Facts of the Case

The Revenue filed appeals before the Delhi High Court against the respondent assessee, M/s S3H Builders Pvt. Ltd. However, during the hearing, it was stated by the counsel for the Revenue that the tax effect involved in the appeals was below Rs. 50 lakhs.

In light of CBDT Circular No. 3/2018 dated 11 July 2018, which prescribes monetary limits for filing appeals, the Revenue submitted that the appeals may be disposed of without examining the substantive questions of law.

Issues Involved

  • Whether the High Court should adjudicate the appeal when the tax effect is below the prescribed monetary threshold under CBDT Circular No. 3/2018.
  • Whether dismissal of appeal on low tax effect would leave the question of law open.

Petitioner’s (Revenue) Arguments

  • The Revenue contended that the tax effect in the present appeals was below Rs. 50 lakhs.
  • As per CBDT Circular No. 3/2018, such appeals are not required to be pursued.
  • Therefore, the appeals should be disposed of without going into the merits of the case.

Respondent’s Arguments

  • The respondent did not oppose the delay in filing.
  • No substantive arguments were required as the matter was being disposed of based on the monetary limit circular.

Court’s Findings / Order

  • The Court accepted the submission of the Revenue regarding the low tax effect.
  • The appeals were disposed of without examining the issues on merits.
  • Importantly, the Court clarified that:
    • The question of law is left open.
    • If the case falls under any exception to the CBDT Circular, the Revenue may seek revival of the appeal.

Important Clarification

  • Dismissal of appeal due to low tax effect does not amount to affirmation of the lower authority’s decision on merits.
  • The ruling ensures that legal questions remain open for future adjudication.
  • Revenue retains the right to revive the appeal if exceptions apply.

Sections Involved

  • CBDT Circular No. 3/2018 dated 11 July 2018
  • Income Tax Act – Appeal provisions (general applicability

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8319-DB/SKN15102018ITA6952018_153936.pdf

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