Section 373 of the Income-tax Act, 2025 — Filing of Appeal by an Income-tax Authority (Departmental Appeals & Monetary Limits)

In plain language

What Section 373 actually does

When you lose (or partly lose) a case before the Commissioner (Appeals), the Income-tax Department can also appeal — for example, when it loses at the Commissioner (Appeals) stage and wants to go up to the Appellate Tribunal, High Court or Supreme Court. But the Government does not want its officers dragging every small dispute through years of litigation. Section 373 is the legal engine that lets the Central Board of Direct Taxes (CBDT / "the Board") fix monetary limits below which the Department should NOT file an appeal. It is the successor to Section 268A of the Income-tax Act, 1961, and carries the same scheme forward almost word-for-word.

Section 373 does not itself contain any rupee figure. Instead, it empowers the Board to issue orders, instructions and directions fixing those limits, and it protects those instructions from being twisted by taxpayers in court.

The four sub-sections in plain English

• Section 373(1) — Power to fix limits: The Board may, from time to time, issue orders, instructions or directions to income-tax authorities fixing such monetary limits as it thinks fit, to regulate the filing of appeals by any income-tax authority under Chapter XVIII (Appeals, Revisions and ADR).
• Section 373(2) — No precedent trap: Just because the Department did not appeal in one case (because the tax effect was below the limit), it is not barred from appealing on the very same issue — (a) for the same taxpayer in another tax year, or (b) for any other taxpayer in the same or a different tax year.
• Section 373(3) — No "acquiescence" argument: A taxpayer who is a party to an appeal cannot argue that the Department "accepted" or agreed with a decision simply because it did not appeal in some other case.
• Section 373(4) — Courts must respect the limits: The Appellate Tribunal or the Court hearing an appeal must have regard to these Board instructions and the circumstances in which an appeal was or was not filed.

Who it applies to

Section 373 governs the Department, not the taxpayer. The monetary limits restrict when the Assessing Officer / Commissioner can file a departmental (revenue) appeal. A taxpayer's own right to appeal is never capped by any monetary limit — you can appeal a ₹5,000 addition if you wish. The section matters to you because it decides whether the Department will chase you higher up the appellate ladder.

The key concept — "tax effect"

Whether a limit is crossed is judged by the "tax effect", not the disputed income. Tax effect broadly means the difference between the tax on the income as assessed and the tax that would be payable if the disputed issue were decided in the taxpayer's favour (including applicable surcharge and cess, but generally excluding interest unless interest itself is the dispute). Each assessment year and each taxpayer is normally counted separately.

The current monetary limits (via CBDT Circulars)

Under the powers now housed in Section 373, the operative limits come from CBDT Circular No. 5/2024 (15 March 2024) as enhanced by Circular No. 9/2024 (17 September 2024). These raised the thresholds significantly to cut down small-value litigation:

• ITAT (Appellate Tribunal): ₹60 lakh (earlier ₹50 lakh)
• High Court: ₹2 crore (earlier ₹1 crore)
• Supreme Court: ₹5 crore (earlier ₹2 crore)

These are administrative limits issued under the enabling power, so they can be revised again by fresh circulars — always check the latest CBDT circular for the figure applicable to your year.

Important exceptions — limits don't always save you

Even if the tax effect is below the limit, the Department can still appeal on merits in "exception" cases spelt out in the circulars, such as where the constitutional validity of a provision is challenged, a Board instruction/circular is held illegal, an addition is based on information from law-enforcement agencies (like the ED or GST authorities), or matters involving undisclosed foreign assets, bogus purchases through organised rackets, TDS/TCS on foreign remittances, etc. Conversely, an appeal is not to be filed merely because the tax effect crosses the limit — the officer must still weigh the merits.

How it interacts with related sections

• Chapter XVIII houses the whole appeal machinery — appeals to the Commissioner (Appeals) / JCIT(A), to the Appellate Tribunal, and references/appeals to the High Court and Supreme Court. Section 373 is the "gatekeeper" for the Department across all of these.
• It works alongside the sections on appeals to the Appellate Tribunal and appeals to the High Court and Supreme Court, deciding whether the Department may step through those doors.

Practical implications for taxpayers

• If you win at the first appeal and the tax effect is below the limit, the Department usually cannot pursue you further — giving you finality.
• But do not assume the Department has "conceded" the point for future years — Section 373(2) and (3) expressly keep the issue open for other years and other taxpayers.
• Pending low-value departmental appeals below the enhanced limits are ordinarily withdrawn / not pressed, which is why many small appeals were dropped after the 2024 circulars.