Facts of the Case

The Revenue (Principal Commissioner of Income Tax, Central) filed appeals against the respondent, Sainik Mining & Allied Services Ltd. However, during the hearing, it was submitted by the Revenue’s counsel that the tax effect involved in the appeals was below ₹50 lakhs.

As per CBDT Circular No. 3/2018 dated 11 July 2018, appeals below the prescribed monetary threshold are not to be pursued. Accordingly, the Revenue requested disposal of the appeals without adjudication on merits.

Issues Involved

  • 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.
  • Whether the Court should adjudicate the substantial question of law despite low tax effect.

Petitioner’s Arguments (Revenue)

  • The Revenue acknowledged that the tax effect is less than ₹50 lakhs.
  • In view of CBDT Circular No. 3/2018, the appeal may be disposed of without examining the merits of the case.

Respondent’s Arguments (Assessee)

  • Though not elaborately recorded, the respondent implicitly supported disposal in terms of the applicable CBDT circular limiting litigation in low tax effect cases.

Court’s Findings / Order

  • The Court accepted the statement made by the Revenue regarding the low tax effect.
  • The appeals were disposed of without examining or deciding the issue/question of law.
  • The Court clarified that the questions of law are left open 

Important Clarification by the Court

  • If the case falls within any exception to the CBDT Circular, the Revenue is at liberty to seek revival of the appeal.

Sections Involved

  • CBDT Circular No. 3/2018 dated 11.07.2018 (Monetary limits for filing appeals)
  • Provisions relating to Income Tax Appeals before High Court (Section 260A of the Income-tax Act, 1961 – implied context)

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8318-DB/SKN10102018ITA6902018_153535.pdf

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