Income Tax - monetary limits for filing appeals by the Department – revised instructions.

By Vijay Kumar

Appeals will henceforth be filed only in cases where the tax effect exceeds monetary limits given here 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 issue against which appeal is intended to be filed (hereafter referred to as "disputed issues").

However, the tax will not include any interest thereon. Similarly, in loss cases notional tax effect should be taken into account. In the cases of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against.

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 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 this instruction". 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 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 Tribunal or the Court only on the ground that the Department has 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 and other assessment year, by not filing an appeal on the same disputed issues. The Departmental representatives/counsel 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 by 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. Accordingly, they should impress upon the Tribunal or the Court that such cases do not have any precedent value.

Adverse judgments relating to the following should be contested irrespective of the tax effect.

(a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge.

(b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra wires.

(c) Where Revenue Audit objection in the case has been accepted by the Department.

The proposal for filing Special Leave Petition under Article 136 of the Constitution before the Supreme Court should, in all cases be sent to the Directorate of Income-tax (Legal & Research) New Delhi and the decision to file Special Leave Petition shall be in consultation with the Ministry of Law and Justice.

The monetary limits will not apply to writ matters.

This instruction will apply to appeals filed on or after 15th of May 2008.

CBDT Instruction No. 5/2008, Dated: May 15, 2008