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TMI Blog2020 (10) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... ave challenged this Court s order, dated 7 January 2016, which refused to frame a particular question as a substantial question of law. That said, the Revenue is not remediless. If it chooses to question the High Court's judgment u/s 260A of the Act before the Apex Court, it may have its options open. It may comprehensively contend even on the grounds that the High Court has erred in not formulating a substantial question of law at the stage of admission. Res Judicata and Tax Disputes - second contention the Revenue has advanced is that the concept of res judicata is alien to the tax jurisprudence - Forest Development Corporation of Maharashtra Ltd., [ 2015 (8) TMI 421 - BOMBAY HIGH COURT ] has stressed two aspects. One concerns consistency; it is the law's cardinal virtue. That is, even if the principle of res judicata does not apply to tax matters, yet consistency and certainty of law would require the State to take a uniform position and not change their stand in the absence of change in facts and/or the law. The second one concerns the distinct factors that differentiate one order from the other. That is, a mere change in the assessment year, will not warrant an appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, through a reasoned order, this Court refused. 2. When we took up the matter for final hearing, the Revenue filed a miscellaneous application. It again wanted us to frame the same or similar substantial question of law. According to it, this Court earlier refused to frame that substantial question of law, oblivious of the Supreme Court judgment on an identical issue. 3. Now the question before us is this: can we-a Bench of different composition but of the same strength, though-reconsider the issue, disregarding its earlier refusal, and frame a substantial question of law, afresh? Facts : 4. The disputed tax is less than ₹ one crore. Suppose we confine ourselves to the two substantial questions of law already framed. In that case, we need not adjudicate them on the merits because of the Circular the Revenue has issued earlier, setting out the Revenue s policy not to contest the matters with less than one crore disputed tax. So, unless we are persuaded to frame the third substantial question of law, there is no scope for adjudication. 5. In these circumstances, we set out the facts, first, to decide whether we should reconsider framing the third substantial question of law. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehensive. According to her, this Court earlier erred in holding that the substantial question (b) was based on Dr Prafulla Hede v. Asst. Commissioner of Income Tax, Circle-1(1), Panaji . But the fact remains, Ms Razaq adds, that Dr Prafulla Hede ignored the Apex Court s dictum in Ambika Quarry Works v. State of Gujarat AIR 1987 SC 1073 and subsequent judgments, including Nature Lovers Movement v. State of Kerala (2009) 5 SCC 373. 12. Ms Razaq has also drawn our attention to Section 260A of the Act. Then, she has submitted that this Court may, nay ought to, frame a substantial question of law even at the stage of final hearing if this Hon ble Court is satisfied that such a question arises in the matter . She has eventually argued that in Dr Prafulla Hede, there was no appreciation of the decisions rendered by the Apex Court regarding grant of renewals of mining leases in forest lands after the enforcement of the Forest Conservation Act, 1980 . To support her contentions, Ms Razaq has, among others, relied on Sir Chunilal Mehta Sons v. Century Spinning and Mfg Ltd AIR 1962 SC 1314. Respondent : 13. Shri Pardiwala, the learned counsel for the respondent-assessee has submitted that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 213) and subsequent decisions are required to be referred to a larger Bench? C. Whether in the facts and circumstances of the case, the findings of the CIT (Appeals) and the ITAT are perverse findings? (italics supplied) 17. Faced with the objection the assessee has raised, we will examine whether the additional questions of law now the Revenue presented are the same as or similar to question (b) this Court refused to take as a substantial question of law. If it is similar, is there any bar against this Court s reframing a substantial question of law despite its earlier refusal? Before we determine this issue, let us examine a few precedents cited at the Bar. A New, Additional Question of Law: 18. In Commissioner of Income-tax-I, Lucknow, v. Indo-Gulf Fertilizers Ltd. [2012] 26 taxmann.com 66 (Allahabad), the High Court of Allahabad has framed two substantial questions of law and admitted the Revenue s appeal. During the final hearing, the Revenue s counsel wanted the Court to frame one additional substantial of law keeping in view the pleadings on record and the substantial question of law already framed. The Court was prepared to do so, but the assessee s counsel objected. 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a former appeal of a case is binding in a later appeal [of the same case.] It differs from the law of the trial, res judicata, or stare decisis. On the other hand, Law of the Trial is a legal theory or court ruling that is not objected to and is used or relied on in a trial. 24. In Messenger v. Anderson 225 U.S. 436, 444 (1912) Justice Holmes observes that in the absence of statute, the phrase, law of the case, as applied to the effect of previous orders on the later action of the court rendering them in the 69th Edn. same case, merely expresses the practice of courts generally refusing to reopen what has been decided. It is not a limit to their power, though. 