Facts of the Case

The present appeal was filed by the Revenue before the Delhi High Court against the respondent assessee, PSB Industrial (India) Pvt. Ltd. The Revenue sought to challenge the order passed in favour of the assessee.

During the hearing, the counsel for the Revenue fairly conceded that the tax effect involved in the appeal was below ₹50 lakhs. However, it was submitted that there were no clear instructions regarding whether any prosecution proceedings had been initiated in the matter.

On the other hand, the counsel for the respondent clarified, on instructions, that no prosecution proceedings were pending in the case.

 Issues Involved

  • Whether the Revenue’s appeal is maintainable when the tax effect is below the prescribed monetary limit of ₹50 lakhs as per CBDT Circular No. 3/2018.
  • Whether any exception applies that would permit continuation of the appeal despite low tax effect.

Petitioner’s Arguments (Revenue)

  • The Revenue acknowledged that the tax effect is below ₹50 lakhs.
  • It was submitted that there were no instructions available regarding initiation of prosecution proceedings, which could potentially fall under exceptions to the monetary limit circular.

Respondent’s Arguments (Assessee)

  • The respondent submitted that no prosecution proceedings were pending.
  • Therefore, no exception to the CBDT Circular applied, and the appeal should not be pursued.

Court Order / Findings

  • The Hon’ble Delhi High Court noted the statements made by both parties.
  • Considering that the tax effect was below ₹50 lakhs, the Court applied the CBDT Circular No. 3/2018.
  • The appeal was disposed of as not pressed.
  • However, the Court granted liberty to the Revenue to seek revival of the appeal if the case falls within any exception provided under the circular and its subsequent clarification.

Important Clarification

  • The Court clarified that dismissal of the appeal is not on merits, but solely due to low tax effect.
  • The Revenue retains the right to revive the appeal if it can demonstrate that the case falls within exceptions (e.g., cases involving prosecution, undisclosed foreign assets, etc.) under CBDT Circular No. 3/2018.

Sections Involved

  • Relevant provisions under the Income Tax Act, 1961 relating to appellate jurisdiction.
  • CBDT Circular No. 3/2018 dated 11 July 2018 (Monetary limits for filing appeals by the Department).

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2019:DHC:7394-DB/SKN09012019ITA4192018_153519.pdf

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