in case at hand, is less than Rs. 4,00,000. It is also not in question before us in view of catena of decisions of Supreme Court on issue, that instructions issued by Central Board of Direct Taxes, are binding on Revenue except where (a) constitutional validity of provisions of Act or Rule is under challenge; (b) Boards order, notification, instruction or circular has been held to be illegal or ultra vires; and (c) Revenue audit objection in case has been accepted by Department. 13. Though what has been indicated above is sufficient to dispose of present appeal as not maintainable inasmuch as appeal runs counter to instructions, which have been issued by Central Board of Direct Taxes, we deem it appropriate to point out that section 268A has been inserted in Act, with effect from 1-4-1999, by Finance Bill, 2008. Memorandum Explaining Provisions of Finance Bill, 2008, while highlighting underlying object of section 268A, clearly reflected anxiety of Parliament to reduce litigation in small cases and regulate fight of Revenue to file or not to file appeal under section 260A. Consequently, there is inherent limitation on Revenues right to file appeal tinder section 260A inasmuch as condition precedent for preferring appeal is existence of (43 of 89) [ITA-575/2008] substantial question of law. Section 260A does not, however, contemplate any monetary limit. This monetary limit has been imposed indicated above by Central Board of Direct Taxes in exercise of its power under section 268A. 14. It is worth pointing out that section 268A enjoys same legislative status as section 260A, both having been enacted by Parliament. Undisputedly, section 268A is later in point of time. Having known and being conscious of right of appeal, which has been provided to Revenue under section 260A, Parliament has nevertheless deemed it necessary to vest in Central Board of Direct Taxes, by enacting section 268A, power to regulate appeal by prescribing monetary limit. 15. When, thus, Central Board of Direct Taxes has prescribed monetary limit, no appeal under section 260A can be filed by Revenue except in circumstances, which we have indicated above. mere fact that assessee-respondent has taken two distinctly different stands, one, before income-tax authority, and other, before Income-tax Appellate Tribunal, we do not deem it proper that such conflict can be of such grave nature, which would allow Revenue to override prescription of section 268A. 17. We must, however, point out that in appropriate case, High Court may, perhaps, not apply instructions, as regards monetary limits, ipso facto and may choose nevertheless to examine substantial questions of law raised in appeal. present one, however, is in our considered view, not such case, where High Court shall enter into determination of substantial question of law, which has been framed. We are in this regard, conscious of Supreme Courts order, dated 29-8-2011, passed in Special Leave (44 of 89) [ITA-575/2008] to Appeal (CM) No. 24562 of 2011 (13694 of 2011) CIT v. Surya Herbal Ltd. (2013) 350 ITR 300 (SC), wherein court has observed: Delay condoned. Liberty is given to Department to move High Court pointing out that Circular dated February 9, 2011, should not be applied ipso facto, particularly, when matter has cascading effect. There are cases under Income-tax Act, 1961, in which common principle may be involved in subsequent group of matters or large number of matters. In our view, in such cases, if attention of High Court is drawn, High Court will not apply Circular ipso facto. For that purpose, liberty is granted to Department to move High Court in two weeks. (v) Commissioner of Income Tax vs. Camco Colour Co. (26.11.2001 BOMHC) [2002] 254 ITR 565 3. issue in present case being one of some potential general significance in relation to policy decision taken by Board not to raise questions of law where effect is less than amount prescribed in instructions issued by Central Board of Direct Taxes with view to reduce litigations before High Courts and Supreme Court, we propose to dispose of this appeal on this short contention canvassed by learned counsel for respondent without examining merits of question of law sought to be raised in this appeal. 4. Learned counsel for respondent also relied upon decision in Navnit Id C. Javeri v. K. K. Sen, AAC of I.T. [1965]56ITR198(SC) ; Ellerman Lines Ltd. v. C1T [1971]82ITR913(SC) and K. P. Varghese v. ITO [1981]131ITR597(SC) to contend that circular issued by (45 of 89) [ITA-575/2008] Central Board of Direct Taxes is binding on all officers and Commissioners and in terms of which he sought to examine question of necessity of filing of present appeal. 5. In appears that despite above circular, Revenue has chosen to file present appeal knowing fully well that corridors of courts are flooded with pending litigations. presentation of this appeal is quite contrary to instruction issued in circular which is binding on Revenue. 6. In above view of matter, considering instructions issued by Central Board of Direct Taxes, we are satisfied that Board has taken policy decision not to file appeal in type of case in hand and same is binding on Revenue (appellant herein). In result, we dismiss this appeal on this count in limine with no order as to costs. (vi) Commissioner of Income Tax vs. Abhinash Gupta (11.12.2009 - PHHC) [2012] 327 ITR 619 (P&H) 7. After hearing arguments of learned Counsel for parties, we find force in preliminary objection raised by learned Counsel for assessee with regard to maintainability of appeal filed by Department. During course of arguments, it is not disputed before us that tax effect in instant case is less than Rs. 4 lakhs. In present case, Assessing Officer disallowed claim of assessee of exemption of Rs. 4,04,664 under Section 54F of Act on ground that investment made by assessee on construction in residential house was not made within specified time of one year before date when long-term capital gains arose. However, said addition was deleted by Income Tax Appellate Tribunal while recording finding (46 of 89) [ITA-575/2008] of fact that investment by assessee on construction in residential house was made during period March 1, 1999 to March 26,1999. said finding was recorded on basis of housing loan account. It has also been held that transfer of long-term capital asset, i.e., shares and securities took place on February 1, 2000, therefore, said investment was within one year prior to date of transfer of long-term capital asset. In view of said fact, it was held that assessee was fully eligible for benefit of Section 54F of Act. Though Income Tax Appellate Tribunal has deleted addition on basis of above-said finding of fact, yet, in our opinion, dispute arises in this appeal is not of recurring nature. Even if it is taken that alleged substantial question of law raised in this appeal is of recurring nature, in our opinion, Revenue cannot maintain instant appeal in view of Circular No. 5 of 2008 issued by Central Board of Direct Taxes, as cumulative tax effect involved, in this appeal is less than Rs. 4 lakhs. In CIT v. Oscar Laboratories P. Ltd. [2010] 324 ITR 115 (P & H), it was held that Instructions/Circulars issued by Central Board of Direct Taxes laying down monetary limits for filing of appeals are mandatory and binding on Revenue. contention of learned Counsel for Revenue that Circular No. 5 of 2008 is not applicable on appeals filed prior to May 15, 2008, cannot be accepted. similar issue has been considered by Bombay High Court in CIT v. Madhukar K. Inamdar (HUF) [2009] 318 ITR 149 wherein it was held that Circular No. 5 of 2008 is also applicable on pending appeals, irrespective of fact whether same were filed before or after May 15, 2008. In this regard Bombay High Court made following observations (page 150): It cannot be disputed that Central Board of Direct Taxes Circular dated May 15, 2008, has no retrospective effect. It operates from (47 of 89) [ITA-575/2008] date of its issuance. As corollary thereof, appeals which come on board for consideration after issuance of Central Board of Direct Taxes Circular dated May 15, 2008, needs to be considered in light of said Circular. Application of said Circular to cases coming on board after May 15, 2008, by no stretch of imagination can be said to be application of Circular with retrospective effect. In order to consider issue in its right perspective, it is necessary to refer to Circular of Central Board of Direct Taxes dated May 15, 2008, paragraph 5 of which reads as under: 5. Assessing Officer shall calculate tax effect separately for every assessment year in respect of disputed issue in case of every assessee. If, in case of assessee, disputed issues arise in more than one assessment year, appeal shall be filed in respect of such assessment year or years in which tax effect in respect of disputed issue exceeds monetary limit specified in paragraph 3. No appeal shall be filed in respect of assessment year or years in which tax effect is less than monetary limit specified in paragraph 3. In other words, henceforth, appeals will be filed only with reference to tax effect in relevant assessment year. However, in case of composite order of any High Court or appellate authority, which involves more than one year, appeal shall be filed in respect of all assessment years even if 'tax