25. The law-of-the-case doctrine is said to come in at least two forms. One form, also called the mandate rule, forestalls relitigation in the trial court of matters that were explicitly or implicitly decided by an early appellate decision in the same case. Once an appellate court decides an issue, then it stands settled in further proceedings in the trial court and controls the case. The other form generally binds a court to its own earlier ruling in the same case-in the absence of an intervening ruling by a higher court on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petition could be repeated and fresh orders sought on the basis of identical facts. 30. Indeed, in In Prahlad Singh v. Col. Sukhdev Singh (1987) 1 SCC 727 , the Supreme Court has quoted with approval its earlier dictum in Satyadhyan Ghosal v. Deorajin Debi AIR 1960 SC 941. It is for the proposition that the principle of res judicata also applies between two stages in the same proceedings if a party to the proceedings wants to reagitate the matter at a later stage, despite a court deciding the matter at an earlier stage. 31. Let us examine Commissioner of Income-tax v. Biju Patnaik [1978] 112 ITR 555 (ORI.). There, the Orissa High Court has considered the relative scope of subsections (1) and (2) of Section 256, a provision deleted in 2005. Under sub-section (1), either an assessee or the Commissioner may require the Appellate Tribunal to refer to the High Court any question of law. Then, the Tribunal, in its discretion, draws up a statement of the case and refers it to the High Court. On the other hand, if Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner may apply under sub-section (2) of Section 256 to the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt. 35. Finally, we may refer to Kishanchand v. Ramkrishna 1991 SCC OnLine MP 105 . There, Madhya Pradesh High Court, per R. C. Lahoti J (as his Lordship then was), considered under Section 100 of CPC an identical question as has arisen now before us. In a second appeal arising out of eviction proceedings, Madhya Pradesh High Court chose a few questions from the memorandum of appeal and framed them into substantial questions of law. But it has rejected a few others from the appeal memorandum. During the final hearing, the appellant wanted the Court to reframe those questions of law the Court had omitted earlier. 36. In that context, Kishanchand has noted that the appellant may state the questions of law and press the High Court to formulate those questions as the substantial questions of law. It must be at the stage of the motion hearing. Then, the High Court may either agree or disagree with the appellant's prayer. The Proviso protects, Kishanchand notes, the High Court s powers to hear such other question of law which might not have been formulated by it, if it is satisfied that such a question, the case involves . But the proviso contemplates hearing being permitted on suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section. (italics supplied) 39. Seen from the above extract, sub-section (4) of Section 260A, especially the proviso appended to it, liberates the High Court to formulate and hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it. But it does not, despite the Revenue s insistence, empower the High Court to reconsider its earlier view in the same proceedings and reformulate a question of law which it had refused to formulate. In other words, (1) a question that escaped the Court s earlier attention, or (2) a question the appellant not presented to the Court, or even (3) a question that cropped up because of subsequent developments stands on a different footing. But a question the High Court consciously refused to treat as a substantial question of law fails to qualify under none of the above three categories. 40. The Revenue ought to have challenged this Court s order, dated 7 January 2016, which refused to frame a particular question as a substantial question of law. That said, the Revenue is not remediless. If it choo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment Corporation of Maharashtra Ltd., found no distinction in facts or law between the orders for AY 2002-03 and AY 2003-04. Unquestionable as the proposition of law in Forest Development Corporation of Maharashtra Ltd., we wonder how it relates to the issue before us. Regrettably, this case does not help the Revenue s cause. 46. As we have already noted, what we have been faced with may not be termed res judicata per se. In some jurisdictions, it is called the law of the case: entertaining what has been rejected earlier in the same proceedings. And we have addressed that principle above. So even if we were to hold that res judicata is alien to adjudication under taxation regime, that plea is unavailable for the Revenue here. The Circular: 47. Ministry of Finance, the Government of India, has issued Circular No.17/2019. It reveals the Revenue s policy decision. To file appeals before the High Court, the Central Board of Direct Taxes has fixed the limit of ₹ 1,00,00,000/-. Here, the disputed tax falls short of that amount. In tune with the Revenue s consistent policy, the learned Standing Counsel has already told us that if this Court does not find favour with the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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