Income Tax Department Hikes Appeal Filing Thresholds
New Delhi, Sep 18 (PTI) — The income tax department has announced an increase in the minimum thresholds for filing appeals in tribunals, high courts, and the Supreme Court. According to a recent circular from the Central Board of Direct Taxes (CBDT), tax authorities may now file appeals before the Income Tax Appellate Tribunal (ITAT), high courts, and the Supreme Court if the disputed tax demand exceeds Rs 60 lakh, Rs 2 crore, and Rs 5 crore, respectively.
In 2019, the government set the previous thresholds for filing appeals at ITAT (Rs 50 crore), high courts (Rs 1 crore), and the Supreme Court (Rs 2 crore). The CBDT clarified that the new monetary limits will apply to all cases, including those related to Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). It also stated that Special Leave Petitions (SLPs) or appeals pending before the Supreme Court, high courts, and tribunals that are below the prescribed threshold should be withdrawn.
As a step towards management of litigation, it has been decided by the Board to revise the monetary limits for filing appeals in income tax cases,” the CBDT stated. The circular emphasized that an appeal should not be filed merely due to the tax effect in a case exceeding the prescribed limits but should instead be determined based on the merits of the case.
The circular urged the concerned officers to keep in mind the overarching objective of reducing unnecessary litigation and providing certainty to taxpayers when considering whether to file an appeal.
Finance Minister Nirmala Sitharaman had announced the increase in monetary limits for filing appeals related to direct taxes, excise, and service tax in tax tribunals, high courts, and the Supreme Court during her Budget speech on July 23.
Rajat Mohan, Executive Director at Moore Singhi, welcomed these higher limits, stating that they reduce the likelihood of prolonged litigation and promote quicker resolutions at earlier stages. He noted, “While these changes are a welcome shift, the true impact will depend on how judiciously the tax authorities exercise their discretion in deciding which cases to escalate. This policy could lead to a more balanced and efficient litigation environment, where both sides can avoid unnecessary delays and focus on significant legal issues.”
Sandeep Jhunjhunwala, Partner at Nangia Andersen LLP, expressed that this revision in monetary limits is expected to ease the burden on judicial bodies significantly, allowing for more efficient adjudication of larger tax disputes. He remarked, “By formalizing the increase in monetary limits for filing appeals, the government signals its intent to adopt a more pragmatic approach to tax litigation.
Jhunjhunwala further elaborated that the circular maintains exceptions outlined in previous CBDT communications, allowing the Revenue department to pursue appeals in cases that fall below the revised monetary thresholds, especially those involving TDS/TCS, undisclosed foreign income or assets, tax evasion, and instances where courts have issued specific directions.
In March, the CBDT had issued a circular allowing income tax authorities to file appeals irrespective of the monetary threshold in cases involving TDS/TCS, undisclosed foreign income, or information received from investigating agencies like the Enforcement Directorate (ED) and GST Intelligence.
Lastly, the circular stated that the prescribed monetary limits would not apply in cases where prosecution has been initiated by the department and is pending trial or if a conviction order has been issued that has not yet been compounded. Currently, there are approximately 2.7 crore direct tax demands, totaling about Rs 35 lakh crore, being disputed across various legal forums.
