The Principal Director of Income Tax (Investigation) vs. Mr. Prakash Nimmagadda

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ITTA/4/2026HC TelanganaHBHC01000662202608 January 2026Bench: P.SAM KOSHY,SUDDALA CHALAPATHI RAO4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal filed by the Revenue was not sustainable. The primary reason for this decision was the tax effect of the penalty, which amounted to Rs. 10,00,000/-. This amount was significantly below the revised monetary limit of Rs. 2 crores prescribed by the Department's Circular No. 5 of 2024 for preferring appeals before higher authorities, including the High Court. The Court found that the instant appeal did not meet the threshold stipulated in the circular. Consequently, the appeal was dismissed on this procedural ground. No decision was made on the merits of the penalty itself. The operative direction was the dismissal of the appeal.

What were the facts?

This case involves an appeal filed by the Principal Director of Income Tax (Investigation) against an order of the Income Tax Appellate Tribunal (ITAT). The appeal concerns the Block Assessment Year 2019-20. The original order was passed by the Assistant Director of Income Tax, which was then appealed to the Commissioner of Income Tax (Appeals), and subsequently to the ITAT. The ITAT's order, dated 21.04.2025, is the one under challenge before the High Court. The dispute pertains to a penalty imposed under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

What were the issues?

1. Whether the appeal filed by the Revenue is maintainable before the High Court, given the tax effect and the prevailing monetary limits for appeals as per departmental circulars? The Revenue, represented by the Principal Director of Income Tax (Investigation), argued that the appeal was validly filed. The Respondent, Mr. Prakash Nimmagadda, did not present any arguments as recorded in the judgment. The High Court, however, focused on the tax effect of the penalty imposed, which was stated to be Rs. 10,00,000/- (Ten Lakhs Only). The Court referred to Circular No. 5 of 2024, which raised the monetary limit for preferring appeals before the ITATs, High Courts, and Supreme Court from Rs. 1 crore to Rs. 2 crores.

Which sections of the Income-tax Act were involved?

Section 43

AI-generated summary — verify with the full judgment below

t IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THURSDAY,THE EIGHTH DAY OF JANUARY TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE SUDDALA CHALAPATHI RAO I.T.T.A.NO: 4 OF 2026 lncome Tax Tribunal Appeal under Section 260 A of the lncome Tax Act., 1961 against the order made in B.M.A.No.1lHydl2O24 for the Block Assessment Year 2019-20 Dated 21.04.2025 on the file of the lncome Tax Appellate Tribunal, Hyderabad "8" Bench, Hyderabad preferred against the Order of the Commissioner of lncome Tax (Appeals)-11, Hyderabad in CIT.(A), Hyderabad-11/BMA/001 12022-23 Dated 28.06.2024 preferred against the Order of the Asst. Director of lncome Tax, Hyderabad made in PAN No.ACAPN 4246RDated 26.03.2022. Between: The Principal Director of lncome Tax (lnvestigation), Aayakar Bhawan, Hyderabad. ...APPELLANT AND lMr. Pral5ash Nimmagadda, 7 -7 -2981218/3, Sowbhag Ashok Nagar, Street No. 1, Secunderabad - 500029 Counsel for the Appellant : SRl. N PRAVEEN REDDY (sENroR sc FoR lr DEPT) Counsel for the Respondents: --- The Court made the following: JUDGMENT ya Avenue Apts, 1st Floor, PAN - ACAPN4246R ...RESPONDENT

IN T}IE TITGII COURT FOR THE STATE OF TELANGANA AT HYDERABAD T'HE HONOURABLE SRT JUSTTCE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE SUDDALA CHALAPATHT RAO ITTA No.4 OF 2026 Dated:08.01 .2026 Betwe,:n: The Principal Director of Income Tax (investigation) Aayak:lr Bhawan, Hyderabad. Appellant AND Mr.Prakash Nimmagadda ..Respondent JUDG VTENT (per Hon'ble Sri Justice P.Sam Koshy) I{eard Mr. N.Praveen Reddy, Senior Standing Counsel for the Income Tax Department appearing for the appellant. 2. ln the course of the hearing, it has been found that the tax effect arising in the instant case is only Rs.10,00,000/- (Ten Lakhs Only) that too by way of penalty imposed by the appellant under Section 43 of Black Money (Undisclosed Foreign Income and Assets) and lmposition of Tax Act, 2015. However, perusal of

2 L Circular No.5 of 2024, where the monetary limit frxed by the department in the course of prefen-ing an appeal before the ITTA's, High Courts and Supreme Court has been raised from Rs.1 crore to Rs.2 crores. We find that the tax effect in instant case is only Rs. [0,00,000/- which is much below the monetary limit prescribed under the said Circular. 3. In view of the same, we are of the considered opinion that in terms of the Circular No.5 of 2024, the instant appeal may not be sustainable and the same accordingly stands dismissed Consequently, miscellaneous petitions pending, if any, shall stand closed Sd,.N UTY REG //TRUE COPY// OFFICER The lncorne Tax APPellate Tribunal, HYderabad "B" , Hyderabad Thil Commissioner of lncome Tax (APPeals)-11, HYd d 3. The Asst. Director 4. One CC to Sri N'P 5. Two CD CoPies oflncome Tax, HYderabad raveen ReddY, S.C for lncom e Tax DePartment (OPUC) Ks/PSL W .To,

I l 1 I ! I ! t It 1 HIGH COURT DATED:rl8/0112A26 JUDGME:NT lTTA.No.4 ot 2026 Dismissing the ITTA Without costs. 1 6'qm m 1lt*E $. 's. q * +4(d ff*

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