In accordance with the latest circular from the Income Tax Department, it has raised the minimum threshold for filing appeals to the Income Tax Appellate Tribunal (ITAT) and the High Courts and Supreme Court. According to the latest circular of CBDT, the tax department is allowed to file appeals if the disputed tax demand is more than Rs 60 lakh for ITAT, Rs 2 crore for the High Court, and Rs 5 crore for the Supreme Court.
This was done in a bid to decrease the number of lawsuits and come up with a mechanism that would see tax litigations of relatively small amounts being handled at lower tiers. ITAT had been fixed at Rs 50 lakh, Rs 1 crore for the high courts, and Rs 2 crore for the Supreme Court in the year 2019. The increase in limits shows the government's plan to relieve the judicial bodies and make the process of tax dispute resolution much lighter.
The CBDT circular also adds that the above-mentioned revised limits shall be applicable to all assessees/miscellaneous and specifically in relation to TDS and TCS. The circular also dispenses with the need to continue the appeals or the SLPs pending in courts and tribunals where the tax claim involved fails to exceed the revised limits.
Pursuant to the government's efforts to discourage unward absolutely unnecessary litigations, the circular also states that an appeal cannot be based on the tax amount only being above the threshold. On the other hand, the authorities are advised to consider the merits of each case and the other goal of providing certainty to the taxpayers.
These new thresholds were introduced during the budget speech delivered by Finance Minister Nirmala Sitharaman on July 23, 2024. The decision has been received positively, with an opinion being made that this development will enhance quicker disposal of less complex claims and free courts.
The circular also reiterates that exceptions outlined in previous circulars remain in place. The Revenue Department can still file appeals in cases involving TDS/TCS, undisclosed foreign income, tax evasion, and other serious offenses, even if the tax demand falls below the revised limits.
With around 2.7 crore direct tax demands totaling Rs 35 lakh crore currently being contested, this revision is expected to have a significant impact on easing the judicial backlog and speeding up the resolution of larger tax disputes.
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