Facts of the Case

The Revenue preferred two appeals before the Delhi High Court against the respondent, M/s Seasons Textiles Ltd. The appeals were filed under Section 260A of the Income Tax Act, 1961.

During the course of proceedings, it was observed that the tax effect involved in both appeals was below Rs. 50,00,000. As per CBDT Circular No. 3/2018 dated 11.07.2018, appeals below the prescribed monetary threshold are not to be pursued by the Revenue.

The Court examined the applicability of the said circular to the present appeals.

Issues Involved

  1. Whether the Revenue appeals are maintainable when the tax effect is below the prescribed monetary limit under CBDT Circular No. 3/2018?
  2. Whether the High Court is required to adjudicate substantial questions of law in such cases?

Petitioner’s Arguments (Revenue)

  • The Revenue filed appeals raising substantial questions of law against the order of the lower authority.
  • It sought adjudication of the issues involved despite the monetary threshold.

Respondent’s Arguments (Assessee)

  • The respondent relied on CBDT Circular No. 3/2018.
  • It was contended that since the tax effect is below Rs. 50 lakhs, the appeals are not maintainable and should not be entertained.

Court’s Findings / Order

  • The Delhi High Court held that the tax effect in the present appeals is below Rs. 50,00,000.
  • In view of CBDT Circular No. 3/2018, the Court declined to examine the substantial questions of law.
  • The appeals were disposed of without answering the substantial questions of law, which were kept open.

Important Clarification by the Court

  • The Court granted liberty to the Revenue to file an application for revival of the appeals.
  • Such revival is permissible if the case falls within any exception provided under the CBDT Circular.

Sections Involved

  • Income Tax Act, 1961 – Appeals Provisions (Section 260A)
  • CBDT Circular No. 3/2018 dated 11.07.2018 (Monetary Limits for Filing Appeals

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8294-DB/SKN13092018ITA2372009_133238.pdf

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