Facts of the Case

The present appeal was filed by the Revenue (Pr. Commissioner of Income Tax-7) before the High Court of Delhi against PSB Industrial (India) Pvt. Ltd.

During the hearing, the counsel for the Revenue fairly conceded that the tax effect involved in the appeal was below ₹50 lakhs, which falls below the monetary threshold prescribed under CBDT Circular No. 3/2018 dated 11 July 2018 for filing appeals.

The Revenue also submitted that it did not have instructions regarding whether any prosecution proceedings had been initiated in the matter. On the other hand, the respondent confirmed that no prosecution proceedings were pending.

Issues Involved

  • Whether the appeal filed by the Revenue is maintainable when the tax effect is below the prescribed monetary limit under CBDT Circular No. 3/2018.
  • Whether any exception to the monetary limit applies in absence of prosecution proceedings.

Petitioner’s Arguments (Revenue)

  • The Revenue acknowledged that the tax effect is below ₹50 lakhs, which is the threshold limit for filing appeals before the High Court.
  • However, it sought to keep the matter open on the ground that it had no instructions regarding prosecution proceedings, which could potentially bring the case under exceptions to the circular.

Respondent’s Arguments (Assessee)

  • The respondent clearly submitted that no prosecution proceedings were pending in the case.
  • Therefore, the case does not fall under any of the exceptions provided in CBDT Circular No. 3/2018.

Court Order / Findings

  • The Hon’ble High Court observed that:
    • The tax effect is below ₹50 lakhs, and
    • No prosecution proceedings are pending.
  • Accordingly, the Court disposed of the appeal as “not pressed” in view of the CBDT Circular.
  • The Court granted liberty to the Revenue to file an application for revival only if the case is found to be covered under any exception specified in the circular.

Important Clarification

  • The dismissal of the appeal is not on merits, but purely based on:
    • Low tax effect, and
    • Applicability of CBDT litigation policy.
  • The Revenue retains the right to revive the appeal if it later falls within the exceptions to the monetary limit, such as cases involving:
    • Constitutional validity,
    • Undisclosed foreign income/assets,
    • Organized tax evasion,
    • Or other specified exceptions.

Section Involved

  • Section 260A of the Income Tax Act, 1961 (Appeal to High Court)
  • CBDT Circular No. 3/2018 dated 11.07.2018 (Monetary limits for filing appeals)

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2019:DHC:7394-DB/SKN09012019ITA4192018_153519.pdf

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