Facts of the Case

The present matter involved two appeals filed by the Revenue (Commissioner of Income Tax, Central-I) against M/s Seasons Textiles Ltd. before the Delhi High Court. The dispute arose from orders passed in income tax proceedings, leading the Revenue to prefer appeals under the Income Tax Act.

However, during the course of hearing, it was noted that the tax effect involved in both appeals was below ₹50,00,000.

Issues Involved

  1. Whether the High Court should adjudicate the substantial question of law when the tax effect is below the monetary threshold prescribed by CBDT Circular No. 3/2018.
  2. Whether such appeals are maintainable in view of binding administrative instructions issued by the CBDT.

Petitioner’s (Revenue’s) Arguments

  • The Revenue had filed appeals raising substantial questions of law under the Income Tax Act.
  • It sought adjudication of those questions by the High Court.

(Note: Detailed arguments are not recorded in the order, as the matter was disposed of on the ground of low tax effect.)

Respondent’s Arguments

  • The respondent relied upon the applicability of CBDT Circular No. 3/2018.
  • It was implied that since the tax effect was below ₹50 lakhs, the appeals should not be entertained.

 Court’s Findings / Order

  • The Court observed that the tax effect in the present appeals was below ₹50,00,000.
  • As per CBDT Circular No. 3/2018 dated 11.07.2018, such appeals are not required to be pursued.
  • Accordingly, the Court held that:
    • The substantial question of law need not be answered.
    • The appeals were disposed of without adjudicating on merits.
    • The question of law was left open.

Important Clarification by the Court

  • The Court granted liberty to the Revenue to seek revival of the appeals if the case falls within any of the exceptions provided under the CBDT Circular.
  • future cases.

Sections Involved

  • Income Tax Act, 1961 (General appellate provisions relating to appeals before High Court)
  • CBDT Circular No. 3/2018 dated 11.07.2018 (Monetary limits for filing appeal

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

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