Huge income tax relief! No HC appeal for monetary limit below Rs 20 lakh

New Delhi: In order to cut down on frivolous litigation and taxpayers grievances, the CBDT has issued fresh directions revising the monetary threshold for the taxman to appeal at two important legal forums -- ITAT and High Courts.

The Central Board of Direct Taxes, which formulates policies for the tax department, has issued a fresh directive asking the Income Tax department to go into appeal at the

Income Tax Appellate Tribunal (ITAT) only when the "tax effect" in question is Rs 10 lakh (from earlier Rs 4 lakh) and Rs 20 lakh (from earlier Rs 10 lakh) if the appeal is to be filed in a High Court.

The monetary limit for filing appeals or Special Leave Petitions in the Supreme Court have been kept unchanged at Rs 25 lakh.

There are four essential forums under law which a taxpayer can approach against an IT assessment order -- beginning from the Commissioner of IT (Appeals), ITAT, High Court and finally the apex court.

These limits were last revised in the middle of last year and official sources said the exercise has been conducted again and fresh directions issued for better management of litigation in the department, for which it has received a lot of flak in the past from different quarters including parliamentary committees and CAG.

The board has also directed that the new notified threshold should not be the only guiding light while tackling revenue cases but the "merit" of a case should be the most important aspect to be followed.

"It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case," the CBDT directives issued on December 10 said.