Facts of the Case

The Revenue filed multiple appeals before the Delhi High Court concerning assessment years 2003–2004 to 2007–2008. During the hearing, counsel for the Revenue submitted that the tax effect involved in these appeals was below ₹50 lakhs.

This submission was made in light of CBDT Circular No. 3/2018 dated 11.07.2018, which prescribes monetary limits for filing appeals by the Income Tax Department.

As per the record on page 1 of the judgment, the Revenue itself acknowledged that the appeals fell below the prescribed threshold.

 

Issues Involved

  1. Whether the appeals filed by the Revenue should be entertained when the tax effect is below the prescribed monetary limit under CBDT Circular No. 3/2018.
  2. Whether the substantial question of law framed in the appeals requires adjudication despite low tax effect.

 

Petitioner’s (Revenue’s) Arguments

  • The Revenue, through its counsel, admitted that:
    • The tax effect in all appeals was less than ₹50 lakhs.
    • In view of CBDT Circular No. 3/2018, such appeals need not be pursued.
  • It was therefore requested that the appeals be disposed of without adjudicating the substantial questions of law. 

Respondent’s Arguments

  • The respondent (assessee) was represented by counsel but no detailed counter-arguments were recorded, as the Revenue itself sought disposal of appeals based on the circular.

Court’s Findings / Order

  • The Court recorded the statement made by the Revenue regarding low tax effect.
  • It held that:
    • In terms of CBDT Circular No. 3/2018, the appeals are not required to be pursued.
  • Accordingly:
    • All appeals were disposed of.
    • The substantial questions of law were left open and not adjudicated.

Important Clarification

  • The Court explicitly clarified that:
    • No opinion was expressed on the merits of the case.
    • The substantial question of law remains open, meaning it can be raised in an appropriate case in the future.

 

  • Appeals by the Revenue are liable to be dismissed if the tax effect is below the monetary threshold prescribed by CBDT.
  • Courts may dispose of such appeals without examining merits, preserving legal questions for future adjudication.

 

Sections Involved

  • Section 260A, Income Tax Act, 1961 – Appeal to 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:8305-DB/SKN27082018ITA8732017_144818.pdf

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