Landmark Judgements of Supreme Court on Section Section 260A [Appeal to High Court]
If High Court wishes to hear appeal on any other substantial question of law not formulated by it, it may, for reasons to be recorded, formulate and hear such questions if it is satisfied that case involves such question
High court shall formulate question and may then pronounce judgment either by answering question in affirmative or negative or by stating that case at hand does not involve any such question; if High Court wishes to hear appeal on any other substantial question of law not formulated by it, it may, for reasons to be recorded, formulate and hear such questions if it is satisfied that case involves such question. [In favour of assessee] (Related Assessment year : 1995-96) – [Shiv Raj Gupta v. CIT, Delhi (2020) 425 ITR 420 : 272 Taxman 391 : 117 taxmann.com 871 (SC)]
Assessment – Alternative remedy – Limitation – Power of Supreme Court & High Court under Articles 142 and 226 to entertain a challenge to the assessment order on the sole ground that the statutory remedy of appeal against that order stands foreclosed by the law of limitation Allowing the petition of the revenue the Court held that, Power of Supreme Court & High Court under Articles 142 and 226 to entertain a challenge to the assessment order on the sole ground that the statutory remedy of appeal against that order stands foreclosed by the law of limitation. The statutory period prescribed for redressal of the grievance cannot be disregarded and a writ petition entertained. Doing so would be in the teeth of the principle that the Court cannot issue a writ which is inconsistent with the legislative intent. That would render the legislative scheme and intention behind the statutory provision otiose. - [ACCT v. Glaxo Smith Consumer Health Care Ltd. – Date of Judgement :06.05.2020 (SC)]
Loss claimed by assessee by devaluing book value of shares purchased by them, could not be allowed as business loss
Diminution in value of shares - In course of assessment, Assessing Officer opined that loss claimed by assessee by devaluing book value of shares purchased by them, could not be allowed as business loss. Tribunal upheld order passed by Assessing Officer. High Court also confirmed view taken by authorities below. On facts, SLP filed against High Court’s order was to be dismissed. [In favour of revenue] (Related Assessment year : 2003-04) – [Twenty First Century Management Services Ltd. v. Twenty First Century Management Services Ltd. (2019) 266 Taxman 1 : 108 taxmann.com 586 (SC)]
High Court order without framing substantial question of law and without passing reasoned order is invalid
Tribunal (ITAT) decided the various issues arising in the case in favour of assessee which gave rise to filing of the appeal by Revenue before the High Court under Section 260A. High Court by impugned judgment dismissed the Revenue’s appeal, which gave rise to filing of this appeal by way of special leave by the Revenue in this Court. It was held in the absence of any discussion or/and the reasoning/ground as to why the order of ITAT did not suffer from any illegality and why the grounds of Revenue were not acceptable and why the appeal did not involve any substantial question(s) of law or though framed could not be answered in Revenue’s favour, the impugned order suffered from jurisdictional errors and, therefore, legally unsustainable for want of compliance of the requirements of sub-sections (4) and (5) of Section 260A.
