In a large number of cases Hon’ble Delhi High Court has summarily dismissed the appeals filed by the department prior to 9-2-2011 on the ground that the tax effect involved was less than the revised monetary limits of tax effect involved prescribed by CBDT Instruction No. 3/2011, dated 9-2-2011.
As per Instruction No. 3/2011 the revised monetary limit was applicable only for the appeals filed on or after 9-2-2011 i.e. the date of issue of Instruction. As per para 11 of the Instruction, it was clarified that the appeals filed earlier would be governed by the old instructions operative at the time of filing.
On this issue SLP was filed in Supreme Court and one case namely Surya Herbal came up for hearing before the Hon’ble Supreme Court on 29-8-2011. The order passed by the Hon’ble Court in that case in SLP(C) CC No. 13694 of 2011 is enclosed herewith (see Annexure). The Supreme Court has directed that review petition be filed in High Court within two weeks. In such cases the attention of the High Court may be drawn to the observations of Supreme Court with a prayer not to apply the Instruction No. 3/2011 ipso facto in respect of appeals filed prior to 9-2-2011.
In view of the above, the Board desires that in all such cases (including the cases in which proposal to file SLP has been sent to Directorate of Legal & Research) immediate steps be taken to file review petition in High Court pointing out the observations of Supreme Court. The officers may be advised not to send any proposals henceforth to file SLP in such cases.
SUPREME COURT OF INDIA
Commissioner of Income-tax Central-III
Surya Herbal Ltd.
CHIEF JUSTICE; K.S. RADHAKRISHNAN
AND SWATANTER KUMAR, J.
CC NO. 13694/2011
AUGUST 29, 2011
Goolam E. Vahanvati, Rupesh Kumar, Anand Kannan and B.V. Balaram Das for the Petitioner.
Liberty is given to the Department to move the High Court pointing out that the Circular, dated 9-2-2011, should not be applied ipso facto, particularly, when the matter has a cascading effect. There are cases under the Income-tax Act, 1961, in which a common principle may be involved in subsequent group of matters or large number of matters. In our view, in such cases if attention of the High Court is drawn, the High Court will not apply the Circular ipso facto. For that purpose, liberty is granted to the Department to move the High Court in two weeks.
The special leave petition is, accordingly, disposed of.
Reference: Section 268A of the income Tax Act, 1961
Filing of appeal or application for reference by income-tax authority
(1) The 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 the purpose of regulating filing of appeal or application for reference by any income-tax authority under the provisions of this Chapter.
(2) Where, in pursuance of the orders, instructions or directions issued under sub-section (1), an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of—
(a) the same assessee for any other assessment year; or
(b) any other assessee for the same or any other assessment year.
(3) Notwithstanding that no appeal or application for reference has been filed by an income-tax authority pursuant to the orders or instructions or directions issued under sub-section (1), it shall not be lawful for an assessee, being a party in any appeal or reference, to contend that the income-tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case.
(4) The Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to the orders, instructions or directions issued under sub-section (1) and the 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 the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub-section (1) and the provisions of sub-sections (2), (3) and (4) shall apply accordingly.