Facts of the Case

The Revenue, through the Assistant Commissioner of Income Tax, Central Circle, Varanasi, filed an appeal before the Income Tax Appellate Tribunal, Varanasi Bench against the order passed in favour of the assessee, Shri Vinod Kumar Jalan of Gorakhpur. The dispute arose from relief granted at the appellate stage. However, the tax effect involved in the issues contested by the Department was below the monetary limit prescribed by the Central Board of Direct Taxes (CBDT) for filing appeals before the Tribunal.

Issues Involved

Whether the Revenue’s appeal before the ITAT is maintainable when the tax effect involved is lower than the monetary threshold prescribed under CBDT circulars issued pursuant to Section 268A of the Income-tax Act, 1961.

Petitioner’s Arguments (Revenue)

The Revenue challenged the order of the appellate authority and sought adjudication of the disputed additions or relief granted to the assessee. It requested the Tribunal to examine the matter on merits and set aside the impugned order.

Respondent’s Arguments (Assessee)

The assessee contended that the appeal filed by the Department was not maintainable because the tax effect involved was below the monetary limit specified by the CBDT. It was argued that the circular issued under Section 268A is binding on the tax authorities, and therefore the appeal should be dismissed at the threshold without going into merits.

Court Order / Findings

The Tribunal observed that the tax effect involved in the departmental appeal did not exceed the monetary limit prescribed by the CBDT for filing appeals before the ITAT. Circulars issued under Section 268A are binding on the Revenue authorities, and appeals contrary to such instructions cannot be pursued.

Accordingly, the Tribunal dismissed the Revenue’s appeal in limine without adjudicating the issues on merits.

Such instructions are intended to streamline litigation and focus departmental resources on cases involving substantial revenue.

Important Clarification

  • Dismissal due to low tax effect does not amount to a decision on the merits of the case.
  • The Revenue may raise similar issues in future years where the tax effect exceeds the prescribed limit or where exceptions to the CBDT circular apply.
  • The order does not operate as a precedent on substantive legal issues involved in the dispute.

Link to download the order – https://itat.gov.in/public/files/upload/1568617085-TAX%20EFFECT%20(VARANASI).pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.