Hence, impugned order was set aside and matter was remanded to the High Court with a request to decide the appeal filed by the Revenue afresh on merits in accordance with law. (Related Assessment Years : 1987-88 to 1996-97) - [CIT v. M/s Rashtradoot (HUF) - Date of Judgement : 27.02.2019 (SC)]
Law laid down by High Court is binding on all in State. - [CIT v. Raghuvir Synthetics Ltd. (2017) 394 ITR 1: 151 DTR 153 (SC)]
Time period for filing an appeal under section 260A does not get suspended on account of pendency of an application before Tribunal under section 254(2)
Section 260A, read with section 254, of the Income-tax Act, 1961 and section 14 of the Limitation Act, 1963 - High Court, appeals to (Limitation period) - An application under section 254(2) is for rectifying ‘mistakes apparent from record’ which is much narrower in scope than an appeal under section 260A where an order of Tribunal can be challenged on substantial question of law. Time period for filing an appeal under section 260A does not get suspended on account of pendency of an application before Tribunal under section 254(2). [In favour of revenue] – [Spinacom India (P) Ltd. v. CIT (2018) 258 Taxman 128 : 97 taxmann.com 516 (SC)]
High Court had not taken into consideration issue of powers of Commissioner (Appeals) under rule 46A specifically raised before it, remedy for assessee would be to file an application for review of order of High Court
Review petition - Assessee, on appeal filed against order of High Court, contended that issue of powers of Commissioner (Appeals) under rule 46A was specifically raised before High Court and it had not been taken into consideration by High Court. If indeed such issue was raised specifically before High Court and it had not been taken into consideration by High Court while passing impugned order, appropriate remedy for assessee would be to file an application for review of said order. [Partly in favour of assessee] – [Mathur Marketing (P) Ltd. v. CIT, Delhi (2018) 400 ITR 26 : (2017) 299 CTR 461 : 251 Taxman 3 : 86 taxmann.com 153 (SC)]
Section 260A(2)(a) of the Act provides that an appeal against the order of Income Tax Appellate Tribunal can be filed before the High Court within a period of 120 days from the date on which the order appealed against is received by the assessee or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. Section 260A(2A) of the Act specifically provides that the High Court may admit an appeal after the expiry of the period of 120 days referred to in section 260A(2)(a), if it is satisfied that there was sufficient cause for not filing the same within that period. High Court has inherent jurisdiction to condone delay in filing an appeal under section 260A. - [CIT Pheroza Framroze & Co. (2017) 392 ITR 626 (SC)]
High Court cannot dismisss an appeal without going into merits of the same, which was dismissed by ITAT for non-removal of defects
Heard learned counsel for the parties and perused the impugned judgment and order dated 06.06.2016 passed by the High Court of Judicature at Bombay in Income Tax Appeal No.2356 of 2013 whereby the High Court had dismissed the appeal preferred by the appellant herein only on the ground that the decision
relied upon by the Tribunal i.e. in the case of Narang Overseas (P) Ltd. v. ACIT (2008) 111 ITD 1 (ITAT Mumbai (SB), the appeal was preferred before the High Court and for non-removal of the defects the appeal had been dismissed. We are of the considered opinion that this was not a correct approach of the High Court for the simple reason that merely because one authority has followed its own decision in another case and that matter in appeal had been dismissed on technical grounds still the High Court has to decide the question on merits. Therefore, we set aside the impugned judgment and order passed by the High Court and remand the matter back to the High Court for deciding the same on merits expeditiously and in accordance with law. The Civil Appeal is disposed of in the above terms. - [CIT v. Goodwill Theatres (P) Ltd (2017) 299 CTR 457 : 160 DTR 371 (SC)]
High Court does not have jurisdiction under Order XLI, rule 21 of Civil Procedure Code, 1908, to recall final order passed in income-tax appeal which is not an ex parte order.— [CIT v. Subrata Roy (2016) 71 taxmamm.com89 (SC)]
Section 260A(7) does not curtail or restrict provisions of Code of Civil Procedure as said section only states that all provisions that would apply qua appeals in Code of Civil Procedure would apply to appeals under section 260A
Appeal to (Inherent jurisdiction) - Whether section 260A(7) does not curtail or restrict provisions of Code of Civil Procedure as said section only states that all provisions that would apply qua appeals in Code of Civil Procedure would apply to appeals under section 260A - Held, yes - Whether it does not necessarily suggest that other provisions of Code of Civil Procedure are necessarily excluded or that High Court's inherent jurisdiction is in any manner affected - Held, yes - Whether High Court being Courts of record under Article 215 of Constitution of India, power of review would in fact inhere in them. [In favour of assessee] – [CIT, Guwahati v. Meghalaya Steels Ltd. (2015) 234 Taxman 523 : 60 taxmann.com 260 (SC)]
High Court has power to hear the appeal on questions not formulated at the stage of admission of the appeal
