Facts of the Case

The present matter involves two appeals filed by the Revenue before the Delhi High Court against Galgotia Software Pvt. Ltd. and Galgotia Books & Department Store Pvt. Ltd.. The appeals were instituted under the provisions of the Income Tax Act, challenging certain issues arising from assessment proceedings.

During the course of hearing, counsel for the Revenue submitted that the tax effect involved in both appeals was below ₹50 lakhs, which falls within the monetary limits prescribed under CBDT Circular No. 3/2018 dated 11 July 2018.

Issues Involved

  • Whether the appeals filed by the Revenue are maintainable when the tax effect is below the monetary threshold prescribed by CBDT.
  • Whether the High Court should adjudicate the substantial questions of law despite low tax effect.

Petitioner’s Arguments (Revenue)

  • The Revenue initially preferred appeals raising certain legal issues arising from the assessment orders.
  • However, it was fairly conceded that the tax effect in the present appeals is less than ₹50 lakhs, thereby attracting the applicability of CBDT Circular No. 3/2018.
  • On this basis, the Revenue submitted that the appeals may be disposed of without adjudicating the issues on merits.

Respondent’s Arguments

  • There was no representation on behalf of the respondents at the time of hearing (“Through Nemo”).
  • Hence, no substantive arguments were advanced from the respondents’ side.

Court’s Findings / Order

  • The Delhi High Court recorded the statement of the Revenue regarding the low tax effect.
  • It held that in view of CBDT Circular No. 3/2018, the appeals are liable to be disposed of without examining the issues on merits.
  • The Court explicitly clarified that:
    • The questions of law are left open, and
    • The disposal of appeals shall not be treated as a precedent on the merits of the issues raised.
  • Consequently:
    • The appeals were disposed of.
    • The Court also declined to issue notice on applications for condonation of delay in filing and re-filing of the appeals.

Important Clarification

  • The judgment reiterates that dismissal of appeals due to low tax effect does not amount to affirmation of the lower authority’s decision on merits.
  • The issues remain open for adjudication in appropriate cases where the tax effect exceeds the prescribed threshold.

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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