effect' is less than prescribed monetary limits in any of year(s), if it is decided to file appeal in respect of year(s) in which 'tax effect' exceeds monetary limit prescribed. (emphasis supplied) aforesaid paragraph (5) makes it clear that no appeals should be filed in cases involving tax effect less than Rs. 4 lakhs notwithstanding issue being of recurring (48 of 89) [ITA-575/2008] nature. aforesaid paragraph (5) was subject- matter of judicial interpretation in case of CIT v. Polycott Corporation in Income Tax Appeal No. 1241 of 2008 decided on January 23, 2009, (since reported in [2009] 318 ITR 144 (Bom) wherein this Court ruled as under (page 146): It would be clear from above that if in case of assessee if disputed issues arise in more than one assessment year, appeals are to be filed only in respect of such assessment year or years in which tax effect in respect of disputed issues exceeds monetary limit specified in paragraph 3. In other words, even if in respect of same issue in respect of same assessee for other assessment years monetary limit is not more than Rs. 4 lakhs, appeals need not be filed. Paragraph 6 makes it clear that in such case if appeal is not filed, there will be no presumption that Income Tax Department has acquiesced in decision on disputed issues. aforesaid judicial verdict makes it clear that Circular dated May 15, 2008, in general and paragraph (5) thereof in particular lay down that even if same issue, in respect of same assessee, for other assessment years is involved, even then Department should not file appeal, if tax effect is less than Rs. 4 lakhs. In other words, even if question of law is of recurring nature even then, Revenue is not expected to file appeals in such cases, if tax impact is less than monetary limit fixed by Central Board of Direct Taxes. One fails to understand how Revenue, on face of above clear instructions of Central Board of Direct Taxes, can contend that Circular dated May 15, 2008, issued by Central Board of Direct Taxes is applicable to cases filed after (49 of 89) [ITA-575/2008] May 15, 2008, and in compliance thereof, they do not file appeals, if tax effect is less than Rs. 4 lakhs; but said circular is not applicable to cases filed prior to May 15, 2008, i.e., to old pending appeals; even if tax effect is less than Rs. 4 lakhs. In our view, there is no logic behind this belief entertained by Revenue. This court can very well take judicial notice of fact that by passage of time money value has gone down, cost of litigation expenses has gone up, filing of cases at instance of Revenue has increased; consequently, burden on Department has also increased to tremendous extent. corridors of superior courts are choked with huge pendency of cases. litigation expenses have also increased manifold. In this view of matter, Board has rightly taken decision not to file appeals if tax effect is less than Rs. 4 lakhs so as to reduce burden of Department as well as that of tribunals and courts. same policy for old matters needs to be adopted by Department so as to achieve object of policy laid down by Central Board of Direct Taxes. It would be in public interest if Revenue concentrates on cases wherein tax effect is substantially high rather than running after assessees wherein tax impact is less than Rs. 4 lakhs considering cost of litigation and other administrative cost which may be much more than tax recovery. At this juncture, it will be relevant to note that Central Board of Direct Taxes has also issued Circular on June 5, 2007, directing Department to examine all appeals pending before this Court on case to case basis with further direction to withdraw cases wherein criteria of monetary limits as per prevailing instruction is not satisfied, unless question of law involved or raised in appeal or referred to High (50 of 89) [ITA-575/2008] Court for opinion is of recurring nature required to be settled by higher court. aforesaid Circular makes it clear that on date of issuance of Circular, prevailing instructions fixing monetary limit will hold good even for pending cases. Adopting same approach, we are of considered view that Central Board of Direct Taxes Circular dated May 15, 2008, would be very much applicable to pending cases requiring Department to withdraw cases wherein tax effect is less than prescribed monetary limits. At this juncture, it will also be relevant to mention that it was necessary for Central Board of Direct Taxes to put caveat, while issuing instructions, vide its Circular dated June 5, 2007, that appeals involving substantial question of law of recurring nature should not be withdrawn since provision like Section 268A of Income Tax Act was absent. Now, in view of insertion of provision of Section 268A by Finance Act, 2008, with effect from April 1, 1999, in Income Tax Act, 1961, no prejudice could be caused to Revenue even if cases involving legal issues of recurring nature are withdrawn, since newly inserted provision takes care of adverse eventuality which could have been put against Revenue. While agreeing with view taken by Bombay High Court, we are of view that Circular No. 5 of 2008 would be applicable to cases pending before this Court either for admission or for final disposal and that said Circular is binding on Revenue. Since admittedly tax effect in this appeal is less than Rs. 4 lakhs, therefore, in our opinion, appeal filed by Revenue is not maintainable and same is hereby dismissed with no order as to costs. (51 of 89) [ITA-575/2008] (vii) CIT vs. Sherno Ltd. (28.03.2013 - GUJHC) [2013] 33 taxmann.com 45 (Gujarat) 4. Revenues case as can be discerned from question No. 2 noted above is that since Constitutional validity of provisions of Act ore Rule are under challenge appeal may be entertained. Learned counsel Shri Parikh for Revenue was at loss to explain in what manner validity of statutory provision is involved in present appeal. Admittedly vires of statutory provision is nowhere in question. He however, strenuously urged that decision of Tribunal is palpably erroneous. 5. This in our view would not enable Revenue to ignore conditions of circular dated 9-2-2011 and file appeal which is other-wise not envisaged in said circular. This Court in case of CIT v. Concord Pharmaceuticals (2009) 25 (I) ITCL 548 (Guj-HC): (2009) 317 ITR 395 (Guj) held that instructions issued in said circular dated 9.2.2011 are binding on department. In other words, appeal which is filed ignoring said directives would not be maintainable. Such is view taken by various High Courts. Reference to all judgments is therefore, not necessary. (viii) Commissioner of Income Tax vs. Zoeb Y. Topiwala (22.08.2005 - BOMHC) [2006] 284 ITR 379 (Bombay) 4. This Court in case of CIT v. Cameo Colour Co. [2002]254ITR565(Bom) ruled that above instructions are binding on Department. This judgment is followed by this Court in CIT v. Pithwa Engg. Works [2005]276ITR519(Bom) and held that it is not open for Department to contend that this circular is binding only with respect to new cases and not with respect to old cases even if tax is less than Rs. (52 of 89) [ITA-575/2008] 2 lakhs. same policy for old matters needs to be adopted by Department. 5. above instructions dt. 27th March, 2000, reflects policy decision taken by Board not to raise questions of law where tax effect is less than amount prescribed in instructions with view to reduce litigations before High Courts and Supreme Court. circular is binding on Revenue. There is no justification to proceed with appeal having tax effect less than Rs. 7,000. 6. We, thus, do not think it necessary to entertain this appeal and answer question raised by appellant-Revenue. Accordingly, appeal stands dismissed with no order as to costs. (ix) CIT vs. Paramount Guest House & Resort Ltd., [2013] 38 taxmann.com 262 (Allahabad) 5. We find that under Section 268A of Act which has been inserted with retrospective effect from 1.04.1999 Board has power to issue circular regarding fixing monetary limit and no appeal can be filed by Revenue. circular dated 27.03.2000 issued by Board has thus been issued in exercise of powers conferred under section 268A of Act and has binding effect on all authorities. As tax in dispute is less than rupees two lakh Revenue was not entitled to file appeal before Tribunal. appeal neither involves any question which had far reaching effect nor was of recurring in nature. 