CBDT Circular on Enhancement of Monetary Limits for Filing Appeals

On 17 September 2024, the Central Board of Direct Taxes (CBDT) has notified increase in monetary limits for filing appeals and Special Leave Petitions (SLPs) by the Income-tax Department before the Income-tax Appellate Tribunal (ITAT), High Court and Supreme Court.

This circular brought into force the announcement made in the Union budget 2024-25 for enhancing the monetary limits for filing appeals related to direct taxes, excise and service tax before the aforementioned forums. This circular is effective from 17 September 2024 and will apply to the appeals/SLPs to be filed henceforth. It will also apply to appeals/ SLPs pending before ITAT, High Court and Supreme Court. Such pending appeals/ SLPs can be withdrawn, if the tax effect does not meet the enhanced monetary threshold.

The monetary limits are enhanced as follows:

These enhanced monetary limits will be applicable to all cases including matters relating to tax deducted at source (TDS) or tax collected at source (TCS) under the Income-tax  Act, 1961 (the Act), subject to the following exceptions laid down in CBDT Circular No.5/ 2024 dated 15 March 2024:

1. Disputes concerning determination of nature of transactions, wherein liability to deduct TDS or TCS thereon or otherwise is under question;
2. Appeals of international tax charges where the disputes relate to the applicability of the provisions of double taxation avoidance agreements;
3. In any other case, where in the opinion of the CBDT, it is necessary to contest the issue in the interest of justice/revenue and specified so by a circular issued by CBDT in this regard.

In addition to this, all other exceptions laid down in Circular No.5/ 2024 will continue to be in force, wherein the decision to file appeal or SLP will be taken on merits, with no regards to the tax effect and monetary limits, the exceptions are as listed below:

1. Any provision of the Act or Income-tax Rules, 1962 or notification issued thereunder is held to be constitutionally invalid;
2. Any order, notification, instruction or circular issued by CBDT, or the government is held to be illegal or ultra vires the Act or constitutionally invalid;
3. When the assessment is based on the information with respect to any offence alleged to have been committed under any other law and the information is received from any of the law enforcement or intelligence agencies and State law enforcement agencies;
4. When the prosecution has been filed by the tax authorities and the trial is pending in any Court or conviction order has been passed and the same has not been compounded;
5. If any adverse comments have been passed or cost has been levied against the Revenue Department, CBDT or its officers;
6. If the tax effect is not quantifiable or is not involved such as in case of registration of trusts or institutions under section 10(23C), 12A/12AA/12AB of the Act etc;
7. If addition relates to undisclosed foreign income/undisclosed foreign assets including financial assets)/undisclosed foreign bank account;
8. Cases constituting organised tax evasion, including cases of bogus capital gain/loss through penny stocks or accommodation entries;
9. When mandated by a court’s directions;
10. Writ matters or matters concerning wealth tax, fringe benefit tax, equalisation levy and any matter other than the Act; or
11. Any other case or class of cases which in the opinion of the CBDT, it is necessary to contest in the interest of justice or revenue and is so specified by a circular issued by CBDT.

This circular further clarifies that the appeals/ SLPs should not be filed merely because the tax effect exceeds the monetary limits. The concerned officers shall keep in mind the overall objective of reducing unnecessary litigation and providing certainty to taxpayers on their tax assessment, thus, decision to file appeal should be taken on merits of the case.

Please click here to read the circular.

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