Facts of the Case

The appellant, Revenue (PR. Commissioner of Income Tax-7), filed an appeal before the Delhi High Court against the respondent, PSB Industrial (India) Pvt. Ltd. During the course of hearing, it was acknowledged that the tax effect involved in the appeal was below ₹50 lakhs, which falls below the threshold prescribed under CBDT Circular No. 3/2018.

Further, the Revenue expressed lack of clarity regarding initiation of prosecution proceedings. However, the respondent confirmed that no prosecution proceedings were pending.

Issues Involved

  1. Whether the appeal filed by the Revenue is maintainable when the tax effect is below the prescribed monetary limit under CBDT Circular No. 3/2018.
  2. Whether the case falls under any exception allowing the Revenue to pursue the appeal despite the low tax effect.

Petitioner’s (Revenue’s) Arguments

  • The Revenue acknowledged that the tax effect is below ₹50 lakhs, but submitted that it had no instructions regarding whether the case falls under exceptions (such as prosecution matters).

Respondent’s Arguments

  • The respondent clarified that no prosecution proceedings are pending, thereby indicating that the case does not fall under any exception to the CBDT circular.

Court’s Findings / Order

  • The Court took note of the statements made by both parties.
  • Since the tax effect was below ₹50 lakhs, and no exception (like prosecution proceedings) was applicable, the appeal was disposed of as not pressed.
  • The Court granted liberty to the Revenue to seek revival of the appeal if it is later found that the case falls within any exception under CBDT Circular No. 3/2018 and subsequent clarifications.

Important Clarification

  • The judgment reinforces that CBDT Circular No. 3/2018 is binding, and appeals below the prescribed monetary limit should not be pursued unless they fall within specified exceptions.
  • The Court also clarified that liberty to revive ensures that Revenue is not prejudiced if exceptions later become applicable.

Sections Involved

  • Income Tax Act, 1961 (Appeal provisions)
  • CBDT Circular No. 3/2018 dated 11 July 2018 (Monetary limits for filing appeals)

Link to download the order -

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

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