ITAT Dismisses Revenue’s Plea since CBDT Circular is Binding on Them [Read Order]

The Kolkata ITAT recently held that the circulars issued by the Central Board of Direct Taxes (CBDT) is binding on the department and it cannot take a plea that such a circular is not valid or is against the provisions of law.

In the year 2015, the CBDT had enhanced the monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court have been as measure for reducing Litigation.

In the instant case, the departments’ appeal against the order of the first appellate authority was dismissed by the Appellate Tribunal in view of the fact that the value of demand was below prescribed the monetary limit specified under the above circular.

However, the department took a view that the above circular was not applicable to them.

The bench noticed the Apex Court decision in Commissioner of Customs vs Indian Oil Corporation Ltd, wherein the Court laid down that when a circular issued by the Board remains in operation then the Revenue is bound by it and cannot be allowed to plead that it is not valid or that it is contrary to the terms of the statute. The appeal under consideration has certainly been filed contrary to the Circular issued by the CBDT Circular No.21 dated 10.12.2015.

Following the above decision, the division bench held that “In view of the above, We hold that the appeal filed by the Department, against the impugned order of the Ld. CIT(A), is contrary to the policy decision of the Department and as such the appeal filed by the Department is dismissed in limine.”