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2016 (8) TMI 650 - SC - Income TaxReview of the orders passed by the Division Bench - Monetary limit for filling appeal - High Court 2012 (4) TMI 376 - BOMBAY HIGH COURT has dismissed the Review Petition filed by the Revenue holding the same to be not maintainable against the order passed under the provisions of Section 260A of the Income Tax Act, 1961. Held that - Before this Court, an affidavit has been filed by the Revenue explaining how the notional tax effect is far beyond the amount of ₹ 2,00,000/- (Rupees two lakh). Moreover, in Commissioner of Income Tax Vs. Meghalaya Steels Ltd., 2015 (8) TMI 525 - SUPREME COURT a view has been taken by this Court that the review would be available in respect of the orders passed under Section 260A of the Income Tax Act, 1961. In view of the above, we allow the appeals and set aside both the orders passed by the High Court and request the High Court to decide the review petition and thereafter the appeal itself, if so required, on merits. We also make it clear that we have expressed no opinion on the merits of any of the contentions of the parties.
Issues:
1. Review petition maintainability under Section 260A of the Income Tax Act, 1961. 2. Notional tax effect exceeding the threshold for review. 3. High Court's dismissal of the review petition and tax appeal. Issue 1: Review petition maintainability under Section 260A of the Income Tax Act, 1961: The High Court initially disposed of the appeal by the Revenue without delving into the merits due to the tax demand being below the prescribed limit of ?2,00,000. However, the Revenue filed a review petition, which was dismissed by the High Court citing it as not maintainable against the order passed under Section 260A of the Income Tax Act, 1961. The Supreme Court, after considering an affidavit by the Revenue and a precedent set in a previous case, held that a review is indeed available for orders passed under Section 260A. Consequently, the Supreme Court allowed the appeals and set aside the orders of the High Court, directing the High Court to decide on the review petition and the appeal itself on merits. Issue 2: Notional tax effect exceeding the threshold for review: The Revenue explained to the Supreme Court through an affidavit that the notional tax effect far surpassed the ?2,00,000 limit, which was the reason for the High Court's initial dismissal without considering the merits. The Supreme Court acknowledged this explanation and took into account a previous ruling where it was established that a review could be sought for orders under Section 260A. This acknowledgment led the Supreme Court to overturn the High Court's decision and instruct the High Court to reevaluate the case based on its merits. Issue 3: High Court's dismissal of the review petition and tax appeal: The High Court's dismissal of the Revenue's review petition and tax appeal was based on the notion that the review was not maintainable against the order passed under Section 260A of the Income Tax Act, 1961. However, the Supreme Court, after thorough consideration of the circumstances and legal precedents, found the review to be permissible for such orders. Consequently, the Supreme Court set aside the High Court's orders and directed a fresh consideration of the review petition and the appeal on their merits, emphasizing that no opinion was expressed on the contentions of the parties. This judgment by the Supreme Court clarifies the maintainability of review petitions under Section 260A of the Income Tax Act, 1961, especially when the notional tax effect exceeds the prescribed limit. It emphasizes the importance of considering the merits of a case despite initial procedural constraints and sets a precedent for future similar cases.
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