Document text
Circular No. 5/2024
F. No. 279/Misc.14212007-ITJ (Pt.)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi the 15th March, 2024
Subject: Circular u/s 268A of the Income-tax Act, 1961 for filing of appeals by the
Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before
Supreme Court-measures for reducing litigation-Reg.
Ref1:
Ref2:
Ref3:
Circular No. 3/2018 dated 11.07.2018
Circular No. 1712019 dated 08.08.2019
Board's letter in F.No.279/Misc. 142/2007-IT J (Pt) dated 20.08.2018
Reference is invited to the above wherein monetary limits and other conditions for filing
Departmental appeals under the Income-tax Act, 1961 (hereinafter referred to as the Act) before
Income Tax Appellate Tribunals (,ITAT'), Hon'ble High Courts ('HCs') and Special Leave
Petitions ('SLPs')/ appeals before Hon'ble Supreme Court ('SC') were specified by the Central
Board of Direct Taxes (,CBDT' or 'Board').
2.
In supersession of the above referred communications issued by CBDT, the following may
be noted in respect of departmental appeals to be filed before ITA Ts and HCs and SLPs/ appeals
before SC:
3.1
Monetary limits given in paragraph 4 with regard to filing appeal/SLP shall be applicable
to all cases including those relating to TDS/TCS under the Act with the following exceptions where
the decision to appeal/file SLP shall be taken on merits, without regard to the tax effect and the
monetary limits:
a.
Where any provision of the Act or the Rules or notification issued thereunder has been
held to be constitutionally invalid, or
b. Where any order, notification, instruction or circular of the Board or the Government has
been held to be illegal or ultra vires the Act or otherwise constitutionally invalid, or
c.
Where the assessment is based on information in respect of any offence alleged to have
been committed under any other law received from any of the law enforcement or
intelligence agencies such as CBI, ED, DR!, SFIO, NIA, NCB, DGGI, state law
enforcement agencies such as State Police, State Vigilance Bureau, State Anti-Corruption
Bureau, State Excise Department, State Sales/Commercial Taxes or GST Department, or
d. Where the case is one in which prosecution has been filed by the Depmiment in the
relevant case and the trial is pending in any COUli or conviction order has been passed
and the same has not been compounded, or
1
i.
ii.
e. Where strictures/adverse comments have been passed and/or cost has been levied against
the Department of Revenue, CBDT or their officers, or
f.
Where the tax effect is not quantifiable or not involved, such as the case of registration of
trusts or institutions under sections 10(23C), 12A/ 12AAl12AB of the Act, order passed
u/s 263 of the Act etc. The reference to cases involving sections referred here, where it is
not possible to quantify tax effect or tax effect is not involved, is for the purpose of
illustration only.
g.
h.
i.
j.
k.
I.
m.
Where addition relates to undisclosed foreign income/undisclosed foreign assets
(including financial assets)/undisclosed foreign bank account, or
Cases involving organized tax evasion including cases of bogus capital gain/loss through
penny stocks and cases of accommodation entries, or
Where mandated by a Court's directions, or
Writ matters, or
Matters related to wealth tax, fringe benefit tax, equalization levy and any matter other
than the Income Tax Act, or
In respect of litigation arising out of disputes related to TDS/TCS matters in both
domestic and International taxation charges:-
Where dispute relates to the determination of the nature of transaction such that the
liability to deduct TDS/TCS thereon or otherwise is under question, or
Appeals of International taxation charges where the dispute relates to the applicability of
the provisions of a Double Taxation A voidance Agreement or otherwise
Any other case or class of cases where in the opinion of the Board it is necessary to
contest in the interest of justice or revenue and specified so by a circular issued by Board
in this regard.
3.2
Attention is drawn to Circular No. 8/2023 issued vide F.No. 279/Misc'/M-93/2018-ITJ(Pt.)
dated 31.05.2023 in respect of deferral of appeals u/s 158AB of the Act. Exceptions in such cases
operate as follows:
a.
When judicial finality is achieved in favour of Revenue in the 'other case', appeal in the
'relevant case' is contested on merits subsequent to the decision in the 'other case'
irrespective of the extant monetary limits.
b. If the judicial outcome in the 'other case' is not in favour of Revenue and is not accepted
by the Department, appeal against the same may be contested on merits in the 'other
case' irrespective of the extant monetary limits, to arrive at judicial finality.
4.1
Appeals/ SLPs, not falling in the exceptions as detailed in para 3 above, shall not be filed
in cases where the tax effect does not exceed the monetary limits given hereunder:
2
S. No.
Appeals/ SLPs in Income-tax matters
Monetary Limit (~)
1.
Before Appellate Tribunal
SO,OO,OOO
2.
Before High Court
1,00,00,000
3.
Before Supreme COU11
2,00,00,000
4.2
It is clarified that an appeal should not be filed merely because the tax effect in a case
exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on
merits of the case. The officers concerned shall keep in mind the overall objective of reducing
unnecessary litigation and providing certainty to taxpayers on their Income-tax assessments while
taking a decision regarding filing an appeal.
S.l
For this purpose, 'tax effect' means the difference between the tax on the total income
assessed and the tax that would have been chargeable had such total income been reduced by the
amount of income in respect of the issues against which appeal is intended to be filed (hereinafter
referred to as 'disputed issues'). Further, 'tax effect' shall be tax including applicable surcharge and
cess. However, the tax will not include any interest thereon, except where chargeability of interest
itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of
interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the
tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect
will mean quantum of penalty deleted or reduced in the order to be appealed against.
