Income Tax Appeals Against Section 263 Revision Orders Not Exempt From ₹2 Crore Monetary Limit Where Tax Effect Is Quantifiable; CBDT Circulars Binding on Revenue: Punjab & Haryana High Court
Case Name: Principal Commissioner of Income Tax-1, Chandigarh v. M/s Unipro Techno Infrastructure Private Ltd.
Date of Judgment: 06.10.2026
Citation: ITA No. 413 of 2018
Bench: Hon’ble Mr. Justice Deepak Sibal and Hon’ble Mr. Justice Sunish Bindlish
Held: The Punjab and Haryana High Court held that appeals arising from revisionary orders passed under Section 263 of the Income-tax Act, 1961, are not automatically exempt from the monetary limits prescribed under CBDT Circular Nos. 5/2024 and 9/2024. The exception under Clause 3.1(f) of Circular No. 5/2024 applies only where the tax effect is not quantifiable or is not involved. Where the disputed tax liability can be quantified and falls below the prescribed ₹2 crore threshold for High Court appeals, the Revenue cannot maintain such an appeal merely because it arises from proceedings under Section 263. The Court further clarified that CBDT circulars issued under Section 268A are binding upon the Income Tax Authorities.
Summary: The dispute arose when the Principal Commissioner of Income Tax invoked Section 263 to revise an assessment allowing the assessee a deduction of ₹4.56 crore under Section 80-IA for Assessment Year 2012-13. The Income Tax Appellate Tribunal set aside the revisionary order, prompting the Revenue to approach the High Court.
Meanwhile, the consequential reassessment quantified the disputed tax liability at ₹1,41,07,867. The reassessment was subsequently set aside by the CIT(A), whose decision was upheld by the ITAT. The Revenue did not pursue a further appeal against that decision on account of the low tax effect.
The High Court rejected the Revenue’s contention that all appeals concerning Section 263 orders fall within the exception under Clause 3.1(f). It distinguished between tax effect that is not quantified and tax effect that is not quantifiable, observing that the exception is confined to the latter category. The Court further held that hypothetical additions which an Assessing Officer might have made cannot be included in calculating the tax effect of an appeal concerning a specific disputed issue.
Emphasising the binding nature of CBDT circulars and their objective of reducing unnecessary tax litigation, the Court concluded that the Revenue could not disregard the ₹2 crore threshold after itself quantifying the disputed tax liability below that limit.
Decision: The High Court dismissed the Revenue’s appeal as not maintainable, holding that the quantified tax effect of ₹1,41,07,867 fell below the ₹2 crore monetary threshold prescribed by CBDT Circular No. 9/2024. The Court ruled that Clause 3.1(f) did not protect the appeal merely because it originated from proceedings under Section 263 of the Income-tax Act. The dismissal was confined to maintainability, without adjudication of the underlying entitlement to deduction under Section 80-IA.