Departmental Appeal Dismissed as Monetary Limit of Rs. 10 Lakhs Falls Below Prescribed Limit.
Issue
Whether a departmental appeal filed before the High Court against a penalty of Rs. 10 lakhs imposed under Section 43 of the Black Money Act, 2015 is maintainable in light of CBDT Circular No. 5 of 2024 raising the monetary threshold for filing appeals.
Facts
-
Penalty Imposed: The Income-tax Department initiated proceedings and imposed a penalty of Rs. 10 lakhs under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
-
Tax Effect: The total tax effect involved in the instant departmental appeal was restricted solely to the penalty amount of Rs. 10 lakhs.
-
Revision of Monetary Thresholds: The Central Board of Direct Taxes (CBDT) issued Circular No. 5 of 2024, which enhanced the monetary limits for the Department to prefer appeals before the ITAT, High Courts, and the Supreme Court, raising the High Court appeal threshold to Rs. 2 crores.
Decision
-
Appeal Non-Maintainable: Held, yes. Since the tax effect of Rs. 10 lakhs is far below the revised statutory monetary threshold of Rs. 2 crores mandated by CBDT Circular No. 5 of 2024, the departmental appeal is not maintainable.
-
Dismissal of Appeal: Held, yes. The appeal preferred by the Revenue before the High Court is dismissed on account of low tax effect, with the issue decided in favor of the assessee.
Key Takeaways
-
Binding Nature of CBDT Circulars: CBDT circulars setting monetary limits for litigation are binding on the Income-tax Department, prohibiting appeals below the specified threshold.
-
Applicability to Black Money Act: Monetary limits prescribed for tax litigation apply to penalty proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
-
Limitation on Low-Value Appeals: High Courts will not entertain Revenue appeals where the underlying financial stake/tax effect falls below the revised limit of Rs. 2 crores under Circular No. 5 of 2024.
HIGH COURT OF TELANGANA
Principal Director of Income-tax (Investigation)
v.
Prakash Nimmagadda
P. Sam Koshy and SUDDALA CHALAPATHI RAO, JJ.
ITTA No. 4 OF 2026
JANUARY 8, 2026
P. Sam Koshy, J.- Heard Mr. N.Praveen Reddy, Senior Standing Counsel for the Income Tax Department appearing for the appellant.
2. In the course of the hearing, it has been found that the tax effect arising in the instant case is only Rs.10,00,000/- (Ten Lakhs Only) that too by way of penalty imposed by the appellant under Section 43 of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. However, perusal of Circular No.5 of 2024, where the monetary limit fixed by the department in the course of preferring an appeal before the ITTA’s, High Courts and Supreme Court has been raised from Rs.1 crore to Rs.2 crores. We find that the tax effect in instant case is only Rs.10,00,000/- which is much below the monetary limit prescribed under the said Circular.
3. In view of the same, we are of the considered opinion that in terms of the Circular No.5 of 2024, the instant appeal may not be sustainable and the same accordingly stands dismissed.
Consequently, miscellaneous petitions pending, if any, shall stand closed.