Despite monetary cap of Rs 2 mn, taxmen can still file appeal in all cases

Despite the raised monetary limit for filing tax appeals in place, taxmen, according to a report, still have the option to pursue any case

Those involved in a tax dispute may not get a reprieve after the government's decision to raise the monetary threshold to make an appeal in such cases. According to a report, the Income Tax department can still file an appeal in a tax dispute case based on merit, irrespective of the amount in contention.

The government on 11 July increased the monetary threshold for filing appeals in such disputes in courts to cut down litigation and improve the ease of doing business. The fresh move might dilute the attempt to put a cap on appeals based on the threshold.

The Central Board of Direct Taxes (CBDT), in a recent letter, asked taxmen to contest adverse judgements based on merits, "notwithstanding that the tax effect entailed is less than the monetary limits specified”, reported Mint, which said it had seen the letter dated 20 August.

“Accordingly, taxmen can file appeals in cases that involve foreign black money or accounts, cases challenging constitutional validity of IT Act provisions, where rules issued by the tax department were held to be illegal, cases involving additions based on inputs received from other investigative agencies, or where the tax department has initiated prosecution,” the report said.

In June, the Finance Ministry said the monetary threshold for filing appeals in tribunals had been doubled from Rs 1 million to Rs 2 million. For appeals in High Courts, the monetary threshold was increased to Rs 5 million from Rs 2 million. Similarly, in the case of Supreme Court, the threshold was increased to Rs 10 million from Rs 2.5 million.

The ministry also stated that due to the increase in threshold a large number of appeals will be withdrawn from various courts. The decision, according to the ministry, will bring a 41 per cent reduction in total number of litigations from the department's side by 41 per cent. 

On the flip side, the decision could have deprived the exchequers of potential revenue of over Rs 100 billion.