No threshold relief for foreign black money cases

The cases involving foreign black money would be kept out of the purview of the recent amendment in the income tax law, increasing the threshold monetary limits for the tax department to file appeals at various levels -- appellate tribunals, High Courts and the Supreme Court, the tax department informed recently.

In a circular issued recently, the Central Board of Direct Taxes (CBDT) has said that it is expanding the scope "of issues to be contested on merits notwithstanding low tax effect". The cases, which would be kept out of the new threshold limits, include cases involving undisclosed foreign income and undisclosed financial assets; additions based on information received from enforcement agencies such as CBI (Central Bureau of Investigation), Enforcement Directorate (ED), and SFIO (Serious Fraud Investigation Office); and cases where prosecution has been filed by the Department and is pending in the Court.

The government had in June this year decided to increase the threshold monetary limits for filing appeals with the objective to reduce the number of pending tax litigations at different levels.

The threshold for filing an appeal at Income Tax Appellate Tibunal (ITAT) and The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has been increased from Rs 10 lakh to Rs 20 lakh, for High Courts, the limit has been increased from Rs 20 lakh to Rs 50 lakh and in case of Supreme Court the limit has been increased four-fold to Rs one crore.

However, the earlier announcement came with a clause, which said that the threshold "will not apply in cases where substantial point of law is involved". This clause has been put in the circular to guard revenue interests.

Amit Maheshwari, managing partner of law firm Ashok Maheshwary & Associates LLP, says, "In many cases though the amount of tax involved may be low but the question of law involved could be significant. If the department does not pursue a case purely on monetary limit basis, despite a significant point of law being involved, it may weaken their cases in future where the amount involved would be significant."

The government's move to increase the threshold for filing appeal would result in withdrawing of 34 per cent of cases in Income Tax Appellate Tribunal,  48 per cent in HC and 54 per cent in Supreme Court.