The Supreme Court after dismissing the SLP filed by the Department held that the High Court’s power to frame substantial question(s) of law at the time of hearing of the appeal other than the questions on appeal has been admitted remains under Section 260A(4). This power is subject, however, to two conditions, (one) the Court must be satisfied that appeal involves such questions, and (two) the Court has to record reasons therefore. - [CIT v. Mastek Limited – Date of Judgement : 04.03.2013 (SC)]
Detailed reasons were required to be given by the High Court
Detailed reasons were required to be given by the High Court, particularly when, by the impugned judgment the High Court has overruled the decision of Tribunal, since statutory appeal lies before the High Court under section 260A, the High Court ought to have given its findings in detail, particularly on the question whether there was any error of law in the decision of Tribunal and whether that error caused prejudice to the Revenue. For this reason, we set aside the impugned judgment of the High Court and remit the case for denovo consideration in accordance with law. We do not wish to express any opinion on the merits of the case the impugned judgment is set aside only on the ground that an opportunity needs to be given to the appellant (assessee) to argue his case before the High Court. - [Rajesh Mahajan v. CIT (2012) 249 CTR 28
Department’s Appeals should not be dismissed for delay
High Court dismissing appeal of the Department on the ground of delay.It was held that looking to the amount of tax involved in this case, we are of the view that the High Court ought to have decided the matter on merits. In all such cases where there is delay on the part of the Department, we request the High Court to consider imposing costs but certainly it should examine the cases on merits and should not dispose of cases merely on the ground of delay, particularly when huge stakes are involved. Impugned order was set aside and matter was remitted to High Court to decide the case de novo in accordance with law. High Court was further requested to dispose of this case as early as possible, preferably within a period of four months from 10.12.2010. - [CIT v. West Bengal Infrastructure Development Finance Corporation Ltd. (2011) 334 ITR 269 : 241 CTR 504 (SC)]
It is manifest from a bare reading of section 260A that an appeal to the High Court from a decision of the Tribunal lies only when a substantial question of law arises from the order of the Tribunal, it is mandatory that such question must be formulated. - [Vijay Kumar Talwar v. CIT (2011) 330 ITR 1 (SC)]
Perversity is a Substantial Question of Law
The Apex Court has stated that in grounds of perversity appeal would lie. - [Sudarshan Silks & Sarees v. CIT (2008) 300 ITR 205 : 169 Taxman 321(SC)]
Decision of another High Court
Judicial decorum, propriety and discipline requires that the High Court should, especially in the event of its contra view or dissent, discuss the judgements of the different High Courts and record its own reasons for its contra view. Judgements given by a High Court are not binding on the other High Court(s), but all the same, they have persuasive value. Another High Court would be within its right to differ with the view taken by other High Courts but, in all fairness, the High Court should record its dissent with reasons therefore. - [Pradip J. Mehta v. CIT (2008) 216 CTR 1 (SC)]
Reasons for affirming decision must be stated briefly
In an order of affirmation by High Court, repetition of reasons may not be necessary, however, arguments advanced and points urged have to be dealt with and reasons for affirmation have to be indicated, though in appropriate cases they may be briefly stated. Where, therefore, the High Court had affirmed findings recorded by the Tribunal without giving reasons, matter was to be remitted back to the High Court.— [Mangalore Ganesh Beedi Works v. CIT (2005) 273 ITR 56 : 142 Taxman 720 (SC)]
Essential for the High Court to first formulate the question of law
It is essential for the High Court to first formulate the question of law and thereafter proceed with the matter. It is against the scheme of the Act to formulate the question subsequently after conclusion of the arguments for the purpose of adjudication. - [Janardhana Rao M v. JCIT (2005) 273 ITR 50 (SC)]
A Bench of Hon’ble three Judges held that where the assessee challenges order of the Sales Tax Tribunal in an appeal as well as in writ petition simultaneously, in such circumstances, the writ petition would not be maintainable. - [State of Punjab & Ors. v. Punjab Fibres Ltd. & Ors. (2005) 1 SCC 604]
In Santosh Hazari v. Purushottam Tiwari, a three Judge Bench of the Supreme Court observed that a point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law. To be “substantial”, a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law “involved in the case” there must be first a foundation for it laid in the pleadings and thequestion should emerge from the sustainable finding of fact arrived at by Court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts andcircumstances of each case whether a question of law is a substantial one and involved in the case, or not; the paramount over all consideration being the need for striking a judicious balance between the indispensible obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis.
