Facts of the Case

The present matter involves appeals filed by the Principal Commissioner of Income Tax (Central)-3, New Delhi against Jakhotia Plastics Pvt. Ltd. before the Delhi High Court under Income Tax Appeal Nos. 727/2017 and 728/2017.

During the course of proceedings, it was observed that the tax effect involved in the appeals was below the monetary threshold prescribed by the Central Board of Direct Taxes (CBDT).

Issues Involved

  • Whether the appeals filed by the Revenue are maintainable when the tax effect is below the prescribed monetary limit under CBDT Circular No. 17 of 2019.
  • Whether such appeals should be pursued or treated as not pressed in view of administrative circulars issued by CBDT.

 Petitioner’s Arguments (Revenue)

The Revenue preferred the appeals challenging the order passed in favour of the assessee. However, in light of the CBDT Circular prescribing monetary limits, the Revenue did not press the appeals due to the low tax effect involved.

Respondent’s Arguments (Assessee)

The assessee supported the dismissal of the appeals on the ground that the tax effect falls below the threshold specified in CBDT Circular No. 17/2019, thereby making the appeals non-maintainable.

Court Order / Findings

The Delhi High Court held that:

  • Since the tax effect is below the stipulated monetary limit, the appeals are to be treated as not pressed.
  • The Court disposed of the appeals in terms of CBDT Circular No. 17 of 2019 dated 8th August 2019.

Accordingly, both appeals were disposed of without adjudication on merits.

Important Clarification

  • The dismissal of the appeal is not on merits, but solely based on the low tax effect threshold prescribed by CBDT.
  • Such dismissal does not create a binding precedent on substantive legal issues involved in the case.
  • The Revenue retains the right to pursue similar issues in cases where the tax effect exceeds the prescribed limit 

Sections Involved

  • Section 260A of the Income Tax Act, 1961 (Appeal to High Court)
  • CBDT Circular No. 17/2019 dated 08.08.2019 (Monetary limits for filing appeals)

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2020:DHC:3904-DB/SMD07022020ITA7272017_160909.pdf 

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