8. None of above conditions applies in present case. In this view of matter we are of considered opinion that circular dated 27th March, 2000 issued by Central Board of Direct Taxes was (53 of 89) [ITA-575/2008] binding upon Department and, therefore, appeal preferred by it against order of Commissioner of Income Tax (Appeals) dated 4th November, 2008 wherein tax effect was less than rupees two lac ought not to have been filed. order of Tribunal does not call for any interference. (x) Commissioner of Income Tax vs. Ramkishore Nandkishore (12.02.2013 - MPHC) 5. Division Bench of this Court in Suresh Chand Goyal (supra) has considered this aspect and held thus:- another question raised by learned counsel for respondent is about filing of appeal contrary to circular issued by Central Board of Direct Taxes, according to which, appeal under section 260A of Income-Tax Act on tax effect of less than Rs. 2 lakhs should not be filed by Revenue and placed reliance on decision of Bombay High Court in case of CIT vs. Cameo Colour Co. [2002] 254 ITR 565]. Learned counsel for respondent also relied upon decisions of Supreme Court in cases of Navnit Lal C. Javeri v. K.K. Sen, AAC [1965] 56 ITR 198, Ellerman Lines Ltd. vs. CIT [1971] 82 ITR 913 and K.P. Varghese vs. ITO [1981] 131 ITR 597, to contend that circular issued by Central Board of Direct Taxes is binding on all officers and Commissioners and appeal or reference contrary to instructions issued in circular will not be considered by courts and Division Bench of Bombay High Court was satisfied that Board has taken policy decision not to file appeal in type of case in hand and same is binding on Revenue and in result appeal was dismissed following (54 of 89) [ITA-575/2008] circular. similar view was taken by Division Bench of High Court of Madhya Pradesh in case of Asst. CIT v. Aradhana Oil Mills [2002] 30 ITC 446 and following circular of Central Board of Direct Taxes, appeal was dismissed. 6. In Ashok Manibhai Patel (supra) another Division Bench has also taken similar view. Justice Dipak Misra, as his Lordship then was, speaking for Bench held thus:- 11. factual scenario can be perceived from another aspect. Submission of Mr. A.K. Shrivastava, learned counsel for respondent is that tax impact is Rs. 52,565 and, therefore, as per circular of Central Board of Direct Taxes reference need not be adverted to. Division Bench of High Court of Bombay in case of CIT v. Pithwa Engg. Works[2005] 276 ITR 519 (Bom) in paragraph 6 expressed view as under (page 520): 'This court can very well take judicial notice of fact that by passage of time money value has gone down, cost of litigation expenses has gone up, assessees on file of Department has also increased to tremendous extent. corridors of superior courts are choked with huge pendency of cases. In this view of matter, Board has rightly taken decision not to file references if tax effect less than Rs. 2 lakhs. same policy for old mattes needs to be adopted by Department. In our view, Board's circular dated March 27, 2000, is very much applicable even to old references which are still undecided. department is not justified in proceeding with old references wherein tax impact is minimal. Thus, there is no justification to proceed with decades old references having negligible tax effect Judged from both angles we would answer reference in negative in favour of (55 of 89) [ITA-575/2008] assessee and against Revenue. 7. Division Bench of Bombay High Court in Commissioner of Income Tax vs. Pithwa Engg. Works [276 ITR 519] held thus:- 3. This Court in case of Commissioner of Income Tax V/s. Cameo Colour Co.(2002) 254 ITR 565 ruled that instructions issued by Central Board of Direct Taxes, New Delhi, dated 27th March, 2000; wherein monetary limit for department for filing reference to High Court earlier fixed for Rs. 50,000/- came to be revised and fresh instructions are issued to file references only in cases where tax effect exceeds Rs. 2,00,000/-, are binding on Department. 4. above instructions dated 27th March, 2000 reflect policy decision taken by Board not to raise questions of law where tax effect is less than amount prescribed in above circular with view to reduce litigations before High Courts and Supreme Court. said circular is binding on Revenue though learned Counsel tried to contend that said circular is not applicable to old referred cases. However, he could not take his submission to logical end. 5. One fails to understand how Revenue can contend that so far as new cases are concerned, circular issued by Board is binding on them and in compliance with said instructions, they do not file references if tax effect is less than Rs. 2 lakhs. But same approach is not adopted with respect to old referred cases even if tax effect is less than Rs. 2 lakhs. In our view, there is no logic behind this approach. 6. This Court can very well take judicial notice of fact that by passage of time money value has gone down, cost of (56 of 89) [ITA-575/2008] litigation expenses has gone up, assessees on file of departments have increased; consequently, burden on department has also increased to tremendous extent. corridors of superior courts are chocked with huge pendency of cases. In this view of matter, Board has rightly taken decision not to file references if tax effect less than Rs. 2 lakhs. same policy for old matters needs to be adopted by department. In our view, Board's circular dated 27th March, 2000 is very much applicable even to old references which are still undecided. department is not justified in proceeding with old references wherein tax impact is minimal. Thus, there is no justification to proceed with decades old references having negligible tax effect. 8. aforesaid judgments specifically lays down that any appeal, if tax effect less then Rs. 2 lakhs, could not have been filed by Department. 9. From perusal of instructions issued by Board, we find that Board had issued directions that appeals will be filed only in cases where tax effect exceeds Rs. 2 lakhs in matter of High Court in appeals U/s. 260A or Reference U/s. 256(2). aforesaid circular is binding on all authorities under Board including appellant Commissioner of Income Tax, Jabalpur. Board had taken this decision in continuation to earlier directions issued by Board on 28.10.1992 where monitory limit was Rs. 50,000/-. Now in view of changed circumstances, as directed by Board by instruction dated 27.3.2000, it is apparent that appeal or reference below Rs. 2 lakhs, could not have been filed. instructions of Board are binding to all authorities working under Board including appellant. This appeal which was filed on 10.1.2005 is fully covered by (57 of 89) [ITA-575/2008] instructions issued by Board on 27.3.2000, and this appeal could not have been filed. aforesaid position has been clarified by two Division Bench of this Court in Suresh Chand and Ashok Manibhai (supra). In result, this appeal is found incompetent and is dismissed with no order as to costs. (xi) Commissioner of Income Tax vs. Ramkishore Nandkishore (12.02.2013 MPHC), [2013] 32 taxmann.com 89 5. Division Bench of this Court in Suresh Chand Goyal (supra) has considered this aspect and held thus:- another question raised by learned counsel for respondent is about filing of appeal contrary to circular issued by Central Board of Direct Taxes, according to which, appeal under section 260A of Income-Tax Act on tax effect of less than Rs. 2 lakhs should not be filed by Revenue and placed reliance on decision of Bombay High Court in case of CIT vs. Cameo Colour Co. [2002] 254 ITR 565]. Learned counsel for respondent also relied upon decisions of Supreme Court in cases of Navnit Lal C. Javeri v. K.K. Sen, AAC [1965] 56 ITR 198, Ellerman Lines Ltd. vs. CIT [1971] 82 ITR 913 and K.P. Varghese vs. ITO [1981] 131 ITR 597, to contend that circular issued by Central Board of Direct Taxes is binding on all officers and Commissioners and appeal or reference contrary to instructions issued in circular will not be considered by courts and Division Bench of Bombay High Court was satisfied that Board has taken policy decision not to file appeal in type of case in hand and same is binding on Revenue and in result (58 of 89) [ITA-575/2008] appeal was dismissed following circular. similar view was taken by Division Bench of High Court of Madhya Pradesh in case of Asst. CIT v. Aradhana Oil Mills [2002] 30 ITC 446 and following circular of Central Board of Direct Taxes, appeal was dismissed. 6. In Ashok Manibhai Patel (supra) another Division Bench has also taken similar view. Justice Dipak Misra, as his Lordship then was, speaking for Bench held thus:- 11. factual scenario can be perceived from another aspect. Submission of Mr. A.K. Shrivastava, learned counsel for respondent is that tax impact is Rs. 52,565 and, therefore, as per circular of Central Board of Direct Taxes reference need not be adverted to. Division Bench of High Court of Bombay in case of CIT v. Pithwa Engg. Works [2005] 276 ITR 519 (Bom) in paragraph 6 expressed view as under (page 520): 'This court can very well take judicial notice of fact that by passage of time money value has gone down, cost of litigation expenses has gone up, assessees on file of Department has also increased to tremendous extent. corridors of superior courts are choked with huge pendency of cases. In this view of matter, Board has rightly taken decision not to file references if tax effect less than Rs. 2 lakhs. same policy for old mattes needs to be adopted by Department. In our view, Board's circular dated March 27, 2000, is very much applicable even to old references which are still undecided. department is not justified in proceeding with old references wherein tax impact is minimal. Thus, there is no justification to proceed with decades old references having negligible tax effect Judged from both angles we would answer (59 of 89) [ITA-575/2008] reference in negative in favour of assessee and against Revenue. 7. Division Bench of Bombay High Court in Commissioner of Income Tax vs. Pithwa Engg. Works [276 ITR 519] held thus:- 3. This Court in case of Commissioner of Income Tax V/s. Cameo Colour Co. (2002) 254 ITR 565 ruled that instructions issued by Central Board of Direct Taxes, New Delhi, dated 27th March, 2000; wherein monetary limit for department for filing reference to High Court earlier fixed for Rs. 50,000/- came to be revised and fresh instructions are issued to file references only in cases where tax effect exceeds Rs. 2,00,000/-, are binding on Department. 