Ryatar Sahakari Sakkarre Karkhane Niyamit v. Asst. Commissioner Of Income Tax C-1 & Ors

Section: ISSUES RYATAR SAHAKARI SAKKARRE KARKHANE NIYAMIT ASST. COMMISSIONER OF INCOME TAX C-1 & ORS. (Civil Appeal Nos.4515-4524 of 2019) MAY 01, 2019 [ABHAY MANOHAR SAPRE AND DINESH MAHESHWARI, JJ.] Income Tax Act, 1961 – s.260-A – Substantial question oflaw – The appeal is to be heard on merits, only on the questionsframed by the High Court under sub-section (3) of s.260-A of theAct as provided under s.260A(4) of the Act – In the instant case,High court did not frame substantial question of law as requiredunder s. 260-A(3) of the Act – Matter remanded to High Court forhearing afresh only after framing appropriate substantial questionof law as required under s. 260A(3) of the Act – Appeal. PR. Commissioner of Income Tax Central-2 v.M/s A.A. Estate Pvt. Ltd. 2019 (6) SCALE 509– relied on. Case Law Reference 2019 (6) SCALE 509 relied onPara 10 CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.4515-4524 of 2019. From the Judgment and Order dated 26.02.2016 of the HighCourt of Karnataka, Dharwad Bench in ITA Nos. 100111-100120/2015 Ms. Anitha Shenai, Sr. Adv., Shankar Divate, Adv. for the Appellant. K. Radhakrishnan, Sr. Adv., M. P. Gupta, T. M. Singh, Mrs. AnilKatiyar, Advs. for the Respondents. 183 183 AThe Judgment of the Court was delivered by ABHAY MANOHAR SAPRE, J. 1. Leave granted. 2. These appeals are filed against the final judgment and orderdated 26.02.2016 passed by the High Court of Karnataka, Circuit Benchat Dharwad in ITA Nos.100111-100120 of 2015 whereby the High CourtBdismissed the ITAs filed by the appellant(assessee) herein. 3. These appeals are filed by the assessee against the order passedby the High Court by which a bunch of appeals, some filed by theassessee and some filed by the Commissioner of Income Tax (Revenue)under Section 260-A of the Income Tax Act, 1961(hereinafter referredCto as “the Act”) were disposed of. 4. So far as the appeals filed by the assessee were concerned,they were dismissed and so far as the appeals filed by the Commissionerof Income Tax were concerned, they were allowed. The assessee hasfelt aggrieved and has filed these appeals by way of special leave in thisDCourt. 5. We do not consider it necessary to set out the facts of the casein detail in the light of the order that we are passing for the disposal ofthese appeals. 6. Heard Ms. Anitha Shenai, learned senior counsel for theEappellant(assessee) and Mr. K. Radhakrishnan, learned senior counselfor the respondents. 7. Having heard the learned counsel for the parties and on perusalof the record of the case, we are inclined to allow these appeals, setaside the impugned order and remand the case to the High Court with aFrequest to decide the appeals afresh on merits in accordance with law. 8. The need to remand these appeals is called for because fromthe perusal of the order, we find that in Para 4, the High Court observed,“Assessee has raised the following questions of law in its appeals”and then set out four questions. Likewise, in Para 5, the High CourtGobserved, “Revenue has raised the following questions of law in itsappeals” and then set out three questions. 9. It is not in dispute that the High Court did not frame anyquestion as required under Section 260-A (3) of the Act. RYATAR SAHAKARI SAKKARRE KARKHANE NIYAMIT v. ASST.COMMR. OF INCOME TAX C-1 [ABHAY MANOHAR SAPRE, J.] 10. This Court recently examined this question in Civil AppealNo.3968 of 2019 arising out of S.L.P.(c) No.29524 of 2017 (PR.Commissioner of Income Tax Central-2 vs. M/s A.A. Estate Pvt.Ltd.) decided on 16.04.2019. Paras 21 to 26 and 28 are appositewhich read as under: “21. As is clear from reading of Para 2, the two questionsset out in Para 2 were not the questions framed by the HighCourt as was required to be framed under Section 260-A(3)of the Act for hearing the appeal but were the questionsurged by the appellant. 1 िई, 2019 01 ਮਈ, 2019 22. In our view, there lies a distinction between thequestions proposed by the appellant for admission of theappeal and the questions framed by the Court. 23. The questions, which are proposed by the appellant,fall under Section 260-A (2) (c) of the Act whereas thequestions framed by the High Court fall under Section 260-A (3) of the Act. The appeal is heard on merits only on thequestions framed by the High Court under sub-section (3)of Section 260-A of the Act as provided under Section 260-A (4) of the Act. In other words, the appeal is heard onlyon the questions framed by the Court. 24. Third, if the High Court was of the view that the appealdid not involve any substantial question of law, it shouldhave recorded a categorical finding to that effect sayingthat the questions proposed by the appellant either do notarise in the case or/and are not substantial questions of lawso as to attract the rigor of Section 260-A of the Act for itsadmission and accordingly should have dismissed theappeal in limine. 25. It was, however, not done and instead the High Courtwithout admitting the appeal and framing any question oflaw issued notice of appeal to the respondent-assessee,heard both the parties on the questions urged by theappellant and dismissed it. In our view, the respondent hada right to argue “at the time of hearing” of the appeal thatthe questions framed were not involved in the appeal and Athis the respondent could urge by taking recourse to sub-section (5) of Section 260-A of the Act. But this stage inthis case did not arise because as mentioned above, theHigh Court neither admitted the appeal nor framed anyquestion as required under sub-section (3) of Section 260-A of the Act. The expression “such question” referred toBin sub- section (5) of Section 260-A of the Act means thequestions which are framed by the High Court under sub-section (3) of Section 260-A at the time of admission of theappeal and not the one proposed in Section 260-A (2) (c) ofthe Act by the appellant. 26. We are, therefore, of the view that the High Court didnot decide the appeal in conformity with the mandatoryprocedure prescribed in Section 260-A of the Act. 28. In the light of the foregoing discussion, we consider itjust and proper to remand the case to the High Court forDdeciding the appeal afresh to answer the questions framedabove on merits in accordance with law.” 11. The facts of the case at hand and the one involved in M/sA.A. Estate Pvt. Ltd. quoted above are identical and, therefore, keepingin view the law laid down by this Court in M/s A.A. Estate Pvt.ELtd.(supra), these appeals have to be allowed and the case needs to beremanded to the High Court for hearing afresh on merits. 12. In view of the foregoing discussion, the appeals are allowed.The impugned order is set aside. The appeals are remanded to the HighCourt for hearing afresh only after framing appropriate substantialFquestion(s) of law as required under Section 260-A(3) of the Act. 13. Having formed an opinion to remand the case to the HighCourt, we have not expressed any opinion on the merits of the issuesinvolved in these appeals. The High Court will, therefore, decide theappeals strictly in accordance with law, uninfluenced by any observationsGmade in the impugned order and in this order. Devika Gujral Matter remanded back to High Court