S.2
Further, where income is computed under the provisions of section 11SJB or section lISJC,
for the purposes of determination of 'tax effect', tax on the total income assessed shall be computed
as per the following formula-
(A-B) + (C-D)
where,
A = the total income assessed as per the provisions other than the provisions contained in section
lISJB or section lISJC (herein called general provisions);
B = the total income that would have been chargeable had the total income assessed as per the
general provisions been reduced by the amount of the disputed issues under general provisions;
C = the total income assessed as per the provisions contained in section 11SJB or section 11SJC;
D = the total income that would have been chargeable had the total income assessed as per the
provisions contained in section llSJB or section lISlC was reduced by the amount of disputed
issues under the said provisions:
However, where the amount of disputed issues is considered both under the provisions contained
in section llSJB or section lISJC and under general provisions, such amount shall not be reduced
from total income assessed while determining the amount under item D.
S.3
The Assessing Officer shall calculate the tax effect separately for every assessment year in
respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the
disputed issues arise in more than one assessment year, appeal can be filed in respect of such
3
assessment year or years in which the tax effect in respect of the disputed issues exceeds the
monetary limit specified in para 4.1. No appeal shall be filed in respect of an assessment year or
years in which the tax effect is less than the monetary limit specified in para 4.1. FUliher, even in
the case of composite order of any High COUli or appellate authority which involves more than
one assessment year and common issues in more than one assessment year, no appeal shall be filed
in respect of an assessment year or years in which the tax effect is less than the monetary limit
specified in para 4.1. In case where a composite orderl judgement involves more than one assessee.
each assessee shall be dealt with separately. It is. clarified that the contents of this paragraph are
subject to para 3.2, above.
5.4
For calculating the tax effect of cases involving TDS/TCS, the cumulative effect, of all
orders passed for an assessment year of a deductor, shall be taken into account and shall include
interest u/s 201(1A) of the Act.
6.1
In a case where appeal before a Tribunal or a Court is not filed only on account of the tax
effect being less than the monetary limit specified above, the Pr. Commissioner of Income-taxi
Commissioner of Income-tax shall specifically record that,
"Even though the decision is not acceptable, appeal is not being filed only on the
consideration that the tax effect is less than the monetary limit specified in the CnDT
Circular dated <>".
6.2
Further, in such cases, there will be no presumption that the Income Tax Department
has acquiesced in the decision on the disputed issues. The Income Tax Depmiment shall not be
precluded from filing an appeal against the disputed issues in the case of the same assessee for any
other assessment year, or in the case of any other assessee for the same or any other assessment
year, if the tax effect exceeds the specified monetary limits.
7.
In the past, a number of instances have come to the notice of the Board, whereby an
assessee has claimed relief from the Tribunal or the Court only on the ground that the Department
b.as implicitly accepted the decision of the Tribunal or Court in the case of the assessee for any
other assessment year or in the case of any other assessee for the same or any other assessment
year, by not filing an appeal on the same disputed issues. The Depmimental representativesl
counsels must make every effort to bring to the notice of the Tribunal or the Court that the appeal
in such cases was not filed or not admitted only for the reason of the tax effect being less than the
specified monetary limit and, therefore, no inference should be drawn that the decisions rendered
therein were acceptable to the Depmiment. Accordingly, they should impress upon the Tribunal
or the Court that such cases do not have any precedent value and also bring to the notice of the
Tribunal! Court the provisions of sub section (4) of section 268A of the Act which read as under:
"(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. "
8.
As the evidence of not filing appeal due to this Circular may have to be produced in courts,
the judicial folders in the office of Pr.CsIT/CsIT must be maintained in a systematic manner for
easy retrieval. In cases where appeals are not being filed due to low tax effect despite the judgment
4
not being acceptable on merits or appeals are being filed despite low tax effect in view of
exceptions, the Pr. CIT/CIT shall submit a monthly report, to the CIT(J)/Addl./Jt. CIT(J) office,
as per Annexures-AI and A2, respectively ofCBDT's Instruction No. 112024 dated 09.02.2024
(issued in F.No. 279/Misc.l33/20I4-ITJ). Further, the CIT(J)/ Addl/Jt CIT(J) office shall collate
and disseminate the departmental stand, as regards filing of appeals, in respect of the issues
involved in such appeals, within the region.
9.
The above may be brought to the notice of all concerned.
10.
This issues under section 268A of the Act and shall come into effect from the date of issue
of this Circular. This Circular will apply to SLPs/appeals to be filed hencef0l1h before the
SC/HCs/Tribunals.
11.
Hindi version will follow.
Copy to:
<1~"r
(Tanay Sharma)
Jt.CIT(OSD)-ITJ, CBDT
New Delhi
1. The Chairman, Members and all officers in CBDT of the rank of Under Secretary and above.
2. All Pr. Chief Commissioners of Income Tax and All Directors General of Income Tax with a
request to bring to the attention of all officers.
3. The Comptroller and Auditor General of India.
4. ADG (Vigilance), New Delhi.
5. The Joint Secretary & Legal Advisor, Ministry of Law & Justice, New Delhi.
6. All Directorates ofIncome-tax, New Delhi and DGIT (NADT), Nagpur.
7. Hindi Cell for translation.
8. Guard file.
Jt.CIT(OSD)-ITJ, CBDT
New Delhi
5