4. above instructions dated 27th March, 2000 reflect policy decision taken by Board not to raise questions of law where tax effect is less than amount prescribed in above circular with view to reduce litigations before High Courts and Supreme Court. said circular is binding on Revenue though learned Counsel tried to contend that said circular is not applicable to old referred cases. However, he could not take his submission to logical end. 5. One fails to understand how Revenue can contend that so far as new cases are concerned, circular issued by Board is binding on them and in compliance with said instructions, they do not file references if tax effect is less than Rs. 2 lakhs. But same approach is not adopted with respect to old referred cases even if tax effect is less than Rs. 2 lakhs. In our view, there is no logic behind this approach. 6. This Court can very well take judicial notice of fact that by passage of time money value has gone down, cost of (60 of 89) [ITA-575/2008] litigation expenses has gone up, assessees on file of departments have increased; consequently, burden on department has also increased to tremendous extent. corridors of superior courts are chocked with huge pendency of cases. In this view of matter, Board has rightly taken decision not to file references if tax effect less than Rs. 2 lakhs. same policy for old matters needs to be adopted by department. In our view, Board's circular dated 27th March, 2000 is very much applicable even to old references which are still undecided. department is not justified in proceeding with old references wherein tax impact is minimal. Thus, there is no justification to proceed with decades old references having negligible tax effect. 8. aforesaid judgments specifically lays down that any appeal, if tax effect less then Rs. 2 lakhs, could not have been filed by Department. 9. From perusal of instructions issued by Board, we find that Board had issued directions that appeals will be filed only in cases where tax effect exceeds Rs. 2 lakhs in matter of High Court in appeals U/s. 260A or Reference U/s. 256(2). aforesaid circular is binding on all authorities under Board including appellant Commissioner of Income Tax, Jabalpur. Board had taken this decision in continuation to earlier directions issued by Board on 28.10.1992 where monitory limit was Rs. 50,000/-. Now in view of changed circumstances, as directed by Board by instruction dated 27.3.2000, it is apparent that appeal or reference below Rs. 2 lakhs, could not have been filed. instructions of Board are binding to all authorities working under Board including appellant. This appeal which was filed on 10.1.2005 is (61 of 89) [ITA-575/2008] fully covered by instructions issued by Board on 27.3.2000, and this appeal could not have been filed. aforesaid position has been clarified by two Division Bench of this Court in Suresh Chand and Ashok Manibhai (supra). (XII) Commissioner of Income Tax vs. Smt. Madhu Bai Lodha (13.09.2007 - MPHC) (2008)_ 169 Taxmann 147 (Madhya Pradesh) 4. We have considered contention raised by learned senior counsel. Before considering cases: cited by learned senior counsel, we may point out that Division Bench of [this Court has held in CIT v. Suresh Chand Goyal (2007) 209 CTR (MP) 410 that in cases where tax effect is below Rs. 2,00,000, Revenue cannot file appeal contrary to terms of circular which is binding on Department. relevant discussion contained in para 16 of said Report reads as extracted below: 16. another question raised by learned Counsel for respondent is about filing of appeal contrary: to circular issued by CBDT, according to which, appeal under Section 260A of IT Act on tax effect of less than Rs. 2 lacs should not be filed by Revenue and placed reliance on decision of Bombay High Court in case of CIT v. Camco Colour Co. [2002]254ITR565(Bom) . Learned Counsel for respondent also relied upon decision of Supreme Court in 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 circular issued by CBDT is binding on all officers and CITs and appeal or reference contrary to instructions issued in circular will not be considered by Courts and Division Bench of Bombay High Court was satisfied that Board has taken policy (62 of 89) [ITA-575/2008] decision not to file appeal in type of case in hand and same is binding on Revenue and in result appeal was dismissed following circular. similar view was taken by Division Bench of High Court of Madhya Pradesh in; case of Asstt. CIT v. Aradhana Oil Mills (2002) 30 ITC 446 (MP) and following circular of CBDT, appeal was dismissed. 5. We may point out that circular issued by CBDT as referred to above carves out only one exception with regard to permissibility of filing of appeals, etc., notwithstanding embargo contained in circular of monetary limit. It is only in cases involving substantial question of law of importance as well as cases where same question of law will repeatedly arise either in case concerned or in similar cases that Department will not be hindered by monetary limits. question, therefore, arises as to whether Department can be left at liberty to defeat circular of CBDT restraining its power to file appeal in case of tax effect being below monetary limit by capriciously taking subterfuge under specious plea that case is one of excepted categories of cases. It has not been brought to our notice that IT Department has devised any procedure to consider whether particular case falls within excepted category thus, permitting Revenue to agitate matter before higher forums. In cases where no such procedure has been devised, it is expected that while filing appeal in non-adherence of circular, Department would place material before appellate forum that case falls within excepted category and, therefore, is not covered by restraint contained in circular. learned senior counsel for appellants has also invited attention to decision of Punjab & Haryana High Court in Rani Paliwal v. CIT MANU/PH/0780/2003, of Delhi High Court (63 of 89) [ITA-575/2008] in CIT v. Blaze Advertising (Delhi) (P) Ltd. (2002) 173 CTR 482 : (2002) 255 ITR 460 and of Madras High Court in CIT v. Kodananad Tea Estates Co. [2005]275ITR244(Mad) . We are, however, of view that, as held by this Court in CIT v. Suresh Chand Goyal (supra), where tax liability of assessee is below monetary limit prescribed, Revenue cannot file appeal in transgression of circular by which it is bound. However, we may add that in case which falls within excepted category, it would always be open to Department to bring it to notice of forum approached and to insist that question being covered by exceptions contained in Clause 3 of Circular dt. 24th Oct., 2005 as modified by Instruction No. 5 of 2007, dt. 16th July, 2007, same deserves to be considered by superior forum, circular of CBDT notwithstanding. 6. In view of above, we answer question raised in these appeals against Department subject to liberty that if case falls within excepted category, it would be open to Department to bring said fact to notice of Court or Tribunal so that appropriate authority/Court applies its mind to necessity of formulating question for rendering decision thereon. (xiii) Commssioner of Customs vs. Indian Oil Corporation Ltd., [2004] 267 ITR 272 (SC) 10. principles laid down by all these decisions are: (1) Although circular is not binding on Court or assessee, it is not open to Revenue to raise contention that is contrary to binding circular by Board. When circular remains in operation, Revenue is bound by it and cannot be (64 of 89) [ITA-575/2008] allowed to plead that it is not valid nor that it is contrary to terms of statute. (2) Despite decision of this Court, Department cannot be permitted to take stand contrary to instructions issued by Board. (3) show-cause notice and demand contrary to existing circulars of Board are ab initio bad. (4) It is open to Revenue to advance argument or file appeal contrary to circulars. (xiv) Commissioner of Income Tax vs. Ranka and Ranka (02.11.2011 KARHC), [2013] 352 ITR 121 (Karnataka) 18. circular No. 1/2009 dated 27.03.2009 states that there is prescribed dispute resolution mechanism in Income Tax Act. In this regard Central Board of Tax cases has issued instructions from time to time directing departmental officers not to file appeals if tax effect is less than monetary limit prescribed by it. Hon'ble Supreme Court of India in Berger Paints Limited vs. CIT reported in (2004) 266 ITR 99, held that if Revenue has not challenged correctness of law laid down by High Court and has accepted it in case of one assessee, then it is not open to Revenue to challenge correctness in case of other assessee without just cause. department's appeals are being dismissed by judicial authorities on consideration that disputed issue was not agitated in case of same assessee or in case of any other assessee. underlining object of Board's resolution is to reduce litigation in similar cases with view to bring Revenue's right to file or not to file appeal. (65 of 89) [ITA-575/2008] new Section 268A of Income Tax Act was inserted by Finance Act, 2008 with retrospective effect from 