Supreme Court Dismisses Revenue SLP as Tax Effect Below CBDT Threshold Lacks Legal Exception

By | August 13, 2026
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Supreme Court Dismisses Revenue SLP as Tax Effect Below CBDT Threshold Lacks Legal Exception

Supreme Court Dismisses Revenue SLP as Tax Effect Below CBDT Threshold Lacks Legal Exception

Issue

Whether a Special Leave Petition (SLP) filed by the Revenue is maintainable under Section 268A when the monetary tax effect is below the prescribed CBDT limit and the case does not fall within the exceptions provided in CBDT Circular No. 5/2024.

Facts

  • The Revenue filed an appeal before the High Court challenging an order passed by the Income Tax Appellate Tribunal (ITAT).
  • The tax effect involved in the appeal was below the minimum monetary threshold prescribed for filing appeals by the Revenue as per CBDT Circular No. 5/2024 (dated 15th March, 2024).
  • The Revenue contended that the appeal was maintainable because it fell within the exception clause stipulated under paragraph 3.1(h) of the said CBDT Circular.
  • The High Court rejected the Revenue’s contention, holding that paragraph 3.1(h) was inapplicable since no substantial question of law arose from the Tribunal’s order, and dismissed the appeal.
  • Aggrieved by the High Court’s dismissal, the Revenue preferred a Special Leave Petition (SLP) before the Supreme Court.

Decision

  • The Supreme Court held that no ground for interference with the impugned judgment of the High Court was established.
  • The Special Leave Petition (SLP) filed by the Revenue was dismissed in favour of the assessee.
  • The High Court’s finding—that the appeal failed to satisfy the exception criteria under CBDT Circular No. 5/2024 and was barred due to low tax effect—was affirmed.

Key Takeaways

  • Binding Nature of Monetary Limits: The Revenue cannot prosecute appeals below the monetary thresholds prescribed by the CBDT under Section 268A unless the case strictly falls within a recognized exception.
  • Strict Application of Circular Exceptions: Invoking exception clauses (such as para 3.1(h) of Circular No. 5/2024) requires demonstrating a genuine substantial question of law; mere assertion by the Revenue is insufficient.
  • Supreme Court Refusal to Interfere: Dismissal of the SLP confirms that low-tax-effect appeals lacking substantial legal merit will be dismissed outright to minimize avoidable litigation.
SUPREME COURT OF INDIA
Principal Commissioner of Income-tax
v.
Smita Jhawar*
K.V. Viswanathan and Arun Palli, JJ.
SLP (CIVIL) Diary No(s). 37124 OF 2026†
JULY  14, 2026
Raghavendra P Shankar, A.S.G., Sudarshan Lamba, AOR, Karan Lahiri, Ms. Pallavi Mishra, B K Satija and Rajat Vaishnaw, Advs. for the Petitioner.
ORDER
1. We have heard Mr. Raghavendra P.Shankar, learned Additional Solicitor General appearing for the petitioner.
2. Delay condoned.
3. Learned Additional Solicitor General submits that the High Court erred in treating the case as of low tax effect case.
4. To satisfy ourselves, we examined the order of the Assessment Officer as well as the order of the Income Tax Appellate Tribunal. On the special facts, having examined the case on merits, we are convinced that the present case does not call for any interference in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is accordingly dismissed.
5. Any question of law on the aspect of interpretation of clause 3.1 (h) of the Circular No.5/2024 F.No.279/Misc.142/2007-ITJ(Pt.) dated 15th March, 2024 with regard to the case being of low tax effect or not is kept open.
6. Pending application, if any, shall also stand disposed of.