Setback for Income-Tax dept, over 600 tax appeals dismissed in single day

Giving a jolt to Income-Tax Department ITAT Ahmedabad dismissed more than 600 cases of appeals filed by it in one day. The cases were dismissed on the basis of recent Circular issued by CBDT on August 8, the Circular had increased the threshold for filing cases in ITAT from Rs 20 Lakh to Rs 50 Lakh retrospectively. ITAT noted that tax effect involved in all these appeals does not exceed the revised threshold of Rs. 50 lakhs. The total amount involved in the above dismissed cases was around Rs 350 Cr.

ITAT rejected IT Departments stand that CBDT circular is not retrospective as it specifically states that the said modifications shall come into effect from the date of issue of this Circular, but ITAT clarified that the CBDT’s latest circular has to be read in conjunction with the CBDT circular issued in July 2018.

ITAT rules that, “the relaxation in monetary limits for departmental appeals, vide CBDT circular dated 8th August 2019 shall be applicable to the pending appeals in addition to the appeals to be filed henceforth.”  ITAT appreciated the move and noted in its order “very pragmatic and taxpayer friendly policy decision by the Government of India for reducing the income tax litigation”  it further observed that, “ in an environment in which retrospectively was attached only to the taxation and not to tax reliefs or concessions, such an approach is a pleasant departure from legacy practices.”

Tribunal noted that increasing monetary limits offers taxpayers freedom from the prolonged mental agony and uncertainty of litigation.

On August 8 CBDT had issued a circular and revised the monetary tax disputes limit for ITAT appeals from Rs 20 Lakh to Rs 50 Lakh, Similarly for High Courts from Rs 50 Lakh to Rs 1 Cr and for Supreme Court it was revised to Rs 2 Cr. The idea was to minimize the number of cases under litigation. As per Central Action Plan o 2018-19 of CBDT 3.41 lakh cases of appeals were pending and the tax demand involved in appeals was Rs 5.71 Lakh Cr. Out of the 3.41 Lakh close to 2 Lakh cases were of the type where tax demand was less than Rs 10 Lakh.

The high no of cases burden the judicial system and also require more resources of the department to be used. That’s why the CBDT in subsequent years has been focusing more and more on litigation management.