Section 268A — Filing of Appeal or Application for Reference by Income-tax Authority
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Statutory basis for the Board to fix monetary limits ('tax effect') below which the Department shall not file or pursue appeals/references, and rules on the precedential effect of not appealing.
Finance Act, 2026: No amendment. The Finance Act, 2026 does not touch section 268A.
Nature / mechanism: Empowers CBDT to issue orders/instructions fixing monetary limits for departmental appeals; non-filing in a low-tax case is no acquiescence and does not bar appeal in another case on the same issue.
Litigation profile: Practically important and litigated — the binding and (often) retrospective effect of CBDT monetary-limit circulars on pending departmental appeals.
A. COMMENTARY
Monetary limits and the docket-reduction policy
Section 268A gives statutory footing to CBDT instructions prescribing 'tax effect' thresholds below which the Department shall not file appeals to the Tribunal, High Court or Supreme Court. Sub-section (4) clarifies that the Department's not filing in one case (because it is below the limit) is not acquiescence and does not preclude it from raising the same question in another case where the limit is met — preventing the circulars from being turned into estoppels on the merits.
Binding force and retrospective application to pending appeals
The instructions are binding on the Department. The Supreme Court in SRMB Dairy Farming settled that the low-tax-effect circulars apply not only prospectively but to pending appeals as on the date of the circular, subject to the carve-outs (e.g. cases involving the constitutional validity of a provision, where a circular/notification is held ultra vires, or where an audit objection has been accepted) in which the Department may still be permitted to pursue the appeal. Courts routinely dismiss departmental appeals below the prevailing threshold, leaving the question of law open.
B. STATUTORY TEXT (verbatim)
Reproduced verbatim from the Income-tax Act, 1961 (as amended up to the Finance Act, 2025); the Finance Act, 2026 makes no change to this section. Inline numerals in square brackets are the bare Act's amendment-footnote markers.
Filing of appeal or application for reference by income-tax authority.
268A. (1) The Board may, from time to time, issue orders, instructions or direc-tions to other income-tax authorities, fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal or application for reference by any income-tax authority under the provisions of this Chapter.
(2) Where, in pursuance of the orders, instructions or directions issued under sub-section (1), an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of—
(a) the same assessee for any other assessment year; or
(b) any other assessee for the same or any other assessment year.
(3) Notwithstanding that no appeal or application for reference 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 or reference, to contend that the income-tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case.
(4) The Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to the orders, instructions or directions issued under sub-section (1) and the circumstances under which such appeal or application for reference was filed or not filed in respect of any case.
(5) Every order, instruction or direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub-section (1) and the provisions of sub-sections (2), (3) and (4) shall apply accordingly.
C. AUTHORITIES
The authorities establish the binding, and generally retrospective, effect of the monetary-limit circulars and the merits-question carve-outs.
Cluster 1 — Binding and retrospective effect of monetary-limit circulars
DIT v. S.R.M.B. Dairy Farming (P) Ltd., (2018) 400 ITR 9 (SC)
Holding The CBDT low-tax-effect instruction applies retrospectively to pending appeals as on the date of the circular, to give effect to the docket-reduction policy; the contrary two-judge view (Suman Dhamija / Gemini Distilleries) was held not to lay down the correct law. Carve-outs apply where, e.g., constitutional validity is in issue or an audit objection has been accepted.
Relevance The governing authority on the reach of the monetary-limit circulars under section 268A.
CIT v. Gemini Distilleries, (2017) 386 ITR 681 (SC)
Holding Considered the application of the monetary-limit circulars to pending matters; its restrictive view was effectively settled by the larger consideration in SRMB Dairy Farming.
Relevance Part of the line clarified by SRMB Dairy.
Cluster 2 — No acquiescence from non-filing (statutory)
Section 268A(4) — non-filing is not acquiescence
Position The Department's omission to appeal in a low-tax-effect case does not preclude it from agitating the same question in another case meeting the limit; no estoppel on the merits arises from non-filing.
Caution Stated from sub-section (4); the merits question of law remains open notwithstanding dismissal on tax-effect grounds.
