2019 (3) TMI 66 - SC - Income Tax

Dismissal of revenue appeal by High court without framing the questions - High Court jurisdiction to dismiss the appeal filed under Section 260A - no substantial question of law - HELD THAT - High Court did not dismiss the appeal in limine but dismissed it after hearing both the parties. In such a situation, the High Court should have framed the question(s) and answered them by assigning the reasons accordingly one way or the other by exercising powers under subsections (4) and (5) of Section 260A of the Act. As mentioned above, in the absence of any discussion or/and the reasoning/ground as to why the order of ITAT does not suffer from any illegality and why the grounds of Revenue are not acceptable and why the appeal does not involve any substantial question(s) of law or though framed cannot be answered in Revenue s favour, the impugned order suffers from jurisdictional errors and, therefore, legally unsustainable for want of compliance of the requirements of subsections (4) and (5) of Section 260A of the Act. This Court has consistently laid emphasis that every order/judgment, which decides the lis between the parties, must contain the reason(s)/ground(s) for arriving at a particular conclusion. In order to decide as to whether the impugned order is legally sustainable or not, the Appellate Court is entitled to know as to what impelled the Court below to pass such order in favour of one party and against the aggrieved party. We find that this requirement is missing in the impugned order of this case and hence the interference is called for. We allow the appeal, set aside the impugned order and remand the case to the High Court with a request to decide the appeal filed by the Revenue (Commissioner of Income Tax) afresh on merits in accordance with law.

Summary

Issues:
Appeal against High Court's judgment affirming ITAT's order - Failure of High Court to provide reasons for dismissal - Failure to frame substantial questions of law - Compliance with Section 260A of the Income Tax Act.

Analysis:
The case involves an appeal filed against the High Court's judgment affirming the order of the Income Tax Appellate Tribunal (ITAT). The ITAT had ruled in favor of the respondent(assessee) in income tax proceedings initiated after a search operation. The High Court dismissed the Revenue's appeal under Section 260A of the Income Tax Act, leading to the current appeal before the Supreme Court.

Upon review, the Supreme Court found that the High Court's judgment lacked reasoning for the dismissal and failed to frame substantial questions of law. The Court highlighted that Section 260A of the Act is similar to Section 100 of the Code of Civil Procedure and outlined the jurisdiction of the High Court in dismissing appeals. The Supreme Court emphasized that every judgment must contain reasons for the conclusion reached, and failure to provide such reasons renders the judgment legally unsustainable.

The Supreme Court concluded that the High Court's order was jurisdictionally flawed due to the absence of discussion or reasoning on the legality of the ITAT's order and the grounds raised by the Revenue. As a result, the Court allowed the appeal, set aside the High Court's order, and remanded the case for the High Court to decide the appeal afresh on merits in accordance with the law.

The Supreme Court clarified that its decision to remand the case did not imply an opinion on the case's merits, and the High Court should decide the appeal without influence from the Supreme Court's observations. The judgment serves as a reminder of the importance of providing reasons in legal decisions and ensuring compliance with procedural requirements under the law.