CBDT'S INSTRUCTIONS REGARDING STANDARD OPERATING PROCEDURE ON FILING OF APPEALS TO HIGH COURT
Section 260A of the Income-tax Act, 1961 - High Court - Appeal to - Instructions regarding Standard Operating Procedure on filing of appeals to High Court under section 260A and related matters
INSTRUCTION NO. 7 /2011 [F.NO. 279/MISC./M-42/2011-ITJ], DATED 24-5-2011
The Government has formulated the National Litigation Policy 2010, for conduct of litigation on its behalf. The policy declares:
"Government must cease to be a compulsive litigant. The philosophy that matters should be left to the courts for ultimate decision has to be discarded. The easy approach, 'let the court decide', must be eschewed and condemned."
2. In furtherance of the above stated policy and to achieve the 'zero delay regime' in matters of filing appeals and in suppression of the existing Instructions on the subject of filing of appeals to High Court, in general, and Instruction No. 1038 dated 3-2-1977; Instruction No. 1777 dated 4-11-1987; Instruction No. 1957 dated 22-12-1998; Letter Dy No. 111 /Ds (J)/2004-ITJ dated 25-3-2004; Letter No. 272/77/2007-ITJ dated 24-9-2008; Letter No. 279/Misc.l42/2008-ITJ(Pt) dated 23-10-2008; Letter No. 279/Misc/142/2008 dated 19-11-2008 and Letter No. 279/Misc/M-29/2010-ITJ dated 31-8-2010, in particular, the following Instructions are issued herewith for compliance by all concerned:
Responsibility for Filing of Appeal to High Court
3. Subject to the Instructions for the time being in force on the monetary limits for filing appeals issued by CBDT under section 268A, the jurisdictional CCIT shall be the authority to decide whether to contest an order of the ITAT, in the light of the facts and circumstances of a particular case and the statutory provisions. He shall take a view in the matter after taking into consideration the recommendations of the authorities below. Once the CCIT communicates his decision to contest a particular order of ITAT, it shall be the responsibility of the CIT to ensure timely and proper filing of appeal in the High Court and consequential follow up actions.
Time Lines for Filing of Appeals in the High Court under section 260A of the Act
4. Time lines indicating clearly the responsibilities of each level involved in the process of filing appeal to High Court have been laid down in Annexure-I to this instruction for strict adherence by all concerned.
5. Appeal Effect and Scrutiny Report:
i. On receipt of the order of the ITAT, the Assessing Officer (Assessing Officer) shall ensure that appeal effect is given timely and properly. The Range Head and the CIT shall monitor timely appeal effect in all the orders of the ITAT.
ii. With a view to provide relevant inputs to the decision making authority, a format for scrutiny report is prescribed herewith at Annexure-II, which envisages basic record based information to be filled-in by the Assessing Officer and inferential analysis beginning at the level of the Range Head. The parts to be filled-in by the Assessing Officer and Range Head have been specified. However, the CIT may, in his discretion, allow the Assessing Officer to fill up the sections meant for Range Head or vice versa, if the situation so demands, to avoid delay.
iii. In respect of appeals decided in favour of revenue, the Assessing Officer shall submit only Part I of the proforma in Annex II to the CIT through Range Head and there will be no need to fill in other parts of the proforma in such cases.
iv. Appeal effect should be particularly monitored by the CIT in the cases in which the ITAT has decided certain issues in favour of the assessee and set-aside/ remanded back other issues to the Assessing Officer. The set-aside issues must be decided on priority.