01.04.1999. said provision reads as under: 268A. Filing of appeal or application for reference by income-tax authority. (1) Board may from time to time, issue orders, instructions or directions to other income- tax authorities, fixing such monetary limits as it may deem fit for purpose of regulating filing of appeal or application for reference by any income-tax authority under provisions of this Chapter. (2) Where, in pursuance of orders, instructions or directions issued under sub- section (1), income-tax authority has not filed any appeal or application for reference on any issue in case of assessee for any assessment year, it shall not preclude such authority from filing appeal or application for reference on same issue in case of. (a) same assessee for any other assessment year; or (b) any other assessee for same or any other assessment year. (3) Notwithstanding that no appeal or application for reference has been filed by income-tax authority pursuant to orders or instructions or directions issued under sub-section (1), it shall not be lawful for assessee, being party in any appeal or reference, to contend tat income-tax authority has acquiesced in decision on disputed issue by not filing appeal or application for reference in any case. (4) Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to orders, instructions or directions issued under sub-section (1) and circumstances under which such appeal or application for reference was filed or not filed in respect of any case. (66 of 89) [ITA-575/2008] (5) Every order, instruction or direction which has been issued by Board fixing monetary limits for filing appeal or application for reference shall be deemed to have been issued under sub-section (1) and provisions of sub-sections (2), (3) and (4) shall apply accordingly. 19. In case of CIT Vs. OSCAR LABORATIES P. LTD (STR VOL 324 Pg. 115 at 144) Punjab and Haryana High Court has referred to objects for enacting Section 268A of Act, which reads as under: 36. Aimed at alleviating and remedying aforesaid predicament of Revenue, Finance Act, 2008, inserted section 268A into 1961 Act This conclusion of ours is clearly derivable from objects recorded in Bill introduced in Parliament for promulgation of Finance Act, 2008. extract of objects recorded in Bill pertaining to insertion of section 268A into 1961 Act, is reproduced hereunder: (2008) 298 ITR(st) 170 proposed section seeks to provide that Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for purpose of regulating filing of appeal or application for reference by any income-tax authority under provisions of this Chapter XX. It is further proposed to provide that where, in pursuance of orders, instructions or directions issued under sub-section (1), income-tax authority has not filed any appeal or application for reference on any issue in case of assessee for any assessment year, it shall not preclude such authority from filing appeal or application for reference on same issue in case of - (a) same assessee for any other assessment year; or (b) any (67 of 89) [ITA-575/2008] other assessee for same or any other assessment year. It is also proposed to provide that notwithstanding that no appeal or application for reference has been filed by income-tax authority pursuant to orders or instructions or directions issued under sub-section (1), it shall not be lawful for assessee, being party in any appeal or reference, to contend that income- tax authority has acquiesced in decision on disputed issue by not filing appeal or application for reference in any case. It is also proposed to provide that Appellate Tribunal or Court, hearing any appeal or reference had filed under this Chapter, shall have regard to orders, instructions or directions issued by Board from time to time either before or after insertion of this section and circumstances in which such appeal or application for reference was filed or was not filed in any case; and accordingly Tribunal or Court shall decide appeal or reference on merits of issue consideration. It is also proposed to provide that every order, instruction or direction which has been issued by Board fixing monetary limits for filing appeal or application for reference shall be deemed to have been issued under sub-section (1) and provisions of sub-sections (2), (3) and (4) shall apply accordingly. This amendment will take effect retrospectively from 1st April 1999. 20. Interpreting this provision, Division Bench of Punjab and Haryana High Court in above case of CIT VS. OSCAR Laboratories P. Ltd. (2010) 324 ITR 115 (P&H) held as under: "Under Section 268A(1) of Income Tax Act, 1961, Central Board of Direct Taxes has been authorised to issue orders, instructions or directions to income-tax (68 of 89) [ITA-575/2008] authorities, laying down monetary limits for purposes of filing appeals. As consequence of insertion of section 268A in Act orders, instructions or direction issued on subject of monetary limits for filing appeals must be deemed to have attained statutory status. There can be no dispute that every requirement under mandate of law, leads to consequential statutory obligation to comply with requirement. Subsection (5) of Section 268A mandates that instructions, orders or directions, even issued earlier, i.e., prior to insertion of section 268A in 1961 Act, by Finance Act, 2008, fixing monetary limits for filing of appeals, shall be deemed to have been issued under sub-section (1) of section 268A of 1961 Act. This conclusion emerges from fact that section 268A of 1961 Act was introduced with retrospective effect from April 1, 1999. Accordingly, instructions, orders or directions issued even prior to insertion of section 268A of 1961 Act must be deemed to have statutory status, if they were issued after April 1, 1999. All issues prejudicial to Revenue, in cases where appeal was not filed by Revenue must, therefore, be deemed to have been done away with, after inclusion of section 268A into 1961 Act. After introduction of section 268A into 1961 Act, section 260A of 1961 Act cannot be read independently. Sections 260A and 268A of 1961 Act will now have to be interpreted reading two harmoniously, so as to give effect to two provisions keeping in mind objects and reasons on basis whereof section 268A was inserted into 1961 Act. Department of Revenue having chosen on its own volition, monetary limits for filing appeals to challenge orders passed in favour of assessee cannot be heard to deviate there from when (69 of 89) [ITA-575/2008] Revenue itself lays down monetary limits. harmonious construction of sub- section (1) of section 260A of 1961 Act, and sub-section (1) of section 268A of 1961 Act would inevitably lead to conclusion that Revenue can prefer appeal if case raises substantial question of law, subject to monetary limits stipulated by Central Board of Direct Taxes. It is open to Revenue to prefer appeal only on four grounds specified in paragraph 3 of instruction dated March 27, 2000, and on no other ground, in cases where tax effect was less than that prescribed therein. 29. It is also not out of place to mention herein that Parliament wanted to grant statutory recognition to these Orders/Instructions/Circulars, issued by Department from time to time retrospectively to take care to protect interest of Revenue by introducing sub- section (2) and (3) in Section 268A of Act. This benefit conferred on these assessees would be only in nature of one time settlement because if same issue arises for consideration in subsequent years and tax effect is more than Rs. 10 lakhs, it is not open to them to plead that either department is estopped from claiming such amount or that order passed by this Court dismissing appeals on ground that tax effect being within monetary limit would come in way of Department proceeding against assessee. circular also makes it clear that in pending appeals, where constitutional validity of provisions of Act or Rule are under challenge, or where Board's order, notification, instruction or circular has been held to be illegal or ultra vires or whether Revenue Audit Objection in case has been accepted by Department, notwithstanding fact that tax effect is less then monetary limit fixed under aforesaid circular, still (70 of 89) [ITA-575/2008] it is open to Department to request Court to permit them to prosecute such appeals. Thus, Department has to apply its mind in all pending appeals and point out to Court, which are those appeals in which they intend to prosecute. Therefore sufficient safeguards have been made to protect interest of public revenue. By this approach we would be saving time of Court, time of Department and public time in general and giving effect to Nation Litigation Policy, 2011, so that it can be used for better and productive purpose. (xv) Commissioner of Income Tax vs. Ideal Garden Complex P. Ltd. (19.08.2008 MADHC), [2008] 307 ITR 176 (Madras) 11. It may be noted that this court considered similar issue in decision rendered on August 16, 2007, in T. C. No. 222 of 2004 (CIT v. Associated Electrical Agencies [2007] 295 ITR 496). Based on Instruction 1979 in Circular F. No. 279/126/98 ITJ, dated March 27, 2000, referring to statutory power under Section 119 of Income Tax Act, 1961 under which circular was issued, this court held that (page 500) 10. We are of considered view that none of exceptions stated in circular are applicable to facts of present case. circular was stated to be issued by invoking statutory power under Section 119 of Income Tax Act. appeal is filed under Section 260A of Income Tax Act. It is well-settled principle of law that each and every provision of statute has to be given same importance. One provision cannot be elevated to higher pedestal than other provision, of course, unless or otherwise specifically stated either in scheme, (71 of 89) [ITA-575/2008] Act or in provision itself that particular provision is subjected to or qualified by any other provision or provision can be given effect to notwithstanding anything contained in any other provisions by assigning overriding effect. Hence, contention that notwithstanding circular, which was issued under Section 119 of Income Tax Act, appeal could be filed by Revenue under Section 260A has to be rejected for reason that if contention is accepted, one of sections would become virtually otiose and that cannot be intention of law makers. 