Facts of the Case

The Revenue (Principal Commissioner of Income Tax, Central-2) filed appeals against the respondent, Chintels India Ltd. However, during the hearing, counsel for the Revenue submitted that the tax effect involved in the appeals was less than ₹50 lakhs.

As per CBDT Circular No. 3/2018, appeals below the prescribed monetary threshold are not to be pursued.

Issues Involved

  1. Whether the appeals filed by the Revenue are maintainable when the tax effect is below ₹50 lakhs?
  2. Whether the Court should decide the substantial questions of law despite the low tax effect?

Petitioner’s (Revenue’s) Arguments

  • The Revenue acknowledged that the tax effect in the appeals was below ₹50 lakhs.
  • Relied on CBDT Circular No. 3/2018, which restricts filing/continuation of appeals below the prescribed monetary limit.
  • Requested disposal of appeals without adjudication on merits, keeping questions of law open.

Respondent’s Arguments

  • While specific arguments are not detailed in the order, the respondent supported the disposal of the appeal in view of the applicable CBDT circular and low tax effect.

Court Order / Findings

  • The Delhi High Court recorded the statement made by the Revenue.
  • Held that in view of CBDT Circular No. 3/2018, the appeals are not required to be entertained due to low tax effect.
  • The appeals were disposed of without answering the substantial questions of law.
  • The Court explicitly stated that questions of law are kept open for future consideration.

Important Clarification

  • The dismissal of appeal is not on merits.
  • Substantial questions of law remain open, meaning:
    • The legal issue can be raised in future cases.
    • The decision does not act as a binding precedent on the legal question involved.
  • The case reinforces the binding nature of CBDT monetary limit circulars on the Revenue.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8301-DB/SKN10082018ITA5752017_140234.pdf

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