Commissioner Of Income-Tax v. Kodananad Tea Estates Co. (And Connected Appeals)

K. Raviraja Pandian, J.:— The question to be decided in these appeals is one and the same as to whether the Appellate Tribunal is right in dismissing the appeal filed by the Revenue without considering it on the merits on the ground that the Departmental instruction bearing No. 1979 instructs that if effect involved in the appeals is less than the amount prescribed therein, no appeal need be filed before the Tribunal.

2. As the issue involved is the correctness or otherwise of the order of the Tribunal in not deciding the issue on the merits by placing reliance on the departmental instruction we are of the view that we need not dilate on the facts in issue. The appeals filed by the Revenue before the Tribunal have been dismissed without going into the merits on the basis of Circular Instruction No. 1903 dated October 28, 1992, and Instruction No. 1777 dated November 4, 1987, by which a monetary limit for filing of the appeal by the Department before the Tribunal was laid down. As per the circular, the monetary limit is revised to Rs. one lakh.

3. As the tax effect in these cases is less than rupees one lakh, the appeal was dismissed by relying on the instruction.

4. Though the respondents were duly served, their names were printed in the list, there is no representation on behalf of the respondents in T.C (A) Nos. 100, 243 and 457 of 2004.

5. We heard the argument of learned counsel appearing for the Revenue and also perused Instruction No. 1979, dated March 27, 2000, which reads as follows:

“3. Adverse judgments relating to the following should be contested irrespective of revenue effect:

(i) Where revenue audit objection in the case has been accepted by the Department.

(ii) Where Board's order, notification, instruction or circular is the subject-matter of an adverse order.

(iii) Where prosecution proceedings are contemplated against the assessee.

(iv) Where the constitutional validity of the provisions of the Act are under challenge”.

6. The instruction came into force only with effect from April 1, 2000. The assessment years involved in these appeals are earlier to the date from which the notification was given effect to. Hence, the application of notification for dismissing the appeal cannot be legally sustainable. Apart from that, clause (ii) of para. 3 of Instruction No. 1979 provides that where the Board's order, notification, instruction or circular is the subject-matter of an adverse order irrespective of the revenue effect, the appeal has to be decided on the merits. When the applicability of the notification, which is given effect to from April 1, 2000, is questioned before the Tribunal, the question comes from clause (ii) of paragraph 3 of Instruction No. 1979.

7. For the above two reasons, we are of the view that the Tribunal has committed a mistake in not considering the issue on the merits and dismissing the appeal on the basis of the notification. Accordingly, the orders of the Tribunal, which are impugned in these appeals are set aside and the matters are remanded back to the Tribunal to do the exercise on the merits once again. No costs.