Facts of the Case

The Revenue (Principal Commissioner of Income Tax) filed appeals before the Delhi High Court against the respective respondents. During the hearing, counsel for the Revenue submitted that the tax effect involved in both appeals was below ₹50 lakhs.

As per CBDT Circular No. 3/2018 dated 11 July 2018, appeals where the tax effect is below the prescribed monetary threshold are not to be pursued.

Issues Involved

  • Whether the High Court should adjudicate the substantial question of law when the tax effect is below ₹50 lakhs in light of CBDT Circular No. 3/2018.

 

Petitioner’s Arguments (Revenue)

  • The Revenue, through its counsel, acknowledged that:
    • The tax effect in the present appeals is below ₹50 lakhs.
    • In view of CBDT Circular No. 3/2018, the substantial question of law need not be answered.

Respondent’s Arguments

  • None appeared on behalf of the respondents. 

Court Findings / Order

  • The Court recorded the statement made by the Revenue.
  • It held that:
    • Since the tax effect is below ₹50 lakhs, the appeals fall within the ambit of the CBDT circular.
    • Therefore, the substantial question of law is not required to be adjudicated.

Final Order:

  • The appeals were disposed of without answering the substantial question of law, and the issue was left open.

Important Clarification

  • The Court did not decide the legal issue on merits.
  • The dismissal was solely based on low tax effect, meaning:
    • The question of law remains open.
    • The same issue can be raised in future cases where the tax effect exceeds the
    • prescribed limit.

Sections Involved

  • Income Tax Act, 1961
  • 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:8312-DB/SKN31082018ITA4742018_151530.pdf

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