CBDT Dilutes Applicability Of Low Tax Effect Circular

The CBDT has issued a directive dated 20th August 2018 by which it has carved out several exceptions to its Circular No. 3 of 2018 dated 11th July 2018 relating to the withdrawal/ non-filing of appeal by the Department in low-tax effect appeals. The CBDT has specified several instances where appeals have to be filed and prosecuted despite their low-tax effect.




F No 279/Misc. 142/2007-ITJ (Pt)
Government of India
Ministry of Finance
Department of Revenue
Central Board Direct Taxes

New Delhi the 20th August, 2018

To,

All the Principal Chief Commissioners of Income Tax

Subject: Amendment to para 10 of the Circular No. 3 of 2018 dated 11.07.2018-reg:

Madam/Sir,

Kindly refer to the above.

2.The monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/ appeals before Supreme Court have been revised by Board’s Circular No. 3 of 2018 dated 11.07.2018.

3.Para 10 of the said Circular provides that adverse judgments relating to the issues enumerated in the said para should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 thereof or there is no tax effect. Para 10 of the Circular No. 3 of 2018 dated 11.07.2018 is hereby amended as under:

“10. Adverse judgments relating to the following issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect:

(a)Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or

(b)Where Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or

(c)Where Revenue Audit objection in the case has been accepted by the Department, or

(d)Where addition relates to undisclosed foreign income/ undisclosed foreign assets (including financial assets)/ undisclosed foreign bank account.

(e)Where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ ED/ DRI/ SFIO/ Directorate General of GST Intelligence (DGGI).

(f)Cases where prosecution has been filed by the Department and is pending in the Court.”

4.The said modification shall come into effect from the date of issue of this letter.

5.The same may be brought to the knowledge of all officers working in your region.

6.This issues with the approval of the Hon’ble Finance Minister.

(Neetika Bansal )
Director (ITJ), CBDT, New Delhi.


6 comments on “CBDT Dilutes Applicability Of Low Tax Effect Circular
  1. Varaprasad Daitha says:

    It is reported that some of the Tribunal benches had already adopted the circular dated 11th July and disposed the appeals filed by the department. What would happen to such disposed off appeals? Who will be accountable for the loss of revenue, if any. A rat is being smelt that the original circular was used by some enthusiastic tax practitioners.

  2. Paarth Garg says:

    It is a government way of giving by one hand and grabbing back by another. Or is it because withdrawal of appeals would hurt the egos of the authorities passing such orders,

  3. It is surprising and alarming to note that Assessing officers in Kerala make assessment of Co-operative Societies in the following manner.
    (1) disallowing deduction u/s 80P,
    (2) making additions u/s 40A(ia) for non-compliance of
    TDS provision u/s 194 A,
    (3) Treating interest income from investments as “income
    from other sources” u/s 56,
    (4) Treating deposits accepted from members as
    undisclosed cash credit u/s 68 for non-furnishing of
    details of depositors
    (5) Disallowing reserves and provisions
    (6) Impose penalty u/s 271D for non-compliance of Section
    269SS.
    When do they realise that these are all covered matters in favour of Co-operatives in the judgments of High Courts and ITATs all over India?
    These types of assessments lead to thousands of litigations between Co-operatives and Revenue, resulting to loss of Crores of Rupees for the Central Government as well as the Co-operatives and become national wastage. Precious time of Courts, ITATs, Income tax authorities and co-operative societies are being expended in these exercises which are not at all productive.
    Hope CBDT will look into the matter urgently and issue directions accordingly.

  4. vswami says:

    OFFHAND
    If looked through, with a different stroke off thoughts, the earlier circular now revised, might have to be regarded, not to have a .diluted’;but on the contrary, to have the effect /consequence of , de-simplifying or rolling back the objective of reducing scope / rationalizing the conditions for an inconclusive, otherwise avoidable disputes and stimulated litigation.

    And, the subject circular /directive has come to be issued- Amendment of Para 10 of the Circular No. 3 of 2018 dated 11.07.2018 has been drastically amended within a year;adding that, –“ The said modification shall come into effect from the date of issue of this letter.”

    In so mandating, what seem to have been pathetically over sighted are the ‘fall out’ problems, most likely to be faced with, in implementing objectively but successfully, in both letter and spirit the modified directive.

    Over to the experts, both within and outside the governmental portals, endowed, perhaps by default, with a sensibly practical outlook, to devoutly consider, also share independent but well-founded thoughts on the imponderable dilemma, –do not the subject material amendment (s) have the inherent potentials to throw up more ‘unkindly light’ in the direction of rarely made attempts at simplifying the law, to save the legal system from muddling it any further/farther to dizzy heights !

  5. Varaprasad Daitha says:

    The exceptions enumerated in the above directive are already in existence. The CBDT in the circular dated 11th July had missed to name them. Is if intentional or overlooked is to be judged. If it was intentional, the omission is not pardonable. If if were overlooked then also it is to be inquired into disciplinary action shall be taken against the erring officers.

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  1. […] No.3 of 2018 dated 11.07.2018 (the Circular) of Central Board of Direct Taxes (the Board) and its amendment dated 20th August 2018 vide which monetary limits for filing of income tax appeals by the Department before Income Tax […]

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