Facts of the Case

The Revenue filed appeals against the respondent assessee, Sindhu Trade Links Ltd., under Income Tax Appeals (ITA Nos. 404/2018 and 456/2018). During the hearing, counsel for the Revenue submitted that the tax effect involved in the appeals was below ₹50,00,000.

This submission brought the case within the ambit of CBDT Circular No. 3/2018, which prescribes monetary limits for filing or pursuing appeals by the Department.

Issues Involved

  1. Whether the Revenue’s appeal should be entertained when the tax effect is below the prescribed monetary threshold.
  2. Whether substantial questions of law should be adjudicated despite applicability of CBDT circular.

Petitioner’s Arguments (Revenue)

  • The Revenue acknowledged that the tax effect was below ₹50 lakhs.
  • It relied upon CBDT Circular No. 3/2018, submitting that the appeals may be disposed of without answering the substantial questions of law.
  • Requested that the questions of law be kept open.

Respondent’s Arguments (Assessee)

  • Though not elaborately recorded in the order, the respondent effectively benefited from the Revenue’s admission regarding low tax effect.
  • No opposition was necessary in light of the binding CBDT circular.

Court’s Findings / Order

  • The Court accepted the statement of the Revenue regarding the tax effect.
  • Held that in view of CBDT Circular No. 3/2018, the appeals do not require adjudication on merits.
  • The appeals were disposed of without answering the substantial questions of law, which were left open.

Important Clarification

  • The Court clarified that:
    • Substantial questions of law remain open.
    • The dismissal is not on merits, but purely due to low tax effect.
    • Such dismissal does not create a binding precedent on legal issues involved.


Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8311-DB/SKN21082018ITA4562018_151239.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.