Facts of the Case

  • The Revenue filed multiple appeals including ITA No. 777/2017 against M/s Jawa Plastics (P) Ltd.
  • Similar connected matters were also filed (ITA 802/2018 and ITA 433/2018).
  • During the hearing, counsel for the Revenue stated that the tax effect in each appeal was below ₹50,00,000.
  • As per CBDT Circular No. 3/2018 dated 11 July 2018, such appeals were not maintainable due to low tax effect.

Issues Involved

  1. Whether the appeals filed by the Revenue are maintainable when the tax effect is below the prescribed monetary limit?
  2. Whether substantial questions of law should still be adjudicated despite low tax effect?

Petitioner’s Arguments (Revenue)

  • The Revenue acknowledged that the tax effect in the present appeals was below ₹50 lakhs.
  • In view of CBDT Circular No. 3/2018, the Revenue chose not to press the appeals.
  • It was submitted that questions of law may be left open for adjudication in appropriate cases 

Respondent’s Arguments

  • No detailed arguments were recorded from the respondents in the order, as the Revenue itself chose not to pursue the appeals due to low tax effect.

Court Order / Findings

  • The Delhi High Court recorded the statement of the Revenue.
  • The Court held that:
    • Since the tax effect is below the threshold prescribed under CBDT Circular No. 3/2018, the appeals are not pressed.
    • The appeals are disposed of without answering any substantial question of law.
    • All questions of law are kept open for future consideration.
  • The Court also declined to issue notice in the condonation of delay application due to disposal of the main appeal.

Important Clarification

  • Dismissal of appeal due to low tax effect does not amount to affirmation of the lower court’s reasoning.
  • The substantial questions of law remain open and can be raised in future cases where the tax effect exceeds the prescribed limit.
  • This judgment reinforces the binding nature of CBDT circulars on the Revenue authorities

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8304-DB/SKN31072018ITA7772017_144134.pdf

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