12. Thus, following long line of case law reported in CIT v. Rajasthan Patrika Limited MANU/RH/0420/2002 and CIT v. P.S.T.S. Thiruvirathnam [2003]261ITR406(Mad) to which one of us is party (K. Raviraja Pandian J.), CIT v. Digvijay [2007]292ITR314(MP) and CIT v. Camco Colour Co. [2002]254ITR565(Bom) , this court held that uniform line of judicial opinion is that if tax effect is less than what is stated in circular, Revenue need not agitate issue on appeal and that circular is binding on Revenue. 13. In light of said view expressed by this court and on admitted fact that tax effect is also negligible and less than Rs. 1,00,000 and case not falling under any of stipulations of circular, we do not find any justification to admit these appeals. Consequently, same are dismissed. (xvi) CIT, Kolkata-I vs. Indo Tossa (P.) LTd., [2016] 66 taxmann.com 182 (Calcutta) 4. Since tax effect in this appeal is Rs. 15,32,504/- and since monetary limit of Rs. 20 lakhs is fixed for filing appeals before (72 of 89) [ITA-575/2008] High Court by Department as per Circular which has been issued with retrospective effect and as Mr. Dudhoria submits that he has no written instruction from Department for withdrawing this appeal, as said Circular, in view of Section 119(1) is binding on departmental authority, appeal is treated to be dismissed as withdrawn. (xvii) Commissioner of Income Tax vs. Manbhar Devi Meena (04.05.2016 - RAJHC) [2016] 70 taxmann.com 275 (Rajasthan) Circular No. 21/2015 has been issued by Central Board of Direct Taxes dated 10.12.2015 in exercise of its power u/sec. 268A (1) of Income-tax Act 1961 in supersession of Boards Instruction No. 5/2014, Dt. 10.7.2014 regularising monetary limits for filing appeals by Revenue before Tribunal, High Courts and Apex Court with object for reducing litigation. Relevant para Nos. 3, 8, 9 and 10 reads ad infra:-- "3. Henceforth, appeals/SLPs shall not be filed in cases where tax effect does not exceed monetary limits given hereunder:-- It is clarified that appeal should not be filed merely because tax effect in case exceeds monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of case. 4 to 7** ** ** 8. Adverse judgments relating to following issues should be contested on merits notwithstanding that tax effect entailed is less than monetary limits specified in para 3 above or there is no tax effect: (73 of 89) [ITA-575/2008] (a) Where Constitutional validity of provisions of Act or Rule are under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in case has been accepted by Department, or (d) Where addition relates to undisclosed foreign assets/bank accounts. 9. monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevant provisions of statute & rules. Further, filing of appeal in cases of Income Tax, where tax effect is not quantifiable or not involved, such as case of registration of trusts or institutions under section 12A of IT Act, 1961, shall not be governed by limits specified in para 3 above and decision to file appeal in such cases may be taken on merits of particular case. 10. This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below specified tax limits in para 3 above may be withdrawn/not pressed. Appeals before Supreme Court will be governed by instructions on this subject, operative at time when such appeal was filed." extract of paragraphs referred to supra, clearly indicates that limits specified in para 3 may not apply to certain exceptions specified in para 8, at same time para Nos. 9 and 10 of Circular if read conjointly, clearly envisages that present instructions will apply retrospectively to all pending appeals and appeals to be filed henceforth in High (74 of 89) [ITA-575/2008] Courts/Tribunals, subject to exceptions where tax effect even if is less than Rs. 20 lac, can be preferred in High Courts. 2. Taking note of CBDT Circular Dt. 10/12/2015 and tax effect which indisputably in instant case is less than Rs. 20 lac, much less than what has been prescribed for filing appeal before High Courts, deserves to be dismissed as not pressed. However, it is made clear that substantial questions of law raised in instant appeals, if any, are left open to be examined in appropriate proceeding, if arises in future. At same time we consider it appropriate to observe that if appeal falls in any of exceptions as referred to in Circular Dt. 10/12/2015, Revenue will be at liberty to move application for recalling of order if so advised. (xviii) Commissioner of Income Tax vs. Garment Crafts and Ors. (12.01.2016 - RAJHC) ITA No. 42/2008 & Ors. 9. Counsels in some of cases also contended that in few of appeals preferred by Revenue, tax effect is less than Rs. 20 lac and therefore, in light of latest circular of Central Board of Direct Taxes bearing No. 21/2005 dt. 10/12/2015, board has instructed that Circular be applied to appeals to be filed and also to pending in High Court and such appeals either are required to be withdrawn/not pressed by Revenue and therefore, such of appeals where tax effect being below 20 lac, deserve to be dismissed in view of Circular which is binding on revenue. ---- 17. We may also deal with issue raised by learned counsel for assessees that in some of appeals tax effect being below Rs. 20 lac such appeals deserve to be (75 of 89) [ITA-575/2008] dismissed in view of Circular of Central Board of Direct Taxes No. 21/2015 dated 10.12.2015. We have gone through Circular which states (para 3) that where monetary limit is below Rs. 20 lac insofar as High Courts are concerned, and that it applies to all pending appeals (para 10) below specified tax limits, which may be withdrawn/not pressed. However, in view of Article 141 of Constitution, we are bound by judgment of Hon'ble Apex Court and bound to follow such issue/question which is squarely and directly covered on issue being law of land, and Circular may not be applicable at-least in such matters and even otherwise Circular of CBDT is not binding on this Court. Thus, we hold that when issue/question is directly covered by binding judgment of Hon'ble Apex Court or of this Court, Circular supra insofar as such issue/question is concerned, is not binding on this count and in our opinion if issue/question is directly or squarely covered as aforesaid by judgment and is no more res integra, Circular (supra) would be inapplicable. 9. Mr. Pandey has relied on following decisions: (i) 2008(3) SCC 582 State of Kerala and Ors. vs. Kurian Abraham Pvt. Ltd. and Anr. (08.02.2008 - SC) 23. Tax administration is complex subject. It consists of several aspects. Government needs to strike balance in imposition of tax between collection of revenue on one hand and business-friendly approach on other hand. Today, Governments have realized that in matters of tax collection, difficulties faced by business have got to be taken into account. Exemption, undoubtedly, is matter of (76 of 89) [ITA-575/2008] policy. Interpretation of Entry is undoubtedly quasi-judicial function under tax laws. Imposition of taxes consists of liability, quantification of liability and collection of taxes. Policy decisions have to be taken by Government. However, Government has to work through its senior officers in matter of difficulties which business may face, particularly in matters of tax administration. That is where role of Board of Revenue comes into play. said Board takes administrative decisions, which includes authority to grant Administrative Reliefs. This is underlying reason for empowering Board to issue orders, instructions and directions to officers under it. (ii) 2004(10) SCC 1, Union of India & Anr. vs. Azadi Bachao Andolan & Anr. (07.10.2003 - SC) 47. It was contended successfully before High Court that circular is ultra vires provisions of section 119. Sub-section (1) of section 119 is deliberately worded in general manner so that Central Board of Direct Taxes is enabled to issue appropriate orders, instruction or direction to subordinate authorities "as it may deem fit for proper administration of Act". As long as circular emanates from Central Board of Direct Taxes and contains orders, instructions or directions pertaining to proper administration of Act, it is relatable to source of power under section 119 irrespective of its nomenclature. Apart from sub-section (1), sub-section (2) of section 119 also enables Central Board of Direct Taxes "for purpose of proper and efficient management of work of assessment and collection of revenue, to issue appropriate orders, general or special in respect of any class of income or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to guidelines, principles or procedures to be followed by other income tax authorities in work relating to assessment or collection of revenue or (77 of 89) [ITA-575/2008] initiation of proceedings for imposition of penalties". In our view, High Court was not justified in reading circular as not complying with provisions of section 119. circular falls well within parameters of powers exercisable by Central Board of Direct Taxes under Section 119 of Act. (iii) Union of India & others Vs. Arviva Industries India Limited and others- 2014 (3) SCC 159 4. This Court in Commr. Of Customs Vs. Indian Oil Corpn. Ltd.