In a significant development, the Central Board of Direct Taxes (CBDT) has revised the monetary limits for filing income tax appeals by the Department before the Income Tax Appellate Tribunal (ITAT), High Courts, and the Supreme Court. This move is part of the broader effort to reduce litigation and bring greater certainty to taxpayers’ income tax assessments.
Circular 9/2024: Key Highlights
As per Circular No. 9/2024 dated 17th September 2024, the CBDT has set new monetary limits for filing appeals as follows:
- Before Income Tax Appellate Tribunal (ITAT): Rs. 60 lakh
- Before High Court: Rs. 2 crore
- Before Supreme Court: Rs. 5 crore
These limits apply to all income tax appeals, including those related to TDS/TCS under the Income Tax Act, 1961, with exceptions as specified in Paragraphs 3.1 and 3.2 of the Circular. In these exceptional cases, the decision to appeal or file a Special Leave Petition (SLP) will be made based on the merits of the case, irrespective of the tax effect or monetary limits.
Clarification on Appeal Filings
The CBDT has emphasized that appeals should not be filed solely because the tax effect exceeds the prescribed limits. Instead, the decision to file an appeal should be made based on the merits of the case. Officers are urged to consider the overall objective of reducing unnecessary litigation and ensuring certainty for taxpayers when deciding to file an appeal.
Impact of the Circular
This circular is effective from the date of its issuance and applies to all future SLPs/appeals before the Supreme Court, High Courts, and Tribunals. Additionally, it will apply to pending appeals before the Supreme Court, High Courts, and Tribunals, which may be withdrawn if they fall within the new limits.
Recent Case: Dy. Commissioner of Income Tax vs. Naresh Kumar Garg
In a recent case, the ITAT dismissed an appeal based on the new circular’s provisions. The case, Dy. Commissioner of Income Tax vs. Naresh Kumar Garg (ITA No. 2280/Del/2023, Assessment Year: 2016-17), highlighted the application of the revised monetary limits. The Tribunal followed the circular.
Conclusion
The enhancement of monetary limits for filing income tax appeals represents a key policy change aimed at reducing litigation in tax matters. By focusing on the merits of the case rather than just the tax effect, the CBDT aims to streamline the litigation process and reduce the burden on the judicial system. Taxpayers and tax officers alike should take note of these revisions as they will impact the approach to filing and contesting income tax appeals in the future.
