2019 (4) TMI 633 - SC - Income Tax

Reopening u/s 147 - validity of notice u/s 148 - original assessment u/s 143(1) - change of the opinion - High Court dismissing the Revenue's appeal in limine holding that no substantial question of law involved - HELD THAT - We are of the view that the High Court was not justified in dismissing the appeal on the ground that the appeal did not involve any substantial question of law. We are, therefore, constrained to allow this appeal, set aside the impugned order and remand the case to the High Court for deciding the appellant s appeal afresh on merits in accordance with law. Four questions framed need to be answered by the High Court on their respective merits while deciding the appeal filed by the Revenue (appellant herein) u/s 260A. We are, therefore, of the view that such order is not legally sustainable in law and hence deserves to be set aside. The appeal succeeds and is accordingly allowed. The impugned order is set aside. The case is remanded to the High Court for answering the aforementioned questions on merits in accordance with law.

Summary

Issues involved:
Appeal against dismissal of appeal by High Court under Section 260A of the Income Tax Act, legality and correctness of notice issued by Assessing Officer under Section 148 of the Act, substantial question of law determination by High Court, appeal remanded for fresh decision.

Analysis:
The Supreme Court heard an appeal against the High Court's dismissal of the Revenue's appeal under Section 260A of the Income Tax Act, 1961. The High Court had held that the appeal did not involve any substantial question of law, leading to its dismissal. The core issue revolved around the legality and correctness of the notice issued by the Assessing Officer to the assessee under Section 148 of the Act for the assessment year 1999-2000. The assessee had objected to the notice, arguing it was based on a change of opinion and therefore bad in law. The ITAT upheld the objections, resulting in the dismissal of the Revenue's appeal by the High Court. The Supreme Court found that the High Court erred in dismissing the appeal solely on the ground of not involving a substantial question of law. Consequently, the Court set aside the impugned order and remanded the case to the High Court for a fresh decision on the merits.

The Supreme Court identified four substantial questions of law that should have been framed by the High Court for deciding the appeal on its merits. These questions pertained to the justification of the notice issued under Section 148, the basis for considering the notice as bad in law, the satisfaction of requirements under Section 148, and the legal sustainability of the ITAT's findings on the merits of the case. The Court emphasized that these questions needed to be addressed by the High Court while deciding the appeal filed by the Revenue under Section 260A of the Act. The Court concluded that the High Court's order was not legally sustainable and set it aside, remanding the case for a fresh decision on the identified substantial questions of law.

In its judgment, the Supreme Court clarified that it refrained from expressing any opinion on the case's merits and directed the High Court to decide the appeal without influence from the Supreme Court's observations. The Court highlighted the importance of addressing the substantial questions of law raised in the appeal and emphasized the need for a thorough examination of these questions in accordance with the law. Ultimately, the appeal was allowed, the impugned order was set aside, and the case was remanded to the High Court for a fresh determination based on the identified substantial questions of law.