6. Quality of Appeals:
i. An appeal to the High Court or the Supreme Court can be filed only on 'Substantial Questions of Law'. The CCsIT/ CsIT have to bestow their personal attention on this issue while taking decision to file appeal under section 260A of the Act. The Substantial Questions of Law arising out of the order of ITAT must be clearly identified and suggested draft question of law should be sent to the Standing Counsels for their consideration
ii. Although the expression 'substantial question of law' has not been defined anywhere in the statute, the Supreme Court in the case of Sir Chunilal Mehta & Sons v. Century Spinning & Mfg. Co. Ltd. AIR 1962 SC 1314 (applied by the Apex Court in M Janardhana Rao v. JCIT 273 ITR 50, has laid down the following tests to determine whether a 'substantial question of law' is involved:
a. Whether the issue directly or indirectly affects substantial rights of the parties?
b. Whether the question is of general public importance?
c. Whether it is an open question in the sense that the issue has not been settled by pronouncement of Supreme Court?
d. Whether the issue is not free from difficulty?
e. Whether it calls for a discussion for alternative views?
iii. Perversity of facts also constitutes 'Substantial Question of Law' as it falls in (d) and (e) above. Hon'ble Supreme Court in Sudarshan Silk & Sarees v. CIT 300 ITR 205 has laid down the attributes of perversity by holding that an order or finding is perverse on facts if it falls under any of the following categories:
(a) The finding is without any evidence.
(b) The finding is contrary to the evidence.
(c) There is no direct nexus between the conclusion of fact and primary fact upon which that conclusion is based?
(d) When an authority draws a conclusion which cannot be drawn by any reasonable person or authority on the material and facts placed before it.
7. Proper Judicial Record Management System:
(i) A proper judicial record management system is essential for meaningful conduct of litigation. The CIT has to, inter alia, ensure that once appeal to ITAT is authorized against the order of CIT(A), a separate judicial folder for the assessee for a particular year is maintained in his office. Among other things, the folder should have a copy of relevant assessment order, the remand report of the Assessing Officer on the order of the CIT(A), if any, and the scrutiny report submitted by the authorities below.
(ii) This folder should be retrieved as soon as the order of ITAT in the case is received. The scrutiny report on the order of the ITAT may be processed through this folder (where other relevant papers including the scrutiny report while filing appeal to ITAT should be available). If the appeal to High Court is filed under section 260A, the relevant papers (scrutiny report, memo of appeal etc) should also be linked to the same folder.
(iii) These judicial folders should be easily retrievable once the judgment of the High Court in the case is received, so that the decision to file SLP is taken without making reference to the Assessing Officer / Range Head and proposal to file SLP is processed in the office of the CIT timely.
(iv) Likewise, a separate judicial folder should be maintained in case of assessee's appeal under section 260A / writ petitions filed in High Court, which should contain relevant documents including copy of counter & rejoinder affidavits filed in the Court proceedings.
(v) The CIT should evolve a system through which a digital copy of relevant documents such as Appeal Memo and its enclosures (assessment order, CIT(A)'s order, ITAT order etc.) are retained for use at the time of sending SLP proposal in the case, if the need arises.
Preparation of Memorandum of Appeals / Papers etc.
8. The CIT shall evolve a system in his charge to ensure that:
(i) There is proper vetting of Memorandum of Appeals as regards relevant facts therein before the appeal is actually filed;
(ii) Necessary particulars including the correct PAN and CIT charge is mentioned;
(iii) All annexures including copies of orders of authorities below are properly typed as per High Court Rules to avoid defect/office objections.
(iv) In case, any document like agreement, depositions etc. crucial to the issue involved and considered by lower authorities, a copy of the same must be referred to at relevant place in appeal memo and its copy annexed thereto.
An illustrative list of precautions to be taken to avoid defective appeals/objections being raised in filing appeals to High Court and guidelines for typing of appeal papers etc. are enclosed as Annexure-III to this Instruction. However, the Standing Counsels representing the Department's case may be further consulted on procedural aspects, wherever considered necessary.
Filing of Appeal and Subsequent Monitoring
9. The CIT should put in place proper mechanism with defined responsibility of different levels of officials to ensure that:
(i) The appeal is filed in the registry of High Court within prescribed time limit as in Annexure-I.
(ii) Diary Number / Lodging Number and ITA Number allotted by the registry is obtained and recorded in judicial folder in CIT's office as mentioned in check list / proforma for scrutiny report on ITAT order at Annexure-II.
