Facts of the Case

The Revenue (Principal Commissioner of Income Tax-4) filed appeals before the Delhi High Court against:

  • Galgotia Software Pvt. Ltd.
  • Galgotia Books & Department Store Pvt. Ltd.

However, during the hearing, counsel for the Revenue submitted that the tax effect involved in both appeals was below ₹50 lakhs, which falls below the threshold prescribed under CBDT Circular No. 3/2018.

Issues Involved

  1. Whether the appeals filed by the Revenue are maintainable when the tax effect is below the prescribed monetary limit under CBDT Circular No. 3/2018?
  2. Whether the High Court should adjudicate the substantial question of law despite low tax effect?

Petitioner’s Arguments (Revenue)

  • The Revenue acknowledged that the tax effect in the present appeals was below ₹50 lakhs.
  • It relied upon CBDT Circular No. 3/2018, which restricts filing or continuation of appeals below specified monetary limits.
  • Requested disposal of the appeals without adjudication on merits.

Respondent’s Arguments

  • The respondents did not appear (represented as “Nemo”).

Court’s Findings / Order

  • The Delhi High Court accepted the submission of the Revenue.
  • It held that:
    • Since the tax effect is below ₹50 lakhs, the appeals are liable to be disposed of in terms of CBDT Circular No. 3/2018.
    • The Court did not examine or decide the substantive question of law.
    • The issues raised were left open for future consideration.
  • Accordingly, the appeals were disposed of without adjudication on merits.

Important Clarifications by the Court

  • The dismissal is not on merits of the case.
  • The questions of law remain open and may be adjudicated in appropriate cases where the tax effect exceeds the threshold.
  • The Court also did not issue notice on delay condonation applications, considering the disposal of appeals.

Sections Involved

  • Section 260A of the Income Tax Act, 1961 (Appeal to High Court)
  • 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/2018:DHC:8336-DB/SKN28092018ITA10762018_103734.pdf

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