Section 268A of ITA, 1961 : Section 268A: Filing Of Appeal Or Application For Reference By Income-Tax Authority

Explanation using Example

Imagine a small business owner, Mr. Sharma, who has a dispute with the Income Tax Department over a calculation error that led to a demand for additional taxes of INR 10,000 for the assessment year 2021-22. The department realizes that the cost of litigation might exceed the amount recoverable and decides not to appeal the decision of the lower tax authority based on the monetary limits set by the Central Board of Direct Taxes (CBDT) under Section 268A of the Income-tax Act, 1961.

Later, in the assessment year 2023-24, Mr. Sharma faces a similar issue, but this time the disputed tax amount is INR 1,00,000. The Income Tax Department opts to file an appeal in this case, as it is above the monetary threshold previously set. Mr. Sharma cannot argue that the department has accepted the earlier decision simply because they did not appeal in the first instance, as per Section 268A(3).

Furthermore, if another taxpayer, Ms. Gupta, has a similar dispute in the assessment year 2022-23, the tax authorities are free to decide whether to appeal or not, based on the monetary limits and without being influenced by the decision in Mr. Sharma's case, as clarified by Section 268A(2).