Facts of the Case                                                                              

The appeals were filed by the Commissioner of Income Tax against:

  1. M/s Ram Dayal Associates Ltd (ITA 1404/2006)
  2. Interlink Services Pvt. Ltd (ITA 343/2007)

During the pendency of these appeals, the Central Board of Direct Taxes (CBDT) issued Notification No. 3/2018 dated 11 July 2018, revising the monetary limits for filing and pursuing tax appeals.

In light of this notification, applications were moved seeking dismissal of the appeals on account of low tax effect. 

Issues Involved

  • Whether pending income tax appeals should be dismissed in view of CBDT Circular No. 3/2018 prescribing enhanced monetary limits for litigation.
  • Whether such circular applies retrospectively to pending appeals before the High Court.

Petitioner’s Arguments (Revenue)

  • The Revenue had initially filed appeals challenging orders of lower authorities under Section 260A.
  • However, in view of the CBDT Notification, the Revenue chose not to press the appeals due to low tax effect.

Respondent’s Arguments (Assessee)

  • The respondents supported dismissal of the appeals in light of the CBDT Circular.
  • It was contended that the circular is binding on the Revenue authorities and applies even to pending matters.

Court Order / Findings

  • The Delhi High Court took note of CBDT Notification No. 3/2018 dated 11 July 2018.
  • The Court allowed the applications filed in both appeals.
  • Consequently, the appeals were dismissed as not pressed due to low tax effect.

 Important Clarification

  • The dismissal was not on merits, but solely due to the monetary limit prescribed by the CBDT.
  • Such dismissal does not constitute a binding precedent on substantive legal issues involved in the case.
  • The Revenue retains the right to pursue similar issues in other cases where tax effect exceeds prescribed limits. 

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8292-DB/SMD12112018ITA3432007_130017.pdf

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