CHAPTER XX — APPEALS AND REVISION | F.—General
Section 268A — Filing of Appeal or Application for Reference by Income-tax Authority
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Statutory basis for the Board to fix monetary limits ('tax effect') below which the Department shall not file or pursue appeals/references, and rules on the precedential effect of not appealing.
Finance Act, 2026: No amendment. The Finance Act, 2026 does not touch section 268A.
Nature / mechanism: Empowers CBDT to issue orders/instructions fixing monetary limits for departmental appeals; non-filing in a low-tax case is no acquiescence and does not bar appeal in another case on the same issue.
Litigation profile: Practically important and litigated — the binding and (often) retrospective effect of CBDT monetary-limit circulars on pending departmental appeals.
A. COMMENTARY
Monetary limits and the docket-reduction policy
Section 268A gives statutory footing to CBDT instructions prescribing 'tax effect' thresholds below which the Department shall not file appeals to the Tribunal, High Court or Supreme Court. Sub-section (4) clarifies that the Department's not filing in one case (because it is below the limit) is not acquiescence and does not preclude it from raising the same question in another case where the limit is met — preventing the circulars from being turned into estoppels on the merits.
Binding force and retrospective application to pending appeals
The instructions are binding on the Department. The Supreme Court in SRMB Dairy Farming settled that the low-tax-effect circulars apply not only prospectively but to pending appeals as on the date of the circular, subject to the carve-outs (e.g. cases involving the constitutional validity of a provision, where a circular/notification is held ultra vires, or where an audit objection has been accepted) in which the Department may still be permitted to pursue the appeal. Courts routinely dismiss departmental appeals below the prevailing threshold, leaving the question of law open.
B. STATUTORY TEXT (verbatim)
Reproduced verbatim from the Income-tax Act, 1961 (as amended up to the Finance Act, 2025); the Finance Act, 2026 makes no change to this section. Inline numerals in square brackets are the bare Act's amendment-footnote markers.
Filing of appeal or application for reference by income-tax authority.
268A. (1) The Board may, from time to time, issue orders, instructions or direc-tions to other income-tax authorities, fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal or application for reference by any income-tax authority under the provisions of this Chapter.
(2) Where, in pursuance of the orders, instructions or directions issued under sub-section (1), an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of—
(a) the same assessee for any other assessment year; or
(b) any other assessee for the same or any other assessment year.
(3) Notwithstanding that no appeal or application for reference 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 or reference, to contend that the income-tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case.
(4) The Appellate Tribunal or Court, hearing such appeal or reference, shall have regard to the orders, instructions or directions issued under sub-section (1) and the circumstances under which such appeal or application for reference was filed or not filed in respect of any case.
(5) Every order, instruction or direction which has been issued by the Board fixing monetary limits for filing an appeal or application for reference shall be deemed to have been issued under sub-section (1) and the provisions of sub-sections (2), (3) and (4) shall apply accordingly.
C. AUTHORITIES
The authorities establish the binding, and generally retrospective, effect of the monetary-limit circulars and the merits-question carve-outs.
Cluster 1 — Binding and retrospective effect of monetary-limit circulars
DIT v. S.R.M.B. Dairy Farming (P) Ltd., (2018) 400 ITR 9 (SC)
Holding The CBDT low-tax-effect instruction applies retrospectively to pending appeals as on the date of the circular, to give effect to the docket-reduction policy; the contrary two-judge view (Suman Dhamija / Gemini Distilleries) was held not to lay down the correct law. Carve-outs apply where, e.g., constitutional validity is in issue or an audit objection has been accepted.
Relevance The governing authority on the reach of the monetary-limit circulars under section 268A.
CIT v. Gemini Distilleries, (2017) 386 ITR 681 (SC)
Holding Considered the application of the monetary-limit circulars to pending matters; its restrictive view was effectively settled by the larger consideration in SRMB Dairy Farming.
Relevance Part of the line clarified by SRMB Dairy.
Cluster 2 — No acquiescence from non-filing (statutory)
Section 268A(4) — non-filing is not acquiescence
Position The Department's omission to appeal in a low-tax-effect case does not preclude it from agitating the same question in another case meeting the limit; no estoppel on the merits arises from non-filing.
Caution Stated from sub-section (4); the merits question of law remains open notwithstanding dismissal on tax-effect grounds.