Income tax disputes: Revised limit to be applicable to pending cases : 22-08-2019

In a bid to remove any ambiguity over the withdrawal of direct tax-related litigation, the Central Board of Direct Taxes (CBDT) on Wednesday clarified that the revised higher threshold for filing appeals would be applicable to all pending cases as well.  The Board directed the income tax department to withdraw all such pending cases where claim amounts fall below the revised limit from different appellant forums by October 31.

Just a year after the CBDT had raised the monetary limit of claims for the income tax department to file appeals in higher judicial forums, the board on August 8 again raised the threshold ‘as a step towards further management of litigation’. The threshold now stands at Rs 50 lakh for appeals before the appellate tribunal in income tax matters. Similarly, it has been raised to Rs 1 crore for appeals before the high courts and Rs 2 crore for the Supreme Court.

Amit Maheshwari, partner, Ashok Maheshwary & Associates, said: “This issue has been litigated recently and the courts have taken a view in favour of taxpayers. The CBDT has rightly provided the clarification in light of the recent litigation on this subject. The express instruction to withdraw cases in a time-bound manner comes as a welcome relief.”

Last year, the board had raised the monetary limit for appeal in tribunal to Rs 20 lakh from Rs 10 lakh. The threshold was more than doubled in case of appeals before the high courts to Rs 50 lakh from Rs 20 lakh. For appeals before the apex court, the limit had been raised four folds to Rs 1 crore.

The board hasn’t provided information on the reduction of cases due to higher threshold. After the last year’s increase, it had said the income tax department would withdraw 34% of cases stuck in the appellate tribunal, 48% of those stuck in high courts and 54% in the Supreme Court. The department has struggled to attain any significant progress in concluding disputes to recover tax demands.

According to Budget documents, over Rs 6 lakh crore was stuck in litigation at the end of FY18. The recent CAG report said: “The arrears of demand increased from Rs 10.4 lakh crore in FY 2016-17 to Rs 11.1 lakh crore in FY 2017-18. The department indicated that more than 98.2% of uncollected demand would be difficult to recover.

Source : Financial Express

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