Section 373 Income Tax Act 2025: When Can the Tax Department File an Appeal?
Section 373 empowers the Central Board of Direct Taxes (CBDT) to set monetary limits through orders, instructions or directions regulating appeals filed by income-tax authorities. It also clarifies that a decision not to appeal because of those directions does not bar a departmental appeal on the same issue in another tax year or another assessee's case.
Law: Section 373, Income-tax Act, 2025 (text checked against the Act as amended by the Finance Act, 2026).
What is the purpose of Section 373?
The provision regulates appeals filed by income-tax authorities under the appeal chapter. It allows the Board to set monetary thresholds for departmental litigation and prevents the non-filing of one appeal from being treated as acceptance of the underlying legal position in every other case. The Tribunal or Court must consider the applicable directions and circumstances when hearing the appeal.
How do the four subsections of Section 373 operate?
| Provision | Statutory rule | Practical effect |
|---|---|---|
| Section 373(1) | The Board may issue orders, instructions or directions fixing monetary limits to regulate appeals by income-tax authorities under this Chapter. | Departmental filing decisions are governed by the applicable Board directions. |
| Section 373(2) | Not filing an appeal on an issue for one assessee and tax year does not preclude an appeal on the same issue for another tax year of that assessee or for another assessee in the same or another tax year. | A past decision not to appeal does not create a blanket prohibition against future appeals. |
| Section 373(3) | An assessee cannot argue that the income-tax authority acquiesced in the disputed decision merely because no appeal was filed pursuant to the Board's directions. | Non-filing under monetary-limit directions does not, by itself, amount to acceptance of the issue. |
| Section 373(4) | The Appellate Tribunal or Court hearing the appeal must have regard to the Board's directions and the circumstances in which an appeal was or was not filed. | The adjudicating forum considers both the governing directions and the factual context. |
Section 373(1): Who sets monetary limits for departmental appeals?
The Board is authorised to issue orders, instructions or directions from time to time. Section 373 does not itself prescribe a fixed rupee threshold; the amount must be determined from the relevant directions applicable to the particular appeal and period. Do not assume that a monetary limit applicable to one appellate forum or date applies universally.
Section 373(2): Can the department appeal the same issue in another year?
Yes. Where a departmental appeal was not filed pursuant to the Board's monetary-limit directions, the authority is not thereby prevented from appealing the same issue for another tax year of the same assessee, or for any other assessee for the same or another tax year. Each proposed appeal must still satisfy the applicable law and filing requirements.
Section 373(3): Does non-filing mean the department accepted the decision?
No. The statute expressly prevents an assessee who is a party to an appeal from contending that the income-tax authority acquiesced in a disputed decision solely because it did not appeal in a case pursuant to the Board's directions.
Section 373(4): What must the Tribunal or Court consider?
The Appellate Tribunal or Court must have regard to the orders, instructions or directions issued under subsection (1), and to the circumstances explaining why the department filed or did not file an appeal in a particular case.
Do CBDT monetary limits automatically decide the merits of a tax dispute?
No. Monetary-limit directions concern the department's decision to pursue an appeal. They do not, by themselves, decide whether the underlying assessment or legal interpretation is correct. Section 373 also does not independently grant the assessee a right to have every departmental appeal dismissed merely because a different case was not appealed.
Important: Current numerical thresholds, calculation of tax effect, and any exceptions must be checked against the relevant CBDT orders, circulars or instructions applicable to the forum and filing date. The text of Section 373 does not state those figures.
Relevant statutory and legal expressions
- Board
- The Central Board of Direct Taxes, referred to as the Board in the income-tax legislation.
- Income-tax authority
- An authority recognised under the Act; Section 373 addresses appeals filed by such authorities.
- Monetary limit
- A rupee-based threshold fixed through Board orders, instructions or directions for regulating departmental appeals; not a specific amount fixed in Section 373 itself.
- Tax year
- The relevant tax year to which the dispute relates, as used in the Income-tax Act, 2025.
- Acquiescence
- Acceptance of a decision or position. Section 373(3) excludes an inference of departmental acceptance based merely on non-filing pursuant to Board directions.
- Appellate Tribunal
- The appellate forum constituted under the Act, including the forum for appeals governed by Section 362.
Practical illustrations
Example 1: No departmental appeal for an earlier tax year
An income-tax authority does not appeal an issue for Tax Year A because the applicable monetary-limit direction regulates filing. Under Section 373(2)(a), that non-filing alone does not prevent an appeal on the same issue for Tax Year B of the same assessee.
Example 2: Identical issue involving another assessee
The department does not appeal a decision concerning Taxpayer X pursuant to the Board's directions. Under Section 373(2)(b), it is not thereby precluded from appealing the same issue in Taxpayer Y's case, subject to the law and applicable directions.
Example 3: Claim that the department accepted a legal position
An assessee argues that the department accepted a disputed interpretation because it did not appeal in an earlier case. Where non-filing was pursuant to directions under Section 373(1), Section 373(3) prevents treating that fact alone as departmental acquiescence. The Tribunal or Court also considers the directions and circumstances under subsection (4).
Frequently asked questions
Does Section 373 itself fix the CBDT appeal monetary limit?
No. It empowers the Board to fix monetary limits through orders, instructions or directions. The applicable threshold must be verified from those directions.
Can an assessee rely on a previous year in which the department did not appeal?
That fact may be part of the case history, but non-filing pursuant to Section 373(1) directions does not, by itself, prevent the department from appealing the same issue in another tax year or establish acquiescence.
Does Section 373 govern appeals filed by taxpayers?
Its specific subject is the filing of appeals by income-tax authorities. Taxpayer appeal rights and requirements arise under other provisions of the Act.
Must the Tribunal consider CBDT instructions?
Yes. Section 373(4) requires the Tribunal or Court hearing the appeal to have regard to the applicable orders, instructions or directions and the circumstances of filing or non-filing.
Related statutory provisions
Read Section 362 (appeals to the Appellate Tribunal), Section 365 (appeals to High Court), Section 372 (exclusion of time for obtaining copy) and Section 374 (interpretation of High Court).
Note: This is an explanatory guide to the statutory provision. For a particular departmental appeal, verify the Board's directions applicable on the relevant date and seek case-specific professional advice.