- (1.) The present appeal relates to the Assessment Year 1993-94. Since the tax effect was more than Rs.2 lacs, the appeal was presented on 24th December, 2004 on the basis of Instruction No.1979 dated 27th March, 2000. When the appeal was taken up for hearing, a preliminary objection was raised by the learned counsel for the respondent-assessee on the issue of maintainability of the instant appeal. Reliance was placed on Section 268A of the Income Tax Act (hereinafter referred to as the Act) as well as the Instructions No.3 of 2011 dated 9th February, 2011 by the Central Board of Direct Taxes (hereinafter referred to as the CBDT) laying down the monetary limits for regulating the filing of the appeals. The learned counsel for the assessee contended that under the Instructions No.3 of 2011, the monetary limit for filing an appeal by the Department was Rs.10 lacs, whereas the tax effect in the instant appeal is less than Rs.10 lacs and, therefore, the appeal should be dismissed as not maintainable. Since the preliminary objection raised had far reaching consequence affecting pending appeals in the High Court, the Court invited other counsels to address the Court on this issue. In this manner, we have heard Sri Bharat Ji Agarwal, the learned Senior Counsel alongwith Sri Shambhu Chopra and Sri Govind Krishna, the learned counsels for the Department and Sri R.P. Agarwal, Sri Piyush Agarwal, Sri Ashish Bansal and Sri Suyash Agarwal, the learned counsels for the assessee.
(2.) The learned Senior Counsel for the Income Tax Department (hereinafter referred to as the Department) vehemently repudiated the preliminary objection raised by the learned counsel for the assessee. The learned Senior Counsel for the Department contended that the instructions issued by CBDT only lays down the monetary limits for regulating the filing of the appeals and not to regulate the appeals already filed. It was urged that the appeals already filed as per the earlier instructions will have to be decided on merits irrespective of the fact that the tax effect was less than the prescribed limit as per the latest instructions. The learned Senior Counsel urged that the right to file an appeal is a substantive right under Section 260A of the Act which cannot be taken away by Section 268A or by the instructions issued by CBDT under Section 119 of the Act. It was contended that the instructions are at best guidelines and are not mandatory upon the department. In support of his submission, reliance was placed on the following decisions, namely, Messrs. Hoosein Kasam Dada (India) Ltd. Vs. The State of Madhya Pradesh and others, 1953 AIR(SC) 221 Garikapati Veeraya Vs. N. Subbiah Choudhry and others, 1957 AIR(SC) 540 and Ramesh Singh and another Vs. Cinta Devi and others, 1996 3 SCC 142. It was urged that para 11 of the instructions clearly indicate that the instruction is prospective in nature. The learned Senior Counsel contended that para 11 of the instruction makes it clear that the instruction is not applicable to pending appeals and that the language employed in the instructions is clear and unambiguous and, therefore, the literal rule of interpretation would apply and it is not for the Court to interpret the same in a different way.
(3.) On the other hand, the counsels in support of the assessee, in addition to the submission on monetary limit, contended that the instructions has been issued pursuant to the National Litigation Policy, which also provided for review of pending cases so as to reduce the government litigation in Courts so that valuable court time was spent in resolving other serious issues. The underlying idea under the policy was to filter out frivolous appeals where the stakes were not so high and was less than the amount fixed by the revisional authorities. It was also contended that the instruction was a beneficial piece of legislation and would be applicable retrospectively. It was also urged that the right of appeal under Section 260A of the Act, is now regulated by Section 268A of the Act. In support of their submissions, the learned counsels for the parties have placed reliance on various decisions which would be referred hereinafter.;