Facts of the Case

The present matter relates to an appeal filed by the Income-tax Department before the Income Tax Appellate Tribunal (ITAT), Allahabad Bench, against the order of the Commissioner of Income Tax (Appeals) in the case of the assessee, Shiv Narayan, for the relevant assessment year under the Income-tax Act, 1961.

At the time of hearing, it was noted that the tax effect involved in the Department’s appeal was below the monetary limit prescribed by the Central Board of Direct Taxes (CBDT) for filing appeals before the Tribunal.

Issues Involved

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

Petitioner’s (Revenue’s) Arguments

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

 Respondent’s (Assessee’s) Arguments

  • The tax effect in the Department’s appeal was below the monetary threshold prescribed by CBDT.
  • In view of binding circulars issued under Section 268A, such appeals are not maintainable.
  • Therefore, the appeal deserved to be dismissed in limine.

 

Court Order / Findings

  • The tax effect involved in the Department’s appeal was below the monetary limit prescribed by CBDT for filing appeals before the ITAT.
  • CBDT circulars issued under Section 268A are binding on the tax authorities.
  • No material was placed on record to demonstrate that the case fell within any of the recognized exceptions permitting filing of appeal despite low tax effect.

Important Clarification

The dismissal of the appeal on account of low tax effect does not amount to affirmation of the merits of the Commissioner (Appeals)’ order. The Department may still pursue the matter in appropriate cases where the issue falls within exceptions specified in the CBDT circular or involves recurring legal questions.

 Link to download the order –https://itat.gov.in/public/files/upload/1614083536-107%20Shiv%20Narayan%20Tax%20effect.pdf

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