I-T department expands scope for filing appeals by tax officers, includes TDS disputes

New Delhi: The CBDT has permitted income tax authorities to file appeals irrespective of monetary threshold in cases relating to TDS/TCS, undisclosed foreign income, or information received from investigating agencies like ED and GST Intelligence.

Currently, tax authorities can file appeals before the ITAT, High Court and Supreme Court, if the disputed tax demand exceeds Rs 50 lakh, Rs 1 crore and Rs 2 crore respectively -- a threshold fixed in 2019.

The Central Board of Direct Taxes (CBDT) in a circular dated March 15 said that the said monetary limits will not be applicable for filing appeals in cases where prosecution has been filed by the department in the relevant case, and trial is pending and conviction order has been passed and the same has not been compounded.

Cases where the assessment is based on information with regard to an offence alleged to have been committed under any other law and information received from law enforcement or intelligence agencies like CBI, ED, DRI, SFIO, NIA, NCB, Directorate General of GST Intelligence (DGGI), and state law enforcement agencies, in such cases the appeals would be filed irrespective of the tax demand on the assessee.

The threshold would not apply to litigation arising out of disputes relating to TDS/TCS in domestic and international taxation, or disputes relating to the applicability of provisions of the Double Taxation Avoidance Agreement.

Taxmen would also have to file appeals irrespective of the tax demand in dispute in cases of undisclosed foreign income /assets/bank accounts.

About 2.7 crore direct tax demands totalling about Rs 35 lakh crore are being disputed at various foras.

AKM Global, Tax Partner, Amit Maheshwari said the new circular has consolidated various earlier circulars on the issue of monetary limits for filing of appeals.

"CBDT has broadened the scope of exceptions which are now outside the scope of monetary threshold and on which department may file the appeals / SLP irrespective of the amount involved. Such exceptions although seem to be reasonable will add to the volume of appeals filed by the department in future," Maheshwari said.

The CBDT circular also clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed by the CBDT.

"Filing of appeals in such cases is to be decided on the merits of the case. The officers concerned should keep in mind the overall objective of reducing unnecessary litigation and providing certainty to taxpayers on their I-T assessments while taking a decision regarding filing an appeal," the CBDT said.

Nangia Andersen LLP Partner Sandeep Jhunjhunwala said the circular magnifies the exception list -- cases where appeals can be pursued by the Revenue (Department) despite not meeting the prescribed monetary thresholds. One such addition to the exception list that may merit a mention is litigations related to TDS/ TCS matters where liability to deduct TDS/ TCS having regard to the nature of the transaction is in dispute or where the applicability of tax treaties is disputed.

Also, a residuary item is introduced providing a window to the Board to exempt cases from the monetary condition in the interest of justice and revenue, Jhunjhunwala said.