Facts of the Case

The Revenue filed multiple appeals before the Delhi High Court for Assessment Years 2003–2004 to 2007–2008 against the respondent, Maharani of India. These appeals were filed under Section 260A of the Income Tax Act challenging certain orders where substantial questions of law had been framed.

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

Issues Involved

  1. Whether the High Court should adjudicate the substantial questions of law when the tax effect is below the prescribed monetary limit.
  2. Applicability of CBDT Circular No. 3/2018 to pending appeals.

Petitioner’s (Revenue’s) Arguments

  • The Revenue acknowledged that the tax effect in the present appeals was below ₹50 lakhs.
  • It relied on CBDT Circular No. 3/2018, which restricts filing or continuation of appeals below the specified monetary threshold.
  • It was submitted that in view of the circular, the appeals need not be pursued.

Respondent’s Arguments

  • The respondent supported disposal of the appeals in light of the CBDT circular.
  • No specific contest on merits was required due to the low tax effect.

Court’s Findings / Order

  • The Court recorded the statement of the Revenue regarding the low tax effect.
  • It held that in terms of CBDT Circular No. 3/2018, the appeals do not require adjudication.
  • Accordingly, the appeals were disposed of without answering the substantial questions of law, leaving them open for consideration in appropriate cases in future

Important Clarifications

  • The dismissal was not on merits, but purely on account of low tax effect.
  • The substantial questions of law remain open, meaning:
    • They can be raised in future cases where the tax effect exceeds the prescribed limit.
  • The judgment reinforces the binding nature of CBDT circulars on tax authorities.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8305-DB/SKN27082018ITA8732017_144818.pdf

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