COMMISSIONER OF INCOME TAX-I versus M/S RASHTRADOOT (HUF)

[2019] 4 S.C.R. 868SUPREME COURT REPORTS

[2019] 4 S.C.R.

COMMISSIONER OF INCOME TAX-I

M/S RASHTRADOOT (HUF)

(Civil Appeal No.2362 of 2019)

BFEBRUARY 27, 2019

[ABHAY MANOHAR SAPRE ANDDINESH MAHESHWARI, JJ.]

Income Tax Act, 1961 – s.260A – Substantial question of lawCarising not framed by High Court while deciding the appeal – Inthe instant case, High Court did not dismiss the appeal in limine butdismissed it after hearing both the parties – Correctness of – Held:In such situation, High Court should have framed the questionsand answered them by assigning the reasons accordingly one wayor the other by exercising powers under sub-sections (4) and (5) ofDs.260A of the Act – In the absence of any discussion or/and thereasoning/ground as to why the order of ITAT did not suffer fromany illegality and why the grounds of Revenue are not acceptableand why the appeal does not involve any substantial questions oflaw or though framed cannot be answered in Revenue’s favour, theEimpugned order suffers from jurisdictional errors and, therefore,legally unsustainable for want of compliance of the requirementsof sub-sections (4) and (5) of s.260A of the Act – Matter remitted toHigh Court for consideration afresh – Code of Civil Procedure,1908 – s.100.

FJudgments/Orders – Reasoned/Speaking order – Everyorder/judgment, which decides the lis between the parties, mustcontain the reasons/grounds for arriving at particularconclusion – In order to decide as to whether the impugned order islegally sustainable or not, the Appellate Court is entitled to knowas to what impelled the Court below to pass such order in favour ofGone party and against the aggrieved party – In the instant case,this requirement was missing and, therefore, interference was calledfor – Income Tax Act, 1961 – s.260A.

Allowing the appeal and remitting the matter to High Court,the Court

HELD: 1. The High Court neither discussed and norassigned any reason in support of its conclusion for the dismissalof the appeal. The observation made in paragraph 13 that “Inview of the above” did not lead anywhere because, in theparagraphs 1 to 12, no reasons were mentioned except the factsand the submissions. That apart, the High Court while decidingthe appeal heard the counsel for the parties, yet did not frameany substantial question of law arising in the case. [Paras 9, 10and 11] [872-D-F]

2. Section 260A of the Act is akin to Section 100 of theCode of Civil Procedure, 1908 with addition of sub-sections (6)(a),6(b) and (7) of Section 260A of the Act. The High Court hasjurisdiction to dismiss the appeal filed under Section 260A of theAct on the ground that it does not involve any substantial questionof law. Such dismissal is considered as dismissal of the appealin limine, i.e., dismissal without issuing any notice of appeal tothe respondent and without hearing the respondent. The HighCourt has also the jurisdiction to dismiss the appeal by answeringthe questions framed on merits or by dismissing the appeal onthe ground that the questions though framed but such questionsdoes/do not arise in the appeal. The High Court, though may nothave framed any particular question at the time of admitting theappeal along with other question, yet it has the jurisdiction toframe additional question at later stage before final hearing ofthe appeal by assigning reasons as provided in proviso to Section260A(4) and Section 260A(5) of the Act and lastly, the High Courthas jurisdiction to allow the appeal but this the High Court cando only after framing the substantial questions of law and hearingthe respondent by answering the questions framed in appellant’sfavour. However, in this case, the High Court did not dismiss theappeal in limine but dismissed it after hearing both the parties.In such situation, the High Court should have framed thequestion(s) and answered them by assigning the reasonsaccordingly one way or the other by exercising powers undersub-sections (4) and (5) of Section 260A of the Act. [Paras 12, 13,14 and 15] [872-G-H; 873-A-E]

A3. Every order/judgment, which decides the lis betweenthe parties, must contain the reasons/grounds for arriving at aparticular conclusion. Indeed, what is decisive for deciding thecase is not the conclusion alone but the reasons/grounds assignedin support of such conclusion, which results in reaching to suchconclusion. This requirement is missing in the impugned orderBof this case and hence the interference is called for.[Paras 17-19] [ 873-F-H; 874-B]

