Income Tax 2025

Appearance

Filing of appeal or by income-tax authority. ​

373(1) ​

The Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal by any income-tax authority under the provisions of this Chapter.

373(2) ​

Where, in pursuance of the orders, instructions or directions issued under sub-section (1), an income-tax authority has not filed any appeal on any issue in the case of an assessee for any tax year, it shall not preclude such authority from filing an appeal on the same issue in the case of—

  • (a) the same assessee for any other tax year; or
  • (b) any other assessee for the same or any other tax year.

373(3) ​

Where even when no appeal has been filed by an income-tax authority pursuant to the orders or instructions or directions issued under sub-section (1), it shall not be lawful for an assessee, being a party in any appeal, to contend that the income-tax authority has acquiesced in the decision on the disputed issue by not filing an appeal in any case.

373(4) ​

The Appellate Tribunal or Court, hearing such appeal, shall have regard to the orders, instructions or directions issued under sub-section (1) and the circumstances under which such appeal was filed or not filed in respect of any case.

Explanation

Section Summary: ​

Section 373 of the new income tax law empowers the Central Board of Direct Taxes (CBDT) to set monetary limits for filing appeals by income-tax authorities. This section aims to reduce unnecessary litigation by ensuring that appeals are filed only in cases where the tax amount involved exceeds a specified threshold. It also clarifies that the decision not to file an appeal in one case does not prevent the authority from filing an appeal in another case involving the same or different taxpayers or tax years.

Key Changes: ​

  1. Monetary Limits for Appeals: The CBDT can now issue orders, instructions, or directions to set monetary thresholds for filing appeals. This is a new provision aimed at streamlining the appeal process and reducing litigation.
  2. No Acquiescence Implied: Even if an income-tax authority does not file an appeal in a specific case, it does not imply that the authority has accepted the decision on the disputed issue. This prevents taxpayers from arguing that the authority has acquiesced to a decision by not appealing.
  3. Appellate Tribunal/Court Considerations: Appellate bodies must consider the CBDT's instructions and the circumstances under which an appeal was or was not filed.

Practical Implications: ​

  1. Reduced Litigation: Taxpayers may see fewer appeals filed by income-tax authorities, especially in cases involving smaller amounts, as the CBDT can set higher monetary thresholds.
  2. Consistency in Appeals: The provision ensures that the decision not to appeal in one case does not set a precedent for other cases, maintaining the authority's flexibility to appeal similar issues in different contexts.
  3. Impact on Taxpayers: Taxpayers cannot argue that the tax authority has accepted a decision simply because it did not file an appeal in a similar case. This strengthens the authority's position in future disputes.

Critical Concepts: ​

  1. Monetary Limits: The CBDT can set thresholds (e.g., Rs. 10 lakhs, Rs. 20 lakhs) below which income-tax authorities are discouraged from filing appeals. This is intended to focus resources on high-value cases.
  2. Acquiescence: This term refers to the implied acceptance of a decision. Section 373(3) explicitly states that non-filing of an appeal does not imply acquiescence.
  3. Appellate Bodies: These include the Income Tax Appellate Tribunal (ITAT) and courts, which must consider the CBDT's instructions when hearing appeals.

Compliance Steps: ​

  1. For Tax Authorities:
    • Follow the CBDT's instructions on monetary limits for filing appeals.
    • Ensure that appeals are filed only in cases exceeding the specified thresholds, unless there are exceptional circumstances.
  2. For Taxpayers:
    • Be aware that the tax authority's decision not to appeal in one case does not prevent it from appealing similar issues in other cases.
    • Prepare arguments without relying on the authority's non-filing of appeals as evidence of acquiescence.

Examples: ​

  1. Scenario 1: The CBDT sets a monetary limit of Rs. 20 lakhs for filing appeals. In a case involving a tax dispute of Rs. 15 lakhs, the income-tax authority decides not to file an appeal. However, in another case involving the same taxpayer but a different tax year, where the disputed amount is Rs. 25 lakhs, the authority files an appeal.

    • Implication: The authority is not precluded from filing an appeal in the second case, even though it did not appeal in the first case.

  2. Scenario 2: A taxpayer argues in court that the income-tax authority has accepted a particular interpretation of the law because it did not appeal in a similar case involving another taxpayer.

    • Implication: The court will reject this argument, as Section 373(3) explicitly states that non-filing of an appeal does not imply acquiescence.

This section ensures a balanced approach to litigation, reducing unnecessary appeals while maintaining the tax authority's ability to pursue significant cases.