Assessment
Govt Withdraws Appeals for Tax Affect Below Rs 10 Lakhs , HC Rs 20 Lakhs & SC Rs 25 Lakhs
In a very welcome move, government has decided that all appeals t Income Tax Appellate Tribunal i.e ITAT where the tax effect is below RS 10 Lakhs . Similarly , the appeal to HIGH Courts and Supreme courts are going to be withdrawn if the tax effect is below Rs 20 Lakhs and 25 lakhs . So , all SLPs where the tax effect is below that limit , shall also be withdrawn. Along with this , no new appeal shall be made to the ITAT , High Court and Supreme Court if the tax effect is below that monetary limit.
Thus , CBDT has not only increased the limit for filing appeal to ITAT, High Court and Supreme Court , but also directed field formation for withdrawal of all cases below the limit as per new circular No. 21/2015 by which the new monetary limits for filing of appeals before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court has been now fixed as under :
No appeal shall be made unless the tax affect is as under
1. Before Appellate Tribunal 10,00,000/-
2. Before High Court 20,00,000 /-
3. Before Supreme Court 25,00,000/-
What is meant by tax effect ?
Circular point 4 clarifies the meaning of tax effect for the purpose of filing appeal as under :
- “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”).
- 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 in 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.
Withdraw All Appeals – CBDT Directs.
Circular issued by CBDT , clearly states that appeals below the specified limits maybe withdrawn. Read the excerpt
10. This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/ Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/ not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.
Read the New Monitory Limit for Appeals
F No 279/Misc. 142/2007-ITJ (Pt)
Government of India Ministry of Finance
Department of Revenue
Central Board Direct Taxes
Circular No. 21/2015
New Delhi the 10th December, 2015
Subject: Revision of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court – measures for reducing litigation – Reg –
Reference is invited to Board’s instruction No 5/2014 dated 10.07.2014 wherein monetary limits and other conditions for filing departmental appeals (in Income-tax matters) before Appellate Tribunal and High Courts and SLP before the Supreme Court were specified.
2. In supersession of the above instruction, it has been decided by the Board that departmental appeals may be filed on merits before Appellate Tribunal and High Courts and SLP before the Supreme Court keeping in view the monetary limits and conditions specified below.
3. Henceforth, appeals/ SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits given here under: –
S No Appeals in Income-tax matters Monetary Limit (in Rs)
1. Before Appellate Tribunal 10,00,000/-
2. Before High Court 20,00,000 /-
3. Before Supreme Court 25,00,000/-
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.
4. 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”). However the tax will not include any interest thereon, except where chargeability of interest itself is in dispute In case the chargeability of interest s the issue unde’. dispute, the amount of interest shall be the tax effect. In cases where returned loss is resuced 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.
5. 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 assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified n para 3 No appea shall be filed in respect of an assessment year or years in which the tax effect s less than the monetary limit specified in para 3 In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However n case of a compos te order of any High Court or appellate authority which involves more than one assessment year and common issues in more than one assessment year appeal shall be filed in respect of all such assessment years even f the tax effect’ is less than the prescribed monetary limits in any of the year(s) if it s decided to file appeal n respect of the year(s) in which ‘tax effect’ exceeds the monetary limit prescribed. In case where a composite order/ judgement involves more than one assessee each assessee shall be dealt with separately.
- In a case where appeal before a Tribunal or a Court is not filed only on account of the tax effect being ess than the monetary limit specified above the Commissioner of Income-tax shall specifically record that “even though the decision s not acceptable appeal s not being filed only on the consideration that the tax effect s less than the monetary limit specified in this instruct on” Further, in such cases there w ll be no presumption that the Income-tax Department has acquiesced in the decis on on the disputed ssues. The Income-tax Department 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
- In the past, a number of instances have come to the notice of the Board, whereby an assessee has claimed relief from the Tribuna or the Court only on the ground that the Department has imp cit y accepted the decis on of the Tr buna 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 appea on the same disputed issues The Departmental representatives/counsels must make every effort to bring to the notice of the Tribuna or the Court that the appea 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 Department. According y, they should impress upon the Tribunal or the Court that such cases do not have any precedent value As the evidence of not filing appea due to this instruction may have to be produced in courts, the judicial folders in the office of CsIT must be maintained in a systemic manner for easy retrieval.
8. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above ‘or there is no tax effect:
(a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or
(b) Where Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or
(c) Where Revenue Audit objection in the case has been accepted by the
Department, or
(d) Where the addition relates to undisclosed foreign assets/ bank accounts.
9. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by relevant provisions of statute & rules. Further, filing of appeal in cases of Income Tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions under section 12 A of the IT Act, 1961, shall not be governed by the limits specified in para 3 above and decision to file appeal in such cases may be taken on merits of a particular case.
10. This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/ Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/ not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.
11. This issues under Section 268A (1) of the Income-tax Act 1961.
(D.S. Chaudhry) CIT (A&J), CBDT,
New Delhi
A very welcome move indeed by present government.
