CBDT Circular No. 09/2024: Enhanced Income Tax Appeal Limits

Circular No. 09/2024-Income Tax Dated: 17/09/2024: Enhancement of Monetary limits for filing of appeals by the Department before ITAT, High Courts and SLPs/appeals before Supreme Court.

Introduction

The Central Board of Direct Taxes (CBDT) has, on various occasions, issued a series of circulars that are binding on the revenue authorities. These circulars are designed to facilitate the income tax assessment and appeals process, while ensuring transparency in operations, thereby enhancing taxpayers’ confidence in the tax authorities. By using the statutory powers conferred by Section 268A of Income Tax Act, 1961 the CBDT has issued a Circular No. 09/2024-Income Tax Dated: 17/09/2024 wherein the monetary limits for filing appeal for the department has been specified.

The analysis of Circular No. 09/2024-Income Tax Dated: 17/09/2024 is inherently incomplete without reference to Circular No. 5/2024-Income Tax Dated: 15/03/2024. Consequently, it is imperative for one to examine the preceding circular to fully understand the monetary limits and the exceptions outlined therein.

Circular No. 5/2024-Income Tax Dated: 15/03/2024

The Circular No. 5/2024-Income Tax Dated: 15/03/2024 outlines guidelines for departmental appeals, focusing on monetary thresholds and emphasizing the evaluation of substantive merits over mere tax effects. It specifies exceptions for cases involving constitutional validity, unlawful orders, prosecutorial actions, and issues related to TDS/TCS. It underscores the importance of calculating tax effects for each assessment year and mandates that tax authorities document the instances where appeals are not filed due to low tax effects.

Furthermore, the circular cautions against assuming the department’s consent to prior decisions and reaffirms its right to appeal in subsequent matters. It aims to prevent potential misinterpretations by assessees regarding appeal decisions, emphasizing the need for thorough judicial record-keeping and requiring monthly reports on appeals that were not filed or were filed under specified exceptions.

Subject to the exceptions provided in the aforesaid circular, appeals/SLPs shall not be filed in cases where tax effect does not exceed the monetary limits as tabulated hereunder.

The aforesaid circular also provided that an appeal should not be filed solely because the tax effect exceeds the specified monetary limits. The decision to file an appeal must be based on the merits of the case. The responsible officers should consider the overall goal of minimizing unnecessary litigation and ensuring certainty for taxpayers regarding their Income Tax assessments when deciding whether to file an appeal.

Pursuant to the aforesaid circular, the CBDT has further enhanced the monetary limits for the department for filing appeal before Tribunal, High Courts and Supreme Court vide Circular No. 09/2024-Income Tax Dated: 17/09/2024 w.e.f. 17.09.2024.

Circular No. 09/2024-Income Tax Dated: 17/09/2024

The Circular No. 09/2024 with effect from 17^th September, 2024 enhanced the monetary limits specified in the Circular No. 5/2024 and the enhanced monetary limits are tabulated hereunder.

It is also provided that an appeal should not be filed simply because the tax effect exceeds the specified limits. The decision must be based on the merits of the individual case. Officers should focus on minimizing unnecessary litigation and ensuring clarity for taxpayers regarding their Income Tax assessments when deciding whether to file an appeal. This approach aims to promote efficiency while maintaining taxpayer confidence.

This circular shall be applicable to SLPs and appeals to be filed henceforth in the Supreme Court, High Courts, and Tribunals. It shall also apply to SLPs and appeals that are currently pending before the Supreme Court, High Courts, and Tribunals, which may be withdrawn accordingly.

Conclusion

Pursuant to Circular No. 09/2024-Income Tax Dated: 17/09/2024, the Central Board of Direct Taxes (CBDT) has amended the monetary thresholds for the Income Tax Department, increasing the limits as compared to Circular No. 5/2024-Income Tax Dated: 15/03/2024. This revision extends the Department’s authority to file appeals before the appropriate judicial forums.

Both the circulars aim to reduce the burden on the judiciary by minimizing unnecessary litigations related to income tax and promoting transparency, however, department’s reach has been extended by Circular No. 09/2024-Income Tax Dated: 17/09/2024. The provisions of Circular No. 09/2024-Income Tax Dated: 17/09/2024 underscore the importance of evaluating cases on their merits while preserving the Department’s right to appeal in significant matters. This approach ensures that resources are focused on cases with substantial tax implications, fostering a more accountable and streamlined tax system. Overall, these circulars represent a strategic move toward reducing litigation and enhancing the integrity of the tax administration process in India.