monetary limits for filing of appeals before High Court

21. Before we endeavour upon any further deliberation, it is important for us to examine and interpret Section 268-A of the 1961 Act. Section 268-A aforementioned, is being reproduced hereunder:- “Filing of appeal or application for reference by income-tax authority. 268-A. (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.” A perusal of sub-Section (1) of Section 268-A of the 1961 Act reveals, that the Central Board of Direct Taxes has been authorized under the 1961 Act, to issue orders, instructions or directions to Income Tax Authorities, laying down monetary limits for purposes of filing appeals. As a consequence of the insertion of the instant provision in the Income Tax Act, 1961, orders, instructions or directions issued on the subject of monetary limits for filing appeals must be deemed to have attained statutory status. There can be no dispute that every requirement under the mandate of law, leads to a consequential statutory obligation to comply with the said requirement. Sub-Section (5) of Section 268-A of the 1961 Act is also relevant for the determination of the issue in hand, inasmuch as, it mandates that instructions, orders or directions, even issued earlier i.e. prior to the insertion of Section 268-A in the 1961 Act, by the Finance Act 2008, fixing monetary limits for filing of appeals, shall be deemed to have been issued under sub-Section (1) of Section 268-A of the 1961 Act. This conclusion emerges from the fact, that Section 268-A of the 1961 Act was introduced with retrospective effect from 1.4.1999. Accordingly, instructions, orders or directions issued even prior to the insertion of Section 268-A of the 1961 Act, must be deemed to have statutory status, if they were issued after 1.4.1999. On the basis of the judgements, which were prevalent prior to the insertion of Section 268-A into the 1961 Act, it may not have been advisable for the appellant - revenue not to prefer an appeal, since in terms of the decisions rendered by various High Courts, as well as, by the Supreme Court, the Revenue would be bound, as against the concerned assessees, on determinations in favour of the assessee, which had remained unassailed. In this behalf, reference may be made to the decisions rendered by the Supreme Court in Income Tax, Central, Kanpur Vs. J.K. Charitable Trust, (1992) 196 ITR 31, Berger Paints India Ltd. Vs. Commissioner of Income Tax, (2004) 266 ITR 99 and C.K. Gangadharan Vs. Commissioner of Income Tax, (2008) 304 ITR 61, wherein it was held, that the decision of the Department in favour of an assessee will be deemed to have been accepted by the Revenue, if the Revenue does not assail the same by filing an appeal. Thereafter, the Revenue was barred from raising the same issue against the assessee. This position has now been altered, in as much as, sub-section (3) of Section 268-A of the 1961 Act, leaves the remedy open in the hands of the Revenue, even though, an appeal had not been filed by the Revenue on account of the monetary limits prescribed by the Central Board of Direct Taxes. This emerges from a plain reading of Section 268-A(3) of the 1961 Act. It is this aspect of the matter, which had constrained the Revenue to prefer appeals, in cases where a substantial question of law had arisen for adjudication as against the concerned assessee, even with limited tax effect. All issues prejudicial to the Revenue, in cases where an appeal was not filed by the Revenue, must therefore, be deemed to have been done away with, after the inclusion of Section 268-A into the 1961 Act. 22. Incidentally, all the instructions relied upon by the learned counsel for the respondent – assessee, were issued after 1.4.1999, and as such, the instructions relied upon by the respondent - assessee will be deemed to have been issued under Section 268-A of the 1961 Act. All the instructions relied upon by the learned counsel for the respondent – assessee must be deemed to have statutory recognition. The action of the Revenue in abstaining from filing an appeal under the instructions relied upon by the respondent – assessee will not be subjected to any adverse inference against the Revenue so as to preclude it from raising the issue involved therein against the assessee. 