Facts of the Case

The Revenue filed appeals before the Income Tax Appellate Tribunal (ITAT), Allahabad Bench, challenging the orders passed by the Commissioner of Income Tax (Appeals) in favour of the assessee for the relevant assessment years. The appeals arose from additions and disallowances made during assessment proceedings which were partly or fully deleted by the CIT(A).

On scrutiny of the records, the Tribunal found that the tax effect involved in each appeal was below the monetary limit prescribed by the Central Board of Direct Taxes (CBDT) for filing departmental appeals before the Tribunal.

 Issues Involved

  1. Whether the Revenue’s appeals were maintainable when the tax effect was below the threshold prescribed by CBDT.
  2. Whether the Tribunal should entertain departmental appeals contrary to binding instructions issued under statutory authority.

 Petitioner’s Arguments (Revenue)


The Revenue contended that the order of the CIT(A) granting relief to the assessee was erroneous and that the additions made by the Assessing Officer deserved to be restored. It was argued that the issues involved were substantial and required adjudication on merits by the Tribunal.

 Respondent’s Arguments (Assessee)


The assessee submitted that the appeals were not maintainable as the tax effect in each case was below the monetary limit prescribed by the CBDT for filing appeals before the ITAT. Therefore, the appeals were liable to be dismissed at the threshold in accordance with the Board’s instructions.

Court Order / Findings


The Tribunal observed that the CBDT has issued binding circulars prescribing monetary limits to regulate filing of departmental appeals with the objective of reducing unnecessary litigation.

As per the applicable circular, appeals before the ITAT are not to be filed where the tax effect is below the specified monetary threshold.

The Tribunal clarified that the tax effect represents the difference between the tax on assessed income and the tax that would have been chargeable if the disputed issues were excluded. Interest components are generally not included unless the dispute specifically relates to interest.

Since the tax effect in all the appeals filed by the Revenue was below the prescribed limit, the Tribunal held that the appeals were not maintainable.

Accordingly, the appeals of the Revenue were dismissed in limine.

Important Clarification


The Tribunal clarified that dismissal of appeals on the ground of low tax effect does not amount to adjudication on the merits of the case. Such dismissal is in line with CBDT’s litigation-management policy and does not prevent the Department from raising similar issues in other cases where the tax effect exceeds the prescribed threshold or where exceptions apply.

Link to download the order -https://itat.gov.in/public/files/upload/1545128171-VINDYAWASINI-509%20TO%20511%20(TAX).pdf

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