- (2004)3 SCC 488, after examining entire case law, culled out following principles: (SCC p.497, para 12) (1) Although circular is not binding on court or assessee, it is not open to Revenue to raise contention that is contrary to binding circular by Board. When circular remains in operation, Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to terms of statute. (2) Despite decision of this Court, Department cannot be permitted to take stand contrary to instructions issued by Board. (3) show-cause notice and demand contrary to existing circulars of Board are ab inititio bad. (4) It is not open to Revenue to advance argument or file appeal contrary to circulars. 5. In this particular case, Board s Circular No.39/99- Cus. Dated 25.6.1999 extends benefit of brand rate of drawback to compensate exporters for re-rolled steel products and processed fabrics. High Court has rightly come to conclusion that circulars issued by Board are binding on Department. effort was made by learned Solicitor General to get this case referred to larger Bench. We do not accept this contention in view of number of decisions and especially Constitution Bench decision in Dhiren Chemical Industries- (2002)2 SCC 127. (78 of 89) [ITA-575/2008] 10. provisions which are important are as under: 10.1 Article 141 of Constitution of India 141. Law declared by Supreme Court to be binding on all courts law declared by Supreme Court shall be binding on all courts within territory of India 10.2 Section 263 of Income Tax Act 263. Revision of orders prejudicial to revenue (1) Commissioner may call for and examine record of any proceeding under this Act, and if he considers that any order passed therein by 2 Assessing] Officer is erroneous in so far as it is prejudicial to interests of revenue, he, may, after giving assessee opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as circumstances of case justify, including order enhancing or modifying assessment, or cancelling assessment and directing fresh assessment. 3Explanation.- For removal of doubts, it is hereby declared that, for purposes of this sub- section,-of Commissioner under this sub- section shall extend 1 and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal.] (2) No order shall be made under sub- section (1) after expiry of two years from end of financial year in which order sought to be revised was passed.] (3) Notwithstanding anything contained in sub- section (2), order in revision under this section may be passed at any time in case of order which has been passed in consequence of, or to give effect to, any finding or direction contained in order of Appellate Tribunal, High Court or Supreme Court. Explanation.- In computing period of limitation for (79 of 89) [ITA-575/2008] purposes of sub- section (2), time taken in giving opportunity to assessee to be reheard under proviso to section 129 and any period during which any proceeding under this section is stayed by order or injunction of any court shall be excluded. 10.3 Section 154 of Income Tax Act 154. Rectification of mistake.- (1) With view to rectifying any mistake apparent from record income-tax authority referred to in section 116 may, (a) amend any order passed by it under provisions of this Act ; (b) amend any intimation or deemed intimation under sub-section (1) of section 143. (1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to order referred to in sub-section (1), authority passing such order may, notwithstanding anything contained in any law for time being in force, amend order under that sub-section in relation to any matter other than matter which has been so considered and decided. (2) Subject to other provisions of this section, authority concerned (a) may make amendment under sub- section (1) of its own motion, and (b) shall make such amendment for rectifying any such mistake which has been brought to its notice by assessee, and where authority concerned is Commissioner (Appeals), by Assessing Officer also. (3) amendment, which has effect of enhancing assessment or reducing refund or otherwise increasing liability of assessee, shall not be made under this section unless authority concerned has given notice to assessee of its intention so to do and has allowed assessee reasonable opportunity of being heard. (4) Where amendment is made under this section, order shall be passed in (80 of 89) [ITA-575/2008] writing by income-tax authority concerned. (5) Subject to provisions of section 241, where any such amendment has effect of reducing assessment, Assessing Officer shall make any refund which may be due to such assessee. (6) Where any such amendment has effect of enhancing assessment or reducing refund already made, Assessing Officer shall serve on assessee notice of demand in prescribed form specifying sum payable, and such notice of demand shall be deemed to be issued under section 156 and provisions of this Act shall apply accordingly. (7) Save as otherwise provided in section 155 or sub-section (4) of section 186 no amendment under this section shall be made after expiry of four years [from end of financial year in which order sought to be amended was passed. (8) Without prejudice to provisions of sub-section (7), where application for amendment under this section is made by assessee on or after 1st day of June, 2001 to income-tax authority referred to in sub-section (1), authority shall pass order, within period of six months from end of month in which application is received by it, (a) making amendment; or (b) refusing to allow claim. 10.4 Section 151-A of Customs Act 151A. Instructions to officers of customs. Board may, if it considers it necessary or expedient so to do for purpose of uniformity in classification of goods or with respect to levy of duty thereon, issue such orders, instructions and directions to officers of customs as it may deem fit and such officers of customs and all other persons employed in execution of this Act shall observe and follow such orders, instructions and directions of Board: Provided that no such orders, instructions or directions shall be issued (81 of 89) [ITA-575/2008] (a) so as to require any such officer of customs to make particular assessment or to dispose of particular case in particular manner; or (b) so as to interfere with discretion of Collector of Customs (Appeals) in exercise of his appellate functions.] 10.5 Section 37-B of Excise Act [37B. Instructions to Central Excise Officers. Central Board of Excise and Customs constituted under Central Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient so to do for purpose of uniformity in classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to Central Excise Officers as it may deem fit, and such officers and all other persons employed in execution of this Act shall observe and follow such orders, instructions and directions of said Board: Provided that no such orders, instructions or directions shall be issued (a) so as to require any Central Excise Officer to make particular assessment or to dispose of particular case in particular manner; or (b) so as to interfere with discretion of [Commissioner of Central Excise (Appeals)] in exercise of his appellate functions. 11. While inaugurating five day National Legal Workshop on 23.12.2001, Mr. Justice S.P. Bharucha (the then Chief Justice of India), made following statement: principle cause of arrears in courts does not lay with Judges or Bar but with State Governments. Fast Track Courts or amendments to Civil and Criminal Procedure Code were of no real cure to problem unless Governments acted responsibly. (82 of 89) [ITA-575/2008] 12. In view of contentions which have been raised by learned counsel for parties, apprehension which has been put forward by Department that in spite of Supreme Court decision authority may take contrary view. In that view of matter, appeal may be allowed to be filed irrespective of monetary limit. 12.1. In our considered opinion, intention is not to allow to file appeal up to monetary limit fixed by Board which has statutory force and apprehension is misconceived in view of observation made in para 21. 13. We have also heard learned counsel for parties on issue. 