CBDT – Low Tax Effect Circular – Clarification

CBDT Release

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

The amendment has been brought about in Para 10 in Circular 3 of 2018 dtd. 11th July 2018.

Para 10 of the Circular No. 3 of 2018 dtd. 11th July 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 :

  1. Where the Constitutional validity of the provisions of an Act or Rule is under challenge, or
  2. Where Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or
  3. Where Revenue Audit Objection in the case has been accepted by the Department, or
  4. Where addition relates to undisclosed foreign income/undisclosed foreign assets (including financial assets)/ undisclosed foreign bank account
  5. 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)
  6. Cases where prosecution has been filed by the Department and is pending in the Court 

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

Click here to read the CBDT directive.

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