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Consequence of Non-Filing of Appeal in Respect of Cases Where Tax Effect is Less Than the Prescribed Monetary Limit.

As you are aware that the Commissioner may, of he objects to any order passed by the Commissioner (Appeal) under Section 154 or Section 250, direct the Assessing Officer to appeal to the Tribunal against the said order. However, such direction shall be given only in those cases only in those cases where Tax Effect exceeds the specified amount.

THE TAX EFFECT SHOULD EXCEED MINIMUM AMOUNT-IN CASE OF APPEAL FILED BY THE REVENUE– the appeal will be filed by the Commissioner of Income Tax only in cases where the tax effect exceeds monetary limits (w.e.f 11/07/2018). These limits will apply retrospectively to pending appeals and to appeals to be filed henceforth in High Courts/Tribunals. The pending appeals below the specified tax limits given above may be withdrawn or not pressed.

Appellate Forum/Appeals in income tax matters Monetary Limit (Rs.)
Before Income Tax Appellate Tribunal 50,00,000
Before High Court 1,00,00,000
Before Supreme Court 2,00,00,000

Please Note that the filing of appeal should on the basis of merits and not on the basis of merely exceeding limit of Tax Effect.

The CBDT have issued instructions from time to time directing department officers not to file an appeal if the tax effect is less than the monetary limit prescribed by it and given above.

JUDICIAL INTERPRETATION: the Apex Court in case of Berger Paints India Ltd. Vs. CIT[2004, 135 Taxman 586] has held tat if the revenue has not challenged the correctness of the law laid down by the High Court and has accepted it in the case of one of the assessee, then it is not open to the Revenue to challenge the correctness in the case of other assessees without just cause. Judicial Authorities on this consideration generally dismiss departments’ appeals that the disputed issue was not agitated in the case of the same assessee or in the case of any other assessee.

AMENDMENT the Board has introduced provisions of Section 268A with retrospective effect from April 1, 1999. This insertion has been done to reduce litigation in small cases and to protect right of revenue to file or not to file appeal in small cases.

Consequence of Non-Filing of Appeal due to low Tax Effect

Section 268A provides that: –

1. Orders, instructions or directions by the Board to sub-ordinate authorities [Section 268A (1)]- The Board may issue orders, instructions or directions to other income tax authorities, fixing such monetary limits as it may deem fit. Such fixing of monetary limit is to be for the purpose of regulation filing an appeal or an application for reference by any income tax authority under provisions of the Act.

2. When appeal is not filed because of aforesaid orders, instructions etc. [268A (2)/ (3)]- where an income tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, due to abovementioned order/instruction/direction of the Board, such authority shall not be precluded from filing an appeal or an application for reference on the same issue in the case of –

i) The same assessee for any other assessment year; or

ii) Any other assessee for the same or any other assessment year.

The above provisions of Sub-section (2) shall be applicable only if an income tax authority has not filed /reference on any issue due to an Order/instruction/direction issued by the Board under Section 268A (1) where a monetary limit is fixed. It means that if income tax authorities have not filed appeal in cases where monetary limit exceeds minimum limit as specified, then ruling of Berger Paints Limited will apply.

PLEASE NOTE THAT: – if income tax authorities have failed to file any appeals on the basis of orders/instructions provided by the Board, it does not mean that income tax authority has acquiesced in the decision on the disputed issued by not filing an appeal or an application for reference in any case.

CONCLUSION: the legislature has given equal opportunity to an assessee as well as department to file appeal against orders of appellate authorities. To reduce disputes ,legal cases and cost of appeal the Board has fixed monetary limit after crossing of the same income tax authorities will file an appeal. Once income tax authority has not filed an appeal in case of an assessee , then it is not open for them to file an appeal on the same matter in case of same or any other assessee.

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DISCLAIMER: the article produced here is only for knowledge and information of readers. it should not be considered as professional advice and it is advisable to consult with tax consultants for more clarification and understanding.

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