Facts of the Case

The Revenue preferred multiple income tax appeals before the Delhi High Court against a consolidated order involving Surya Buildwell Pvt. Ltd. The appeals were filed under Section 260A of the Income Tax Act, 1961. At the time of hearing, the Revenue submitted that although the appeals arose from a consolidated order, the tax effect involved in each appeal was below Rs. 50,00,000, thereby attracting the applicability of CBDT Circular No. 3/2018 dated 11.07.2018 prescribing monetary thresholds for departmental litigation.

The assessee did not object to condonation of delay in filing and refiling the appeals. The delay was accordingly condoned by the Court 

Issues Involved

  1. Whether the Revenue appeals were maintainable when the tax effect in each appeal was below the monetary threshold prescribed under CBDT Circular No. 3/2018?
  2. Whether the substantial questions of law raised in the appeals required adjudication despite low tax effect 

Petitioner’s Arguments (Revenue’s Submissions)

  • The Revenue contended that the appeals arose from a consolidated order.
  • It was submitted that each appeal involved a tax effect below Rs. 50 lakhs.
  • In view of CBDT Circular No. 3/2018, the Revenue requested disposal of the appeals without adjudication on merits.
  • The Revenue also requested that the legal questions involved be kept open for future determination in an appropriate case.

Respondent’s Arguments (Assessee’s Submissions)

  • The assessee, through counsel, did not object to condonation of delay in filing and refiling of the appeals.
  • No substantive objection was raised against disposal of the appeals in light of the CBDT Circular.

Court Findings / Observations

The Delhi High Court recorded the Revenue’s submission regarding the low tax effect involved in each appeal and acknowledged the applicability of CBDT Circular No. 3/2018.

The Court observed that since the tax effect in each appeal was below the prescribed monetary threshold, the appeals were liable to be disposed of without entering into the merits of the questions raised.

At the same time, the Court specifically clarified that the legal issue or question involved was not being adjudicated and would remain open.

Court Order / Final Decision

The Delhi High Court disposed of the Revenue’s appeals without examining the questions raised on merits, considering the low tax effect involved under CBDT Circular No. 3/2018.

The Court expressly held that the issue/question of law is left open and not decided.

Important Clarification

This judgment reiterates that dismissal/disposal of Revenue appeals on account of low tax effect under CBDT monetary limit circulars does not amount to affirmation of the lower authority’s findings on merits. The legal questions remain open for adjudication in future cases involving higher tax effect or exceptions under the Circular.

Sections Involved

  • Section 260A of the Income Tax Act, 1961 (Appeal before High Court)
  • CBDT Circular No. 3/2018 dated 11.07.2018 (Monetary limits for filing departmental appeals)

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8335-DB/SKN10092018ITA9882018_103438.pdf

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