State of Maharashtra v. Vithal Rao Pritirao Chawan(1981) 4 SCC 129;Jawahar Lal Singh v. Naresh Singh& Ors.(1987) 2 SCC 222 : [1987] 2 SCR 220;State ofU.P. v. Battan & Ors.(2001) 10 SCC 607; Raj KishoreJha v. State of Bihar & Ors.(2003) 11 SCC 519 :[2003] 4 Suppl. SCR 208 ;State of Orissa v. DhaniramLuhar(2004) 5 SCC 568 : [2004] 2 SCR 68 –relied on.

Case Law Reference

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2362Fof 2019

From the Judgment and Order dated 25.10.2016 by the High Courtof Judicature for Rajasthan bench at Jaipur in D.B. Income Tax AppealNo. 43 of 2002.

Ashok K. Srivastava, Arjun Garg, Aakash Nandolia(for Mrs. Anil Katiyar), Advs. for the Appellant.

Kavin Gulati, Anant Kashliwal, Bhargava V. Desai, RohitShathlekar, Ms. Vasudha Zutshi, Advs. for the Respondent.

COMMISSIONER OF INCOME TAX-I v.M/S RASHTRADOOT (HUF)

The Judgment of the Court was delivered by

ABHAY MANOHAR SAPRE, J. 1. Leave granted.

2. This appeal is filed against the final judgment and order dated25.10.2016 passed by the High Court of Judicature for Rajasthan, Benchat Jaipur in D.B. Income Tax Appeal No. 43 of 2002 whereby the DivisionBench of the High Court dismissed the appeal filed by the appellantherein and affirmed the order dated 24.05.2001 passed by the IncomeTax Appellate Tribunal (ITAT), Jaipur Bench, Jaipur in I.T.S.S.A. No.29/JP/2000.

3. few facts need mention infra for the disposal of the appeal.

4. This appeal filed by the Revenue arises out of the income taxproceedings initiated against the respondent(assessee) on the basis of asearch operation which was carried out by the Income Tax Departmentin assessee’s premises on 04.09.1997. This gave rise to initiation ofassessment proceedings for the block period from 01.04.1987 to04.09.1997 (Assessment Years 1987-88 to 1996-97 and 1997-98 up to04.09.1997) against the assessee to determine their tax liability as aresult of search operations carried in their premises. The matter, out ofthe block assessment proceedings, reached to the Income Tax AppellateTribunal at the instance of the respondent against the order of theassessing authorities.

5. The Tribunal (ITAT), however, decided the various issues arisingin the case in favour of the respondent(assessee) by allowing therespondent’s appeal, which gave rise to filing of the appeal by the Revenuebefore the High Court under Section 260A of the Income Tax Act, 1961(hereinafter referred to as “the Act”).

6. The High Court by impugned judgment dismissed the Revenue’sappeal, which gave rise to filing of this appeal by way of special leave bythe Revenue in this Court.

7. Having heard the learned counsel for the parties and on perusalof the record of the case, we are constrained to allow the appeal andremand the case to the High Court for deciding the appeal afresh onmerits in accordance with law.

A8. The need to remand the case to the High Court has arisen forthe reason that on perusal of the impugned order, we find that the HighCourt has set out the facts in paragraph 2 and the submissions of thecounsel for the parties in paragraphs 3 to 9. In paragraph 10, the HighCourt mentioned the names of the counsel who argued the case andthen in paragraphs 12 and 13, the High Court states as under :B

“12. The Tribunal while considering the judgment on24.05.2001 did not consider the amendments envisaged bythe legislature, therefore, under Section 260-A when weare considering substantial law, we have to considerwhether the Tribunal has committed an error.

13. In view of the above, the issue is answered in favourof the assessee and against the department. The view takenby this Court in case of Relaxo Foorwear(supra) will applyin the present case and the view taken by the Tribunal isliable to be confirmed and the same is confirmed.”D

9. perusal of the aforementioned two concluding paragraphswould go to show that the High Court has neither discussed and norassigned any reason in support of its conclusion for the dismissal of theappeal.

