Facts of the Case

The Appellant, Principal Commissioner of Income Tax (Central)-3, New Delhi, filed appeals against the Respondent, Jakhotia Plastics Pvt. Ltd., before the Delhi High Court. The appeals arose from orders passed in income tax proceedings. However, during the hearing, it was observed that the tax effect involved in the appeals was below the prescribed monetary threshold as stipulated under the CBDT Circular No. 17/2019.

Issues Involved

  1. Whether the appeals filed by the Revenue are maintainable when the tax effect is below the monetary limit prescribed by CBDT Circular No. 17/2019.
  2. Whether such appeals should be entertained or dismissed as not pressed in light of the binding circular.

Petitioner’s (Revenue) Arguments

  • The Revenue had initially filed the appeals challenging the order of the lower authorities under the Income Tax Act.
  • However, in view of the CBDT Circular prescribing monetary limits, the Revenue acknowledged that the tax effect did not meet the required threshold for pursuing the appeals.

Respondent’s Arguments

  • The Respondent supported the applicability of the CBDT Circular.
  • It was implied that the appeals should not be entertained since they fall below the prescribed monetary limits, thereby making them non-maintainable.

Court’s Findings / Order

The Delhi High Court held that:

  • Since the tax effect is below the stipulated monetary limit, the appeals cannot be pursued.
  • In terms of CBDT Circular No. 17/2019 dated 08 August 2019, such appeals are to be treated as not pressed.
  • Accordingly, the Court disposed of the appeals without adjudicating on merits.

Important Clarification

  • The dismissal of the appeal is not on merits, but solely due to low tax effect.
  • The Revenue retains the right to pursue matters in cases where the tax effect exceeds prescribed limits or falls within exceptions to the circular.
  • CBDT Circulars are binding on the Revenue authorities and aim to reduce litigation burden.

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

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