Revision of Monetary Limits for filing Income Tax Appeals

The Central Board of Direct Taxes (CBDT) via Circular No. 3/2018 dated 11th July, 2018 has revised the monetary limits for filing of appeal by the Department before Income Tax Appellate Tribunal, High Courts and Supreme Court. The said circular shall supersede the Circular No 21 of 2015 dated 10^th December, 2015.

As per the Circular, appeals / SLPs shall not be filed in case where the "tax effect" does not exceed the monetary limits as under :

a.       Before Appellate Tribunal – Rs. 20,00,000 as against 10,00,000 as per the previous circular.

b.      Before High Court – Rs. 50,00,000 as against 20,00,000 as per the previous circular.

c.       Before Supreme Court – Rs. 1,00,00,000 as against 25,00,000 as per the previous circular.

Further, the Circular defines the term 'tax effect'.

 

Where the disputed issues arise in more than one assessment year, appeal can be filed only for those assessment year or years where the 'tax effect' exceeds the monetary limits.

However, in case of composite order of any High Court or Appellate Authority which includes more than one assessment year, appeals shall be filed in respect of all such assessment years even if the 'tax effect' in any year is less than the monetary limits.

 

In case where appeal has not been filed only on account of tax effect being less than the monetary limit, the PCIT /  CIT shall specifically record that "even though the decision is not acceptable, appeal is not being filed only on consideration that tax effect is less than the monetary limit specified in the Circular".

 

The following issues should be contested on merits even though the 'tax effect' is less than the monetary limits :

a)      Where the Constitutional Validity of the provisions of an Act or Rule is 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.

 

In cases where the tax effect is not quantifiable (Eg. Registration of trusts or institution under section 12A or 12AA), filing of appeal shall not be governed by the monetary limits.

It is pertinent to note that this circular will apply to SLPs/appeals/cross objections/ references already filed and to be filed. Hence, it applies retrospectively. Pending appeals below the specified tax limits may be withdrawn/not pressed.