Circular No. 5/2024

Circular u/s 268A of the income tax act 1961 for filing of appeals by the department before income tax appellate tribunal high courts and slps/appeals before supreme court measures for reducing litigation

What this is

Circular No. 5/2024 was issued by the Central Board of Direct Taxes on 15 March 2024. Its subject is Circular u/s 268A of the income tax act 1961 for filing of appeals by the department before income tax appellate tribunal high courts and slps/appeals before supreme court measures for reducing litigation.

This fixes the monetary limits below which the department will not appeal. It binds the department only: it is not a rule about the merits, and an assessee cannot draw an inference from a withdrawn appeal.

What it does

The consolidated instruction under section 268A on when the department may file an appeal, superseding Circular No. 3/2018 dated 11 July 2018, Circular No. 17/2019 dated 8 August 2019 and the Board's letter of 20 August 2018. The monetary limits it fixes in its paragraph 4 govern all cases, including matters relating to tax deducted or collected at source. The extract sets out the exceptions in paragraph 3.1, where the decision to appeal is to be taken on merits without regard to tax effect at all: where a provision of the Act, the Rules or a notification has been held constitutionally invalid; where an order, notification, instruction or circular of the Board or the Government has been held illegal, ultra vires the Act or otherwise constitutionally invalid; where the assessment rests on information about an offence under another law received from a law enforcement or intelligence agency, the circular naming the Central Bureau of Investigation, the Enforcement Directorate, the Directorate of Revenue Intelligence, the Serious Fraud Investigation Office, the National Investigation Agency, the Narcotics Control Bureau, the Directorate General of GST Intelligence and State agencies such as the police, vigilance and anti-corruption bureaux and the excise, sales tax and goods and services tax departments; and where the department has launched a prosecution which is pending trial, or has obtained a conviction that has not been compounded.

Why it was issued

A litigation-reduction measure, consolidating and replacing the earlier instructions on monetary limits and the conditions attached to them.

Who it reaches

Assessees facing or resisting a departmental appeal below the limits
Departmental officers deciding whether to appeal
Assessees in cases built on information from another enforcement agency
Assessees against whom a prosecution has been launched

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it. The reading also stopped short of the end of the document: what is below is the opening, not the whole of it.

Circular No. 5/2024
F. No. 279/Misc.14212007-ITJ (Pt.)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi the 15th March, 2024
Subject: Circular u/s 268A of the Income-tax Act, 1961 for filing of appeals by the
Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before
Supreme Court-measures for reducing litigation-Reg.
Ref1:
Ref2:
Ref3:
Circular No. 3/2018 dated 11.07.2018
Circular No. 1712019 dated 08.08.2019
Board's letter in F.No.279/Misc. 142/2007-IT J (Pt) dated 20.08.2018
Reference is invited to the above wherein monetary limits and other conditions for filing
Departmental appeals under the Income-tax Act, 1961 (hereinafter referred to as the Act) before
Income Tax Appellate Tribunals (,ITAT'), Hon'ble High Courts ('HCs') and Special Leave
Petitions ('SLPs')/ appeals before Hon'ble Supreme Court ('SC') were specified by the Central
Board of Direct Taxes (,CBDT' or 'Board').
2. In supersession of the above referred communications issued by CBDT, the following may
be noted in respect of departmental appeals to be filed before ITA Ts and HCs and SLPs/ appeals
before SC:
3.1 Monetary limits given in paragraph 4 with regard to filing appeal/SLP shall be applicable
to all cases including those relating to TDS/TCS under the Act with the following exceptions where
the decision to appeal/file SLP shall be taken on merits, without regard to the tax effect and the
monetary limits:
a. Where any provision of the Act or the Rules or notification issued thereunder has been
held to be constitutionally invalid, or
b. Where any order, notification, instruction or circular of the Board or the Government has
been held to be illegal or ultra vires the Act or otherwise constitutionally invalid, or
c. Where the assessment is based on information in respect of any offence alleged to have
been committed under any other law received from any of the law enforcement or
intelligence agencies such as CBI, ED, DR!, SFIO, NIA, NCB, DGGI, state law
enforcement agencies such as State Police, State Vigilance Bureau, State Anti-Corruption
Bureau, State Excise Department, State Sales/Commercial Taxes or GST Department, or
d. Where the case is one in which prosecution has been filed by the Depmiment in the
relevant case and the trial is pending in any COUli or conviction order has been passed
and the same has not been compounded, or

What to watch

The exceptions are what usually decide these applications: once a case falls in paragraph 3.1 the monetary limit gives no protection whatever the tax effect.
The third exception is wide — an assessment founded on information from any of the named agencies escapes the limits altogether.
A pending prosecution, or an uncompounded conviction, keeps the case appealable however small the amount.
The text available here breaks off in the middle of the list of exceptions, and the monetary limits in paragraph 4 are not in the extract at all, so take those figures from the published circular.

Where you meet it

On an application to dismiss a departmental appeal before the Tribunal or High Court for low tax effect, where the department answers that the case falls within one of the exceptions.

What it names

It mentions. Circular No. 3/2018, Circular No. 5/2024

← Circular No. 6/2024 · Circular No. 4/2024 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.

What it means in practice. This page is the instrument. For the question it answers, what the Board decided and what to do about it, see CBDT Circular 5/2024 — the s.268A exceptions to the appeal limits.