The income tax law follows the system of self-assessment of income. The assessee  assesses its income earned during a particular period, pay the tax, if any, and file the return of income. The Assessing Officers are vested with enough wide range of powers for assessing the income and forming view on the same in the form of Assessment Order.

For balancing the equity and justice both the assessee and revenue has been given the right to appeal before various appellate authorities. Now days the increasing litigation has become a menace for the appellate authorities. Therefore, litigation management is one of the key focus areas in Central Action Plan 2018-19. CBDT from time to time has taken various measures to reduce tax litigation.

In 2015, CBDT issued Circular No. 21/2015 dated 10.12.2015 specifying monetary limits and other conditions for filing Appeals/SLPs by the Income Tax Department before Income Tax Appellate Tribunal, High Court & Supreme Court.

In 2018, as a measure to further reduce the tax litigations, CBDT revised these monetary limits vide its Circular No. 3/2018 dated 11.07.2018:-

Filing of Appeals/SLPs/ Cross Objections in tax matters before Monetary Limit as per Circular No. 21/2015 (in Rs.) Revised Monetary Limit as per Circular No. 3/2018 (in Rs.) Increase in Monetary Limit
Income Tax Appellate Tribunal (ITAT) 10 Lakhs 20 Lakhs 2 Times
High Court 20 Lakhs 50 Lakhs 2.5 Times
Supreme Court 25 Lakhs 1 Crore 4 Times


While raising the aforesaid limits, CBDT clarified that the appeal should not be filed mechanically merely because the tax effect exceeds the above prescribed monetary limit. Decision of filing of appeals should be taken on merits of individual cases.

Since the monetary limit of tax effect for filing of appeals to ITAT against the order of CIT(A) has been raised to Rs. 20 Lacs the department do not remain with any further recourse against the order of CIT(A). Therefore in order to balance the menace of rising tax litigation and to defend the stand taken by the Assessing Officer in the Assessment Order, the CBDT vide F.No.279/Mic/M-124/2018-ITJ dated 14.02.2019, has issued two folded guidelines for:-

(i) Representation of cases before CIT(A); &

(ii) Formation of “Regional Talent Pool” and “National Talent Pool”.

The Central Action Plan has put an obligation on each AO to identify the top 20 cases of quality assessments and make proper representation in those cases before CIT(A), whether personally or by filing written submissions. Further, the Joint/Addl. CIT Range are under obligation to personally monitor proper representation in these cases before the CIT(A) by the department.

In view of the aforesaid, the CBDT has issued guidelines to all Principal CITs to ensure proper representations with respect to such quality assessment orders. As per the guidelines such cases shall be represented before the CIT(A) either by the AO concerned or by any other officer of the range, who has got special expertise or domain knowledge or by any officer duly authorized, under the supervision of the range head or by the range head himself. It shall be the responsibility of the range head to ensure that there is proper representation before CIT(A) in all such quality orders.

Further the Principle CITs/CITs shall identify officer of the region, having expertise/domain knowledge in specific trade/sector/section of Income–tax Act and shall form a “Regional Talent Pool” in their respective regions, to represent in high-stake cases. Such officer in “Talent Pool” should be given due recognition for effective representation in such high stake cases, before CIT(A) or before ITAT or for briefing the Standing Counsel/ASG in the Hon’ble Supreme Court/High Court.

Concluding Remarks

Now the questions are (i) whether the creation of a second layer of tax machinery would be able to serve the purpose (ii) whether instead of enriching the quality of assessment proceedings/orders, defending the same before CIT(A) is the correct approach (iii) whether the CBDT, by issuing these guidelines would be able to hit the root-cause or it would lead to just crippling the leaves. Only the time would tell.

(The author, Pardeep Kumar, is a Chartered Accountant from Rohtak, Haryana. He can be reached at [email protected])

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March 2021