23. In the background of the conclusions drawn by us hereinabove, we would endeavour to deal with the submissions advanced by the earned counsel for the appellant - revenue based on Section 260-A of the 1961 Act. There can be no doubt, whatsoever, that after the introduction of Section 268-A into the 1961 Act, Section 260-A of the 1961 Act, cannot be read independently. Sections 260-A and 268-A of the 1961 Act will now have to be interpreted by reading the two harmoniously, so as to give effect to the aforesaid two provisions keeping in mind the objects and the reasons on the basis whereof Section 268-A was inserted into the 1961 Act. One cannot lose sight of the fact, that Section 268-A of the 1961 Act was inserted by the Finance Act 2008 with retrospective effect from 1.4.1999. The legislature in its wisdom clearly desired to give statutory effect to all instructions issued on the subject of monetary limits for regulating filing of appeals retrospectively. Accordingly, all instructions laying down monetary limits for filing appeals (which were issued on or after 1.4.1999) by a deeming fiction of law must be treated as having been issued under Section 268-A(1) of the 1961 Act. A reading of sub-section (1) of Section 260-A of the 1961 Act, as suggested by the learned counsel for the appellant – revenue, vests a right in the Revenue to prefer an appeal before an Appellate Authority, in all such cases involving substantial questions of law. The aforesaid right will now have to be read along with the mandate of sub-section (1) of Section 268-A of the 1961 Act, which restricts the remedy of preferring appeals on the basis of monetary limits stipulated by the Central Board of Direct Taxes. The Central Board of Direct Taxes is the policy making agency of the Department of Revenue. The monetary limits prescribed by the Central Board of Direct Taxes can not be treated as an arbitrary imposition on the Department of Revenue. The Department of Revenue having chosen on its own volition, the monetary limits for filing appeals to challenge orders passed in favour of assessees, cannot be heard to deviate therefrom. When the Revenue itself lays down the aforestated monetary limits, a harmonious construction of sub-section (1) of Section 260-A of the 1961 Act, and sub-section (1) of Section 268-A of the 1961 Act, would inevitably lead to the conclusion, that the Revenue can prefer an appeal, if a case raises a substantial question of law, subject to the monetary limits stipulated by the Central Board of Direct Taxes. This conclusion of ours will have to be kept in mind while examining different pleas raised on behalf of the appellant – revenue. 24. In view of the conclusion drawn by us in the foregoing paragraph, the submission advanced by the learned counsel for the appellant - Revenue, emerging from Section 260-A(1) of the 1961 Act, to the effect that an appeal can be filed by the Revenue in all cases where a substantial question of law arises, and that, the right of the Revenue to file an appeal cannot be restricted, deserves to be rejected, and is accordingly, rejected. We are also of the view, that the submission of the learned counsel for the appellant – revenue based on sub-section (4) of Section 260-A of the 1961 Act, is also wholly misconceived. We are one with the learned counsel for the respondent - assessee, that it is open to the respondent - assessee to repudiate not only the legal submissions advanced in an appeal on behalf of the Revenue, but also, any other legal submission that may arise therein. What seems to have been over-looked by the learned counsel for the appellant - revenue is, that a plea raised by an assessee under Section 268-A of the 1961 Act, is also a plea on a proposition of law. Furthermore, under sub-section (6) of Section 260-A of the 1961 Act, it is also open to this Court to decide such questions of law, which have not been determined hitherto before. The aforesaid conclusions drawn by us completely negate the contentions raised on behalf of the appellant - revenue on the effect Section 260-A of the 1961 Act. 25. On the basis of the conclusions drawn by us hereinabove, on the basis of the submissions advanced by the learned counsel for the appellant – revenue based on Section 260-A of the 1961 Act, and on the basis of the conclusions drawn by us on the basis of the submissions advanced by the learned counsel for the respondent – assessee based on Section 268-A of the 1961 Act; we have no hesitation to conclude that the instructions issued by the Central Board of Direct Taxes laying down monetary limits for filing of appeals, are mandatory, and as such, binding on the Revenue. This conclusion of our also answers the first contention raised on behalf of the appellant – revenue.