E10. Indeed, the observation made in paragraph 13 that “In view ofthe above” does not lead us anywhere because, as mentioned above, inthe paragraphs 1 to 12 no reasons are mentioned except the facts andthe submissions.

11. That apart, we find that the High Court committed anotherFerror. The High Court while deciding the appeal heard the learned counselfor the parties, yet did not frame any substantial question of law arisingin the case.

12. Section 260A of the Act is akin to Section 100 of the Code ofCivil Procedure, 1908 (hereinafter referred to as “the Code”) withaddition of sub-sections (6)(a),6(b) and (7) of Section 260A of the Act.G

13. The High Court has jurisdiction to dismiss the appeal filedunder Section 260A of the Act on the ground that it does not involve anysubstantial question of law. Such dismissal is considered as dismissal

of the appeal in limine, i.e., dismissal without issuing any notice of appealto the respondent and without hearing the respondent.

14. The High Court has also the jurisdiction to dismiss the appealby answering the question(s) framed on merits or by dismissing the appealon the ground that the question(s) though framed but such question(s)does/do not arise in the appeal. The High Court, though may not haveframed any particular question at the time of admitting the appeal alongwith other question, yet it has the jurisdiction to frame additional questionat later stage before final hearing of the appeal by assigning reasonsas provided in proviso to Section 260A(4) and Section 260A(5) of theAct and lastly, the High Court has jurisdiction to allow the appeal but thisthe High Court can do only after framing the substantial question(s) oflaw and hearing the respondent by answering the question(s) framed inappellant’s favour.

15. However, in this case, we find that the High Court did notdismiss the appeal in limine but dismissed it after hearing both the parties.In such situation, the High Court should have framed the question(s)and answered them by assigning the reasons accordingly one way orthe other by exercising powers under sub-sections (4) and (5) of Section260A of the Act.

16. As mentioned above, in the absence of any discussion or/andthe reasoning/ground as to why the order of ITAT does not suffer fromany illegality and why the grounds of Revenue are not acceptable andwhy the appeal does not involve any substantial question(s) of law orthough framed cannot be answered in Revenue’s favour, the impugnedorder suffers from jurisdictional errors and, therefore, legally unsustainablefor want of compliance of the requirements of sub-sections (4) and (5)of Section 260A of the Act.

17. This Court has consistently laid emphasis that every order/judgment, which decides the lis between the parties, must contain thereason(s)/ground(s) for arriving at particular conclusion.

18. Indeed, what is decisive for deciding the case is not theconclusion alone but the reason(s)/ground(s) assigned in support of suchconclusion, which results in reaching to such conclusion.

A19. In order to decide as to whether the impugned order is legallysustainable or not, the Appellate Court is entitled to know as to whatimpelled the Court below to pass such order in favour of one party andagainst the aggrieved party. We find that this requirement is missing inthe impugned order of this case and hence the interference is called for.(See- State of Maharashtra vs. Vithal Rao Pritirao Chawan, (1981)B4 SCC 129, Jawahar Lal Singh vs. Naresh Singh & Ors., (1987) 2SCC 222, State of U.P. vs. Battan & Ors., (2001) 10 SCC 607, RajKishore Jha vs. State of Bihar & Ors., (2003) 11 SCC 519 andState of Orissa vs. Dhaniram Luhar, (2004) 5 SCC 568).

20. In view of the foregoing discussion, we allow the appeal, setCaside the impugned order and remand the case to the High Court with arequest to decide the appeal filed by the Revenue (Commissioner ofIncome Tax) afresh on merits in accordance with law.

21. Before parting, we may observe that we have not expressedany opinion on the merits of the case having formed an opinion to remandDthe case to the High Court in the light of our foregoing discussion. TheHigh Court will, therefore, decide the appeal in accordance with lawuninfluenced by any observations made by this Court.

Devika GujralE

Appeal allowed.