Low tax effect bars departmental appeal where CBDT's monetary limit is not met, including pending penalty matters.

Departmental appeals are not maintainable where the tax effect falls below the monetary limit prescribed by a binding CBDT circular. The circular applies retrospectively to pending matters and, in penalty cases, the tax effect is assessed by reference to the quantum of penalty deleted or reduced. Once the prescribed threshold is not crossed, income-tax authorities cannot pursue the appeal on merits, and the appellate challenge fails at the threshold.

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Issues: Whether the Revenue's appeal was maintainable in view of the CBDT's enhanced monetary limit for departmental appeals and the resulting low tax effect.

Analysis: The disputed penalty relief carried a tax effect below the monetary limit prescribed by CBDT Circular No. 21/2015 dated 10.12.2015. The circular was stated to apply retrospectively to pending appeals and to govern penalty orders by reference to the quantum of penalty deleted or reduced. As CBDT circulars are binding on income-tax authorities, the appeal could not be pursued on merits once the prescribed monetary threshold was not crossed.

Conclusion: The Revenue's appeal was not maintainable and was dismissed.

Final Conclusion: The departmental appeal failed at the threshold because the tax effect was below the prescribed limit, so the appellate challenge did not survive.

Ratio Decidendi: Departmental appeals are not maintainable where the tax effect is below the monetary limit prescribed by a binding CBDT circular, including in pending matters to which the circular applies retrospectively.

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