Facts of the Case

The present matter pertains to multiple appeals filed by the Principal Commissioner of Income Tax (Central)-2 before the Delhi High Court against M/s Ravnet Solutions Pvt. Ltd. The appeals arose from income tax proceedings; however, during the hearing, it was acknowledged that the tax effect involved in the appeals was below the prescribed monetary threshold.

As recorded in the order dated 17.11.2020, the appeals were heard through video conferencing, and the Revenue sought to pursue them despite the monetary limits prescribed by the Central Board of Direct Taxes (CBDT).

Issues Involved

  • Whether appeals filed by the Revenue are maintainable when the tax effect is below the threshold prescribed under CBDT Circular No. 17/2019.
  • Whether the High Court should entertain such appeals despite binding administrative instructions issued by CBDT.

Petitioner’s (Revenue’s) Arguments

  • The Revenue preferred the appeals challenging the orders passed in favor of the assessee.
  • It sought adjudication on merits despite the prescribed monetary limits.
  • Implicitly, the Revenue intended to contest the underlying tax issues irrespective of the low tax effect.

Respondent’s Arguments

  • The respondent (assessee) did not appear during the proceedings.
  • However, the case position relied upon the applicability of CBDT Circular No. 17/2019, which restricts filing of appeals below a specified tax effect.

Court’s Findings / Order

The Delhi High Court, comprising Hon’ble Justice Manmohan and Hon’ble Justice Sanjeev Narula, held:

  • The tax effect involved in the present appeals was admittedly below ₹1,00,00,000, which is the threshold prescribed under CBDT Circular No. 17/2019 dated 08 August 2019.
  • In view of the binding nature of the CBDT circular, the Court declined to entertain the appeals.
  • Consequently, all appeals were dismissed on account of low tax effect

Important Clarification

  • The dismissal of the appeal is not on merits, but solely due to the low tax effect.
  • The Revenue retains the right to pursue similar issues in cases where the tax effect exceeds the prescribed threshold.
  • CBDT circulars issued under Section 268A of the Income Tax Act are binding on the Department and must be adhered to strictly.

Sections Involved

  • Section 268A of the Income Tax Act, 1961 (Monetary limits for filing appeals)
  • CBDT Circular No. 17/2019 dated 08.08.2019

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2020:DHC:3906-DB/MMH17112020ITA13092018_161205.pd 

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