Delhi High Court:-Pr. Commissioner of Income Tax – 1 Versus

M/s Agroha Fincap Ltd.

ITA No. 60/2024 |

Judgment dated: 23 December 2025

 

CORE ISSUE:-Whether the appeal filed by the Revenue before the High Court was maintainable despite low tax effect, in light of the CBDT monetary-limit circulars, and whether the case fell within the exception relating to organised tax evasion / accommodation entries, and further, whether the reassessment proceedings were rightly quashed by the Tribunal on account of invalid approval under section 151 of the Income-tax Act, 1961.

 

FACTS:-The assessee was subjected to reassessment proceedings under section 147 of the Income-tax Act, 1961. The reassessment was initiated after obtaining approval under section 151 of the Act. The assessee challenged the validity of the reassessment before the Income Tax Appellate Tribunal on multiple grounds, including the jurisdictional ground that the approval granted under section 151 was mechanical, non-speaking and without application of mind, rendering the reassessment void ab initio.

 

During the course of hearing before the Tribunal, the assessee pressed only the legal ground relating to defective approval under section 151, and did not advance submissions on other grounds. The Tribunal accepted the said contention and quashed the entire reassessment proceedings, holding that the statutory approval was invalid and the proceedings were without jurisdiction.

 

Aggrieved, the Revenue preferred an appeal before the High Court. The assessee raised a preliminary objection that the appeal itself was not maintainable on account of low tax effect, relying upon CBDT circulars prescribing monetary limits for filing appeals before the High Court.

 

After the appeal was decided, the assessee filed a review petition, contending that the issue of low tax effect had not been adjudicated and that the matter ought to have been remanded to the Tribunal for adjudication of other grounds.

 

CBDT CIRCULARS – MONETARY LIMIT AND EXCEPTIONS

1. CBDT Circular No. 3/2018 dated 11.07.2018-This circular prescribed a monetary limit of Rs. 50 lakhs for filing appeals before the High Court. It categorically provided that the instructions would apply retrospectively to pending appeals, and appeals below the threshold were required to be withdrawn or not pressed.

 

2. CBDT Circular No. 17/2019 dated 08.08.2019-This circular enhanced the monetary limit for filing appeals before the High Court to Rs. 1 crore and superseded Circular No. 3/2018. The binding nature of the circular and its applicability to pending matters was reiterated.

 

3. CBDT Circular dated 15.03.2024-This circular consolidated earlier instructions and clarified that appeals shall not be filed without regard to tax effect, except in cases falling under specifically carved out exceptions.

 

4. CBDT Circular No. 09/2024 dated 17.09.2025-This circular reiterated and refined the exceptions. Paragraph 3.1(h) expressly provided that monetary limits shall not apply to:

 

“Cases involving organised tax evasion including cases of accommodation entries, bogus capital gain or loss through penny stocks and similar arrangements.”

 

 

HIGH COURT FINDINGS

(a) On Maintainability of Appeal Despite Low Tax Effect-The Hon’ble Delhi High Court held that the earlier circular dated 11.07.2018 stood replaced by the circular dated 08.08.2019, which was further superseded by the circular dated 15.03.2024. The governing circular clearly permitted filing of appeals without regard to tax effect in cases falling under enumerated exceptions.

 

Upon examination of the assessment records and appellate orders, the Court found that the consistent case of the Revenue before the Assessing Officer as well as before the Commissioner (Appeals) was that the assessee had received accommodation entries.

 

The Court therefore held that the appeal squarely fell within exception (h) relating to organised tax evasion / accommodation entries and was maintainable notwithstanding the low tax effect.

 

(b) On Applicability of the Exception-The Court rejected the argument that the exception introduced under the later circular could not apply to an appeal filed earlier. It was held that the decisive factor is the nature of the case, not the date of issuance of the circular. Once the case falls within the exception, the monetary limit ceases to be relevant.

 

(c) On Validity of Reassessment and Section 151 Approval-The Court noted that the Tribunal had quashed the reassessment solely on the ground that the approval under section 151 was defective, mechanical and without application of mind. This being a jurisdictional issue, the Tribunal was justified in allowing the appeal on that ground alone.

 

(d) On Prayer for Remand to Tribunal-The Court relied upon the express findings of the Tribunal that the assessee had pressed only the ground relating to section 151 approval, and no submissions were made on other grounds. In such circumstances, the Court held that the assessee could not seek remand for adjudication of grounds which were consciously not argued.

 

(e) On Scope of Review Jurisdiction-The Court reiterated that review jurisdiction is limited to correction of errors apparent on the face of record and cannot be used to re-argue the appeal or seek a fresh adjudication. No such error was found to exist.

 

RELIANCE PLACED-The assessee had relied upon the following judicial precedents while contesting maintainability on low tax effect:

Director of Income Tax v. SRMB Dairy Farming Pvt. Ltd.

CIT v. V.M. Salgaonkar & Brothers Pvt. Ltd.

PCIT v. IPL Loan Trust

PCIT v. JB Technologies Pvt. Ltd.

 

The Court, however, distinguished these decisions on facts, holding that the present case clearly fell within the statutory exception.

 

OUTCOME-The Hon’ble Delhi High Court held that: The Revenue’s appeal was maintainable despite low tax effect, as it fell within the CBDT exception relating to accommodation entries.

The Tribunal was justified in quashing the reassessment on the ground of invalid approval under section 151.

The assessee, having pressed only one ground before the Tribunal, was not entitled to seek remand on other grounds.

No error apparent on record existed warranting review.

 

Accordingly, the review petition was dismissed.