(iii) In case, the registry of the High court notifies any defect or office objection, immediate steps are taken to remove the same with the assistance of the filing Counsel and compliance is reported to him.
(iv) One set of appeal memo is sent to the Assessing Officer for linking the same with the relevant assessment record.
(v) In case, the assessee files counter affidavit, the appearing counsel makes available the same to the CIT/Assessing Officer to file Rejoinder affidavit to rebut the contention of the assessee.
(vi) The appeals are followed up and the Department is effectively represented at every hearing/stage.
(vii) Proper coordination with the appearing counsel is maintained at every stage.
(viii)The details and information called for by the High Court/ appearing counsels should be furnished (in quadruplicate) at the earliest and, in any case at least three days before the date fixed for hearing before the High Court.
Appeal/Writ Petition Filed by the Assessee
10. As soon as the memo of appeal / writ petition filed by the assessee is received, a file should be opened in the office of CIT and assigned a proper identification number incorporating the ITA No. /WP No. allotted by the High Court. Factual comments on the memo of appeal / writ petition and judicial precedents in support of the Revenue's stand should be forwarded by the CIT to the Departmental Counsel for drafting counter-affidavit. The CIT should ensure that the counter-affidavit is filed within time allowed by the Court and further follow up actions taken in consultation with the counsel.
Power to defend Union of India, Ministry of Finance, Secretary (Revenue), Chairman CBDT etc. in cases before High Court
11. All the cases before High Court, pertaining to Direct Taxes, wherein Union of India, Ministry of Finance, Secretary (Revenue), Chairman CBDT, or any of these figure as respondents, should be defended by the CCIT/ DGIT concerned. Powers may be delegated to appropriate officers nominated for the purpose stated above.
The Board may be approached immediately for guidance/ Instructions in case any difficulty is experienced in exercising these powers. In Writ matters against orders under section 119(2) of the IT Act, 1961 etc, appropriate instructions may be obtained from the concerned division of the Board under intimation to ITJ section.
Compliance of High Court Directions
12. The CIT shall personally ensure compliance of directions of the High Court like Dasti service, filing of counter or rejoinder affidavit or other specific directions within time frame to avoid adverse observations.
There should be close co-ordination between field officers and Standing Counsels in the High Court so that directions are communicated in time and proper compliance is made to the satisfaction of the Court.
Judgments of High Court containing strictures etc.
13. Judgments of the High Court containing strictures or which are contrary to Board's orders, notifications, instructions, circulars etc. shall be brought to the notice of the Board (concerned division) immediately by the CCIT/DGIT under intimation to ITJ section of the Board.
Assistance to Departmental Counsels
14. The CIT should ensure that whenever the Departmental Counsel seeks Instructions / clarifications in a case, the same are attended to by the officers concerned promptly. The counsel should be briefed properly to strengthen Revenue's case. The CIT should personally involve himself in cases involving intricate issues of facts / law having wide ramifications or involving high revenue stake.
A copy of the scrutiny report for filing appeal to High Court should invariably be made available to the appearing counsel for his assistance in preparation of the case and arguments.
15. Monitoring Mechanism:
i. The CCIT/ CIT shall ensure due adherence to this instruction. In order to facilitate monitoring, a Register shall be maintained in the office of CIT as per the format prescribed at Annexure-IV to this instruction.
ii. Quarterly Report of appeals filed in the High Court as prescribed at Annexure-V to this Instruction shall be furnished by the CIT to the CCIT (CCA) through his controlling CCIT by the 15th of the month following each quarter. The CCIT (CCA) in turn shall compile the report and send to the DGIT (L&R) at DELHI_DGIT-L&R@incometax.gov.in in digital form by E-mail before end of the month following each quarter. The DGIT (L&R) shall put up an analysis of such reports to the Member (A&J) with his comments.
16. This Instruction shall apply in all the appeals being filed in High Courts and matters related thereto with effect from 1-6-2011.
Note: Reference to the CCIT/DIT in this Instruction includes DGIT/DIT as the case may be.