Facts of the Case

The Income Tax Officer, Allahabad, filed an appeal before the Income Tax Appellate Tribunal, Allahabad Bench, challenging the order passed by the Commissioner of Income Tax (Appeals) in the case of M/s J.P. Associates, Allahabad. During the course of hearing, it was observed that the tax effect involved in the departmental appeal was below the monetary threshold prescribed by the Central Board of Direct Taxes (CBDT) for filing appeals before the Tribunal.

Issues Involved

Whether a departmental appeal filed before the Tribunal is maintainable when the tax effect involved is lower than the monetary limit prescribed under CBDT’s circular issued under Section 268A of the Income-tax Act, 1961.

Petitioner’s Arguments (Revenue)

The Revenue relied upon the grounds stated in the memorandum of appeal and sought adjudication of the issues raised against the order of the Commissioner (Appeals).

Respondent’s Arguments (Assessee)

  • The tax effect involved in the departmental appeal was below the prescribed monetary limit
  • CBDT circulars issued under Section 268A are binding on the Department
  • Accordingly, the appeal was not maintainable and liable to be dismissed at the threshold

Court Order / Findings

  • The tax effect involved in the appeal was below the monetary limit prescribed by CBDT for filing appeals before the ITAT
  • Section 268A requires appellate authorities to give effect to CBDT instructions governing filing of appeals
  • No material was placed on record to demonstrate that the case fell within any recognized exception permitting filing of appeal despite low tax effect

Important Clarification

  • Does not amount to affirmation of the merits of the Commissioner (Appeals)’ order
  • Does not preclude the Department from contesting the issue in other cases where tax effect exceeds prescribed limits or exceptions apply
  • Will not operate as a precedent on substantive issues

Link to download the order – https://itat.gov.in/public/files/upload/1568611083-TAX%20EFFECT%20(ALLAHABAD).pdf

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