Facts of the Case

The Assistant Commissioner of Income Tax, Circle Azamgarh, filed an appeal before the Income Tax Appellate Tribunal, Allahabad Bench, against the order of the Commissioner of Income Tax (Appeals), Gorakhpur, in the case of Smt. Sharmila Devi, Deoria for the relevant assessment year. During the hearing, it was pointed out that the tax effect involved in the appeal was below the monetary limit prescribed by the Central Board of Direct Taxes (CBDT) for filing appeals before the Tribunal.

Issues Involved

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

Petitioner’s Arguments (Revenue)

The Revenue relied upon the grounds raised in the memorandum of appeal and sought adjudication of the issues arising from 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 Circular No. 3/2018 prohibited filing or pressing such appeals before the Tribunal
  • The circular was binding on the Department and applicable even to pending appeals
  • Accordingly, the appeal was not maintainable

Court Order / Findings

  • The tax effect in dispute was below ₹20 lakh, the monetary limit prescribed for filing appeals before the ITAT
  • CBDT Circular No. 3/2018, issued under Section 268A, applied to the present appeal
  • The circular specifically directed that pending appeals below the specified limit should be withdrawn or not pressed
  • Such circulars are binding on the Department

Important Clarification

  • Does not amount to affirmation of the merits of the Commissioner (Appeals)’ order
  • Does not prevent the Department from pursuing the issue in 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/1560149076-SHARMILA-214_TAX_.pdf

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