RYATAR SAHAKARI SAKKARRE KARKHANE NIYAMIT vs. ASST. COMMISSIONER OF INCOME TAX C 1

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL  APPEAL Nos.4515­4524 OF 2019 (Arising out of S.L.P.(C) Nos.14053­14062 of 2017) Ryatar Sahakari Sakkarre Karkhane Niyamit ….Appellant(s) VERSUS Asst. Commissioner of Income Tax C­1 & Ors. ….Respondent(s)

J U D G M E N T Abhay Manohar Sapre, J. 1. Leave granted. 2. These   appeals   are   filed   against   the   final judgment   and   order   dated   26.02.2016   passed   by the   High   Court   of   Karnataka,   Circuit   Bench   at Dharwad     in   ITA   Nos.100111­100120   of   2015 1 Digitally signed by ASHOK RAJ SINGH Date: 2019.05.01 16:39:16 IST Reason: Signature Not Verified

whereby the High Court dismissed the ITAs filed by the appellant(assessee) herein. 3. These appeals are filed by the assessee against the   order   passed   by   the   High   Court   by   which   a bunch of appeals, some filed by the assessee and some   filed   by   the   Commissioner   of   Income   Tax (Revenue) under Section 260­A of the Income Tax Act, 1961(hereinafter referred to 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 Commissioner of Income Tax were   concerned,   they   were   allowed.   The   assessee has felt aggrieved and has filed these appeals by way of special leave in this Court. 5. We do not consider it necessary to set out the facts of the case in detail in the light of the order 2

that   we   are   passing   for   the   disposal   of   these appeals. 6. Heard   Ms.   Anitha   Shenai,   learned   senior counsel   for   the   appellant(assessee)   and   Mr.   K. Radhakrishnan,   learned   senior   counsel   for   the respondents. 7. Having   heard   the   learned   counsel   for   the parties and on perusal of the record of the case, we are inclined to allow these appeals, set aside the impugned order and remand the case to the High Court with a request to decide the appeals afresh on merits in accordance with law. 8. The need to remand these appeals is called for because from the 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 Court observed, "Revenue has raised the 3

following questions of law in its appeals” and then set out three questions. 9. It is not in dispute that the High Court did not frame any question as required under Section 260­A (3) of the Act. 10. This Court recently examined this question in Civil Appeal No.3968 of 2019 arising out of S.L.P.(c) No.29524 of 2017  (PR. Commissioner of Income Tax   Central­2   vs.   M/s   A.A.   Estate   Pvt.   Ltd.) decided on 16.04.2019.   Paras 21 to 26 and 28 are apposite which read as under: “21. As is clear from reading of Para 2, the two questions set out in Para 2 were not the questions framed by the High Court as was required to be framed under Section 260­A(3) of the Act for hearing the appeal but were the questions urged by the appellant.

the High Court fall under Section 260­A (3) of the Act. The appeal is heard on merits only on the questions framed by the High Court under sub­section (3) of Section 260­A of the Act as provided under Section 260­A (4) of the Act.  In other words, the appeal is heard only on the questions framed by the Court. 24. Third, if the High Court was of the view that   the   appeal   did   not   involve   any substantial   question   of   law,   it   should   have recorded a categorical finding to that effect saying   that   the   questions   proposed   by   the appellant   either   do   not   arise   in   the   case or/and are not substantial questions of law so as to attract the rigor of Section 260­A of the Act for its admission and accordingly should have dismissed the appeal in limine. 25. It was, however, not done and instead the High Court without admitting the appeal and framing any question of law issued notice of appeal to the respondent­assessee, heard both the parties on the questions urged by the appellant and dismissed it. In our view, the respondent had a right to argue “at the time   of   hearing”   of   the   appeal   that   the questions   framed   were   not   involved   in   the appeal and this the respondent could urge by taking recourse to sub­ section (5) of Section 260­A of the Act. But this stage in this case did   not   arise   because   as   mentioned   above, the High Court neither admitted the appeal nor framed any question  as required under sub­section (3) