Facts of the Case

  • The Revenue filed appeals before the Delhi High Court against the respondent assessee, M/s Cliff Scaffoldings Pvt. Ltd.
  • During the hearing, counsel for the Revenue submitted that the tax effect involved was below ₹50 lakhs.
  • As per CBDT Circular No. 3/2018, appeals below the prescribed monetary threshold are not to be pursued.

Issues Involved

  1. Whether the High Court should adjudicate the appeal when the tax effect is below the monetary limit prescribed by CBDT Circular No. 3/2018.
  2. Whether dismissal of such appeal affects the determination of the legal issue involved.

Petitioner’s Arguments (Revenue)

  • The Revenue submitted that:
    • The tax effect in the present appeals is below ₹50 lakhs.
    • In view of CBDT Circular No. 3/2018, the appeal may be disposed of without examining the legal issues raised.
    • The issue/question involved should be left open for adjudication in appropriate cases. 

Respondent’s Arguments (Assessee)

  • The order does not specifically record detailed arguments of the respondent.
  • However, the respondent implicitly benefited from the application of the CBDT circular leading to dismissal of the appeal.

Court Order / Findings

  • The Delhi High Court:
    • Accepted the statement made by the Revenue regarding low tax effect.
    • Disposed of the appeals without examining the merits of the case.
    • Clearly stated that:
      • The question of law is left open.
      • The Revenue is granted liberty to seek revival of the appeal if the case falls within any exception to the circular.

Important Clarification by Court

  • Dismissal of appeal due to low tax effect:
    • Does not amount to affirmation of the lower court’s reasoning.
    • Does not settle the legal issue involved.
  • The Revenue retains the right to:
    • Revive the appeal if exceptions under the CBDT circular apply.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8316-DB/SKN16112018ITA5742018_152544.pdf

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