The word “substantial” as qualifying “question of law” means – of having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contradiction with technical, of no substance or consequence, or academic merely. However, it is clear that the Legislature has chosen not to qualify the scope of “substantial question of law” by suffixing the words “of general importance” as has been done in many other provisions such as section 109 of the Code of Civil Procedure or Article 133(1)(a) of the Constitution. The substantial question of law on which a 2nd appeal shall be heard need not necessarily be a substantial question of law of general importance. - [Santosh Hazari v. Purushottam Tiwari (2001) 251 ITR 84 (SC)]
The jurisdiction of the High Court to entertain an appeal under section 260A is confined only to such appeals involves a substantial question of law and it does not confer any jurisdiction on the High Court to interfere with pure question of facts while exercising its jurisdiction under section 260A. - [Roop Singh v. Ram Singh (2000) 3 SCC 708 (SC)]
It is essential for the High Court to formulate a substantial question of law and then only dispose of the appeal under section 260A. - [Taherakhatoon v. Salambin Mohammad AIR 1999 (SC) 1104 and Madhavan Nair v. Ramankutty (2000) 2 SCC 356 (SC)]
In DCIT v. Marudhar Hotels (P) Ltd. (1999) 155 CTR 437 (Raj) (notice issued by the Supreme Court : (2000) 243 ITR ST 153 (SC) the following parameters have been curled out from the aforesaid Supreme Court decisions :
“(a) an appeal under section 260A cannot be entertained simply because on a same question of law, a reference has been made and has been admitted for hearing by the High Court,
(b) the finding of fact, howsoever erroneous, cannot be disturbed by the High Court in exercise of the powers under section 260A,
(c) whether the substantial question of law raised, directly and substantially affects the rights of the parties and if so, whether it is either an open question in the sense that it is not finally settled by the Apex Court or by the concerned High Court or is not free from difficulty or calls for discussion of alternative views,
(d) if the question is settled by the highest Court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd, the question would not be a substantial question of law, and
(e) it is not within the domain of the High Court to investigate the grounds on which the findings were arrived at, by the Tribunal or the first appellate authority
…… the High Court cannot substitute its opinion for the opinion of the Tribunal unless it is found that conclusions drawn by the Tribunal are erroneous being contrary to the mandatory provisions of law applicable or settled position on the basis of pronouncements made by the Apex Court or was based upon in admissible evidence or arrived at without evidence……...”
It was held that “if the question of law termed as substantial question stands already decided by a larger bench of the High Court concerned or by the Privy Counsel or by the Federal Court or by the Supreme Court, its merely wrong application on the facts of the case would not be termed to be a substantial question of law. Where a point of law has not been pleaded or is found to be arising between the parties in the absence of any factual format, a litigant should not be allowed to raise that question as substantial question of law. The mere appreciation of the facts, the documentary evidence or the meaning of the entries and the contents of document cannot be held to be raising a substantial question of law. But where it is found that the Tribunal has assumed jurisdiction which did not vest in it, the same can be adjudicated in the appeal under section 260A treating it as substantial question of law”. - [Kondiba Dagadu Kadam v. Savitribai Sopan Gujar AIR 1999 SC 2213]
Issue on writ petition can be remanded
While deciding a writ appeal, the Supreme Court pointed out that the issue, whether the petitioner was entitled to exemption as a charitable institution was a matter, which required investigation of facts and should not have been entertained on a writ petition. It also found that the corporation was not a local authority within the meaning of section 10(20) to be entitled to exemption, the claim for exemption under section 11 was, therefore, remanded to the Assessing Officer to be decided in accordance with law. - [CIT v. U.P. Forest Corporation (1998) 230 ITR 945 (SC)]
Writ jurisdiction of the High Court cannot be invoked more than once by any person
The writ jurisdiction of the High Court cannot be invoked more than once by any person aggrieved of the order of any authority subordinate to it and if the first Writ petition is dismissed for whatever reason the petitioner cannot approach the High Court once again to invoke the writ jurisdiction on a different basis or ground. - [State of UP & Anr. v. Labh Chand (1993) 200 ITR 647 (SC)]
No permission to pursue to parallel remedies in respect of the same matter at the same time
It was held that the appellant therein having filed a suit in which the same question as the subject-matter in the writ petition was agitated could not be permitted to pursue to parallel remedies in respect of the same matter at the same time. - [Jai Singh v. Union of India & Ors. (1977) 1 SCC 1 (SC)]
The petitioner therein had filed a writ petition during the pendency of the appeal before the statutory authority. The Hon’ble Apex Court held that such a writ was not maintainable. - [Bombay Metropolitan Region Development Authority v. Gokak Patel Volkart Ltd. & Ors. (1995) 1 SCC 642 (SC)]