14. To give comparison of Clause 11 of Instruction No.3/2011 issued in reference to Board s Instruction No.5/2008 dated 15.5.2008 and Clause 10 of Circular No.21/2015 dated 10.12.2015, they are required to be reproduced again independently in tabular form, which read as under: Clause 11 Clause 10 This instruction will apply to This instruction will apply appeals filed on or after 9 retrospectively th to pending February 2011. However, appeals and appeal be filed cases where appeals have been henceforth in High Courts/ filed before 9th February, 2011 Tribunals. Pending appeals below will be governed by the specified tax limits in para 3 instructions on this subject, above may be withdrawn/ not operative at time when such passed. Appeals before appeal was filed. Supreme Court will be governed by instructions on this subject, operative at time when such appeal was filed. (83 of 89) [ITA-575/2008] 15. Even on plain comparison of two clauses, referred to above, it is very clear that notification which was issued on 9 th February, 2011 could not achieve results which were envisaged by Government. Therefore, after almost four years, they have come out with more liberal clause to make it retrospective so that pendency could be reduced and genuine litigation can be decided on merits. 16. reasons and objects for which Section 268-A of Income Tax Act was introduced, reads as under: underlying objective of Board s instruction is to reduce litigation in small cases. With view to protecting Revenue s right to file or not to file appeal, new Section 268A of Income- tax Act has been inserted so as to provide that- Board may issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit. Such fixing of monetary limit is to be for purpose of regulating filing of appeal or application for reference by any income tax authority under provisions of this Chapter. Where income-tax authority has not filed any appeal or application for reference on any issue in case of assessee for any assessment year, due to abovementioned order/instruction/direction of Board, such authority shall not be precluded from filing appeal or application for reference on same issue in case of (a) same assessee for any other assessment year; or (b) any other assessee for same or any other assessment year. Where no appeal or application for reference has been filed by income tax authority pursuant to above mentioned orders/ instructions/ directions of Board, it shall not be lawful for assessee to contend that income tax authority (84 of 89) [ITA-575/2008] has acquiesced in decision on disputed issue by not filing appeal or application for reference in any case. Appellate Tribunal or Court shall have regard to above mentioned orders/ instructions/directions of Board and circumstances under which such appeal or application for reference was filed or no filed in respect of any case. Every order/instruction/direction which has been issued by Board fixing monetary limits for filing appeal or application for reference shall be deemed to have been issued under sub-section (1) of this new section and all provisions of this section shall apply to such order/instruction/direction. Applicability: This amendment has been made applicable with retrospective effect from 1st April, 1999. 17. From policy which has been referred by different High Courts and intention of legislation to reduce pendency of tax appeal and to have uniform policy for department through-out Country, therefore, direction issued by CBDT is binding on all subordinate officers and Section 268A(4) which has been amended with retrospective effect is applicable with all force in pending matters. 18. intention of legislation is very clear to prohibit appeal analogous to provisions of Code of Civil Procedure where there is prohibition that appeal upto value will not be entertained by Court. 19. Under Section 260A of Act only question of law is required to be decided, therefore, on analogous principle of Section 96(4) of CPC, if legislation has thought it fit to prohibit department to file appeal, instruction of CBDT to (85 of 89) [ITA-575/2008] delegate power, in our considered opinion, appeal is prohibited. In view of sub-section (4) of Section 96 of CPC where it has been prohibited that no appeal shall lie, except on question of law, from decree in any suit of nature cognizable by Courts of Small Causes, when amount or value of subject matter of original suit does not exceed Rs.10,000/-. 20. In view of majority of High Court decisions where view is in favour of assessee and in view of all judgments referred by counsel for assessee-respondent, if two views are possible, then one view which is in favour of assessee is required to be upheld and same is upheld. 21. contention which has been envisaged is of decision of Supreme Court. There are ample powers under Section 263 and 154, which will meet ends of justice and it will not be out of place to mention that writ can also be filed by department if it is gross case decided by any officer or authority but to that extent appeal is not maintainable and would amount to give over riding effect to statutory provisions. 22. It is well known that Courts are flooded with litigation where State Government and Central Government or Department or Corporation are largest litigants, therefore, frivolous litigation is curb for larger interest of avoiding more Tribunals or Courts to decide matters on merits. 23. In that view of matter, when legislation had thought it fit to put some prohibition on department, in our considered opinion issue is required to be answered in favour (86 of 89) [ITA-575/2008] of assessee and against department inasmuch as circular of CBDT is binding on subordinate officers. (INDERJEET SINGH),J. (K.S.JHAVERI),J. Per Hon ble M.N. Bhandari, J. 24. issue for our consideration is as to whether Department can act contrary to Circular issued by Central Board of Direct Taxes (for short CBDT ) in pursuance of Section 268A of Income Tax Act, 1961 (for short Act of 1961 ). 25. It is admitted by learned counsel for parties that Department cannot act contrary to Circular issued by CBDT for reduction of arrears of cases in different courts. It is more specifically after amendment in Section 268A of Act of 1961. It is, however, urged by learned counsel appearing for Department that if Tribunal takes view contrary to judgments of Apex Court then appeal should be held maintainable irrespective of value of tax effect. 26. Learned counsel appearing for Department submits that Article 141 of Constitution of India provides law declared by Supreme Court to be binding on all Courts within territory of India. In case where ratio propounded by Supreme Court is not followed then irrespective of value of tax effect, appeal should be held maintainable. It is even otherwise (87 of 89) [ITA-575/2008] required for judicial discipline. binding effect of judgments of Supreme Court has to be maintained. Appellate Tribunals are not at liberty to take their own view contrary to judgments of Supreme Court on same issue for reason that no appeal can be preferred considering tax effect involved therein. clarification is thus necessary to that extent. 27. Learned counsel for non-appellant/s has contested issue. It is submitted that when Circular has been issued under Section 268A of Act of 1961 then it takes statutory character, hence, no direction or liberty can be sought contrary to it. Accordingly, arguments raised by learned counsel for Department may not be accepted even in reference to Article 141 of Constitution of India. 28. We have considered submissions made by learned counsel for parties and perused record as well as judgments cited at Bar. 29. Various High Courts have considered issue raised before us. Circular issued by CBDT under Section 268A of Act of 1961 is binding on Department thus appeal cannot be preferred contrary to instructions given therein. This Court, however, cannot lose sight of only issue raised by Department in reference to Article 141 of Constitution of India. If issue has been decided by Apex Court then ratio propounded therein is to be applied as precedence. If Tribunal or CIT (Appeals) takes view contrary to settled (88 of 89) [ITA-575/2008] law then rider imposed by CBDT on filing of appeal cannot be applied. If we hold that appeal would not be maintainable even if Tribunal or CIT (Appeals) has taken view contrary to judgment of Supreme Court then Article 141 of Constitution of India would be violated. No statutory provision can stand or be read contrary to constitutional provision. 30. In view of above, theory of reading down needs to be applied for making Circular of CBDT in consonance to provisions of Constitution of India otherwise it would not only cause judicial indiscipline but give rise to anarchy, leading to serious consequences. 31. Accordingly, Circular issued by CBDT under Section 268A of Act of 1961 is held binding on Department thus appeal cannot be filed, if it is barred. It is, however, with clarification that if issue decided by CIT (Appeals) or Tribunal is contrary to judgments of Supreme Court, Department can prefer appeal, however, care would be taken to file it only in those cases where order passed by CIT (Appeals) or Tribunal is contrary to ratio propounded by Supreme Court on same issue. In doing so, sanctity of Article 141 of Constitution of India would be maintained, thereby, serious consequences of taking different view would also be avoided. 32. Department may incorporate it in Circular to avoid further controversy. (89 of 89) [ITA-575/2008] 33. question framed before Larger Bench is answered accordingly. (M.N. BHANDARI,J. B.M. Gandhi/Preeti Commissioner of Income-tax, Jaipur-II, Jaipur v. Gad Fashion