ITAT dismisses Revenue's Appeal as Tax Effect Falls Below Rs. 60 Lakh Limit Set by CBDT Circular [Read Order]

The Chandigarh Bench of Income Tax Appellate Tribunal ( ITAT ) dismissed the Revenue's appeal, as the tax effect of Rs. 56,31,819 fell below the threshold limit of Rs. 60 lakh set by the Central Board of Direct Taxes ( CBDT ) Circular No. 09/2024.

The Revenue-appellant had filed an appeal against the order of the Commissioner of Income Tax(Appeals)[CIT(A)] dated 19.02.2024, in the case of Gurmal Singh, respondent-assessee. The tax effect involved in this appeal was Rs. 56,31,819.

Upon reviewing the case, it was noted that the tax effect was below the threshold of Rs. 60 lacs, which had been set by the CBDT in Circular No. 09/2024 dated 17.09.2024 for the maintainability of appeals before the tribunal.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

According to this circular, appeals filed by the Revenue are only maintainable if the tax effect exceeds the prescribed limit of Rs. 60 lacs. As the tax effect in this case did not meet this threshold, the tribunal found that the appeal was not maintainable.

CBDT Circular No. 09/2024, issued on September 17, 2024, increases the monetary limits for income tax appeals. The new limits are Rs 60 lakh for ITAT, Rs 2 crore for High Courts, and Rs 5 crore for the Supreme Court. This revision, effective immediately, aims to reduce unnecessary litigation and focus on more substantial cases. Appeals should not be filed solely because the tax effect exceeds these limits, and decisions must be based on the merits of each case. The update applies to both new and pending appeals.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

Given this, the appeal was dismissed on the grounds of low tax effect. However, the Revenue was granted the opportunity to seek a recall of the order if the case fell under any of the exceptions outlined in the CBDT Circular. These exceptions allowed for the possibility of filing an appeal even when the tax effect was below the prescribed limit, depending on the specific circumstances.

The two bench comprising A.D Jain ( Vice President ) and Krinwant Sahay ( Accountant Member ) clarified that the dismissal of the appeal did not amount to an endorsement of the CIT(A)’s order on the merits of the case.

The legal issues raised by the Revenue were left unresolved, with the understanding that these matters could be adjudicated in a future appeal where the tax effect met the necessary criteria.

Ultimately,the appeal filed by the revenue was dismissed.

To Read the full text of the Order CLICK HERE

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