Appeal allowed, Tribunal order quashed, matter remitted for fresh consideration on merits.

The High Court allowed the appeal filed by the Revenue, quashed the Tribunal's order based on low tax effect, and remitted the matter back to the Income Tax Appellate Tribunal for fresh consideration on merits. The judgment emphasized the need to consider substantive issues and exceptions specified in Circulars, rather than solely focusing on the tax effect when deciding tax appeals.

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Issues:
1. Dismissal of appeal by the Income Tax Appellate Tribunal based on low tax effect.
2. Interpretation and application of Circular No.21/2015 dated 10th December 2015.
3. Exception mentioned in Circular No.3/2018 of the C.B.D.T regarding reopening cases based on revenue audit objections.

Issue 1: Dismissal of appeal based on low tax effect
The High Court considered a tax appeal under Section 260A of the Income Tax Act, 1961, filed by the Revenue against an order of the Income Tax Appellate Tribunal. The Tribunal had dismissed the appeal citing low tax effect, as the net tax effect in the case was less than Rs. 10 lakhs. The High Court noted that the Tribunal relied on Circular No.21/2015 dated 10th December 2015, which directed the withdrawal or non-pursuance of department's pending appeals before tribunals/high courts. The High Court found that the Tribunal dismissed the appeal solely based on low tax effect without delving into the merits of the case.

Issue 2: Interpretation and application of Circular No.21/2015
Circular No.21/2015 dated 10th December 2015 by the Central Board of Direct Taxes (CBDT) was pivotal in the Tribunal's decision to dismiss the appeal due to low tax effect. The Circular instructed the withdrawal or non-pursuance of department's pending appeals before tribunals/high courts. The High Court observed that the Tribunal's reliance on this Circular led to the dismissal of the appeal without considering the substantive grounds raised by the Revenue.

Issue 3: Exception in Circular No.3/2018 of the C.B.D.T
The High Court analyzed the exception mentioned in Circular No.3/2018 of the CBDT, dated 11th July 2018, regarding the revision of monetary limits for filing appeals by the department. The Circular specified that adverse judgments on certain issues should be contested on merits irrespective of the tax effect. These issues included challenges to the constitutional validity of provisions, illegality of Board's orders, acceptance of Revenue Audit objections, and undisclosed foreign assets/bank accounts. The High Court emphasized that in cases covered by these exceptions, the Tribunal should decide on the merits rather than dismissing the appeal based on low tax effect.

In conclusion, the High Court allowed the appeal filed by the Revenue, quashed the Tribunal's order, and remitted the matter back to the Income Tax Appellate Tribunal for fresh consideration on merits. The judgment highlighted the importance of considering substantive issues and exceptions specified in relevant Circulars while deciding tax appeals, rather than solely focusing on the tax effect.

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