Low tax effect rule under CBDT Circular No. 3/2018 led to dismissal of the departmental appeal.

CBDT Circular No. 3/2018 increased the monetary limit for departmental appeals before the Tribunal to Rs. 20 lakhs and clarified that the revised limit applies retrospectively to pending appeals. Because the tax effect in the present appeal was below that threshold, and the departmental representative ed the circular's applicability, the appeal was treated as not fit for adjudication on merits and was dismissed for low tax effect. The underlying legal issue was left open for consideration in an appropriate case.

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Issues: Whether the Revenue's appeal was liable to be dismissed on account of low tax effect under CBDT Circular No. 3/2018.

Analysis: The monetary limit for departmental appeals before the Tribunal had been enhanced to Rs. 20 lakhs by CBDT Circular No. 3/2018 dated 11.07.2018, and para 13 clarified its retrospective application to pending appeals. The tax effect in the present appeal was below the prescribed limit, and the departmental representative accepted the applicability of the circular. The appeal was, therefore, not fit for adjudication on merits.

Conclusion: The Revenue's appeal was dismissed due to low tax effect and the underlying legal issue was left open for consideration in an appropriate case.

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