Commissioner of Income Tax vs K. Sreekantan Pillai

H.L. Dattu, CJ.

This Income Tax Appeal is directed against the orders passed by the Income Tax Appellate Tribunal, Cochin Bench, Cochin in ITA No. 477 of 2006, for the assessment year 2003-04, dated 9-10-2006. The Tribunal has rejected the revenue''s appeal only on the ground that the tax effect in the appeal filed by the assessee is less than Rupees two lakhs.

In the memorandum of appeal filed, the revenue has asserted, that, in view of the Board''s Circular dated 24-10-2005, even though the monetary limit of tax effect does not exceed more than Rupees two lakhs, since it involves a substantial question of law of importance, which is urged in the appeal and which may arise in future cases, the Tribunal should consider the appeal and decide the same on merits without being hindered by the monetary limits.

The Tribunal, without considering the aforesaid aspect of the matter, has rejected the appeal, is the grievance of the revenue and its learned Counsel. Reliance is placed on Board''s Circular dated 24-10-2005.

The Board''s Instruction/circular dated 24-10-2005 is as under:

Sub :- Monetary limits for filing Departmental appeals/references before Income Tax Appellate Tribunal, High Courts and Supreme Court measures for reducing litigation.

Reference is invited to Board''s Instruction No. 1979, dated 27-3-2000 [F. No. 279/126/98-IT, dated 27-3-2000] and Instruction No. 1985, dated 29-6-2000 [F. No. 279/126/98-IT, dated 29-6-2000] wherein monetary limits for filing appeals/references before various appellate authorities have been prescribed.

In partial modification of the above Instruction, it has now been decided by the Board that appeals will henceforth be filed only in cases where the tax effect exceeds the revised monetary limits given hereunder:

---------------------------------------------------------------------- Sl. No. Income Tax Tax effect ---------------------------------------------------------------------- (i) Appeal before Appellate Tribunal Rs. 2,00,000 ---------------------------------------------------------------------- (ii) Appeal u/s 260A Rs. 4,00,000 ---------------------------------------------------------------------- (iii) Appeal before the Supreme Court Rs. 10,00,000 ----------------------------------------------------------------------

The Board has also decided that in cases involving substantial question of law of importance as well as in cases where the same question of law will repeatedly arise, either in the case concerned or in similar cases, should be separately considered on merits without being hindered by the monetary limits.

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Para 3 of the said Circular would make it clear that in a case involving a substantial question of law, the Tribunal, without being hindered by the monetary limit, is expected to decide the question of law raised.

In the instant case, the Tribunal, without adverting to the aforesaid aspect of the matter and merely on the ground that the tax effect would not exceed more than Rupees two lakhs, has rejected the appeal. In our view, in view of what has been said by the Board in its Circular dated 24-10-2005, it is difficult for us to sustain the orders passed by the Tribunal.

Therefore, we pass the following:

ORDER

(i) The order passed by the Tribunal is set aside.

(ii) The matter is remanded back to the Tribunal to consider the revenue''s appeal in accordance with law, keeping in view the Circular issued by the Board dated 24-10-2005.

(iii) All the contentions of the parties are left open.

Ordered accordingly.