Summary
Chhattisgarh HC has dismissed an income tax appeal citing CBDT Circular No. 21/2023, which raised the monetary limit for departmental appeals to ₹2 crore. This case reaffirms the binding nature of CBDT circulars and offers relief to small taxpayers facing prolonged litigation.
₹2 Crore Limit for IT Appeals: What the Chhattisgarh HC Ruling Means
CBDT’s increased ₹2 crore limit for income tax appeals has now found judicial backing. In a recent case, the Chhattisgarh High Court dismissed an appeal by the Income Tax Department, citing the updated monetary threshold introduced via CBDT Circular No. 21/2023 dated 1 August 2023.
Let’s break down what this means for taxpayers and consultants.
Background: CBDT’s Revised Appeal Limits
The Central Board of Direct Taxes (CBDT) periodically notifies monetary thresholds for departmental appeals to reduce frivolous litigation.
As per Circular No. 21/2023, the new limits are:
| Forum | Monetary Threshold (from Aug 2023) |
|---|---|
| ITAT (Income Tax Appellate Tribunal) | ₹50 lakh |
| High Court | ₹2 crore |
| Supreme Court | ₹5 crore |
These thresholds apply to appeals filed on or after 1 August 2023.
Case Highlight: Pr. CIT vs XYZ Ltd. [2025 TAXSCAN (HC) 1242]
In this case before the Chhattisgarh High Court, the Revenue had filed an appeal prior to August 2023, but the tax effect was below ₹2 crore. The Court observed:
- The CBDT circular applies even to pending cases, not just future filings.
- Following SC precedent in IT v. Suman Dhamija (2023) 452 ITR 99 (SC), CBDT circulars are binding on tax authorities.
- Since the tax impact was below the threshold, the appeal stood dismissed.
Key Legal Reference:
- CBDT Circular No. 21/2023
- SC ruling in Suman Dhamija case (2023)
- Chhattisgarh HC in [2025 TAXSCAN (HC) 1242]
What This Means for Taxpayers
If the disputed tax demand is below ₹2 crore (in HC cases), and the matter doesn’t involve any exception (like audit objections, constitutional issues, or revenue fraud), the department will not pursue an appeal.
Practical Takeaways:
- Faster resolution: You won’t face long-drawn departmental litigation if the amount involved is below the threshold.
- Focus on high-value disputes: The tax department is concentrating efforts on significant matters.
- Consultants and CAs can use this ruling to close low-value cases confidently.
Exceptions to the ₹2 Crore Rule
CBDT has carved out some exceptions where appeals may still be filed even below the monetary limit:
- Revenue audit objections accepted by the Department
- Cases involving bogus long-term capital gains (LTCG)
- Matters with constitutional validity or retroactive amendments
- Orders with recurring legal issues not yet settled by higher courts
So always check for exceptions before relying on the monetary limit.
Expert View: A Tip for CA Firms and Tax Practitioners
If you have ongoing assessments or appeals with low tax effect, file a representation quoting CBDT Circular No. 21/2023 and this Chhattisgarh HC ruling. This can help:
- Push for early disposal
- Avoid unnecessary compliance costs
- Reduce anxiety for clients
Efiletax Can Help
Facing a low-value tax appeal?
Let Efiletax help you file representations, track CBDT circulars, and close unwanted tax disputes faster.
FAQs
1. Does the ₹2 crore limit apply retrospectively?
Yes. Courts like Chhattisgarh HC have applied CBDT Circular No. 21/2023 to pending appeals, not just future ones.
2. Can the department still file an appeal below ₹2 crore?
Only in exceptional circumstances like audit objections, tax evasion, or constitutional matters.
3. Is this applicable only to High Court cases?
No. Similar limits apply to ITAT (₹50 lakh) and Supreme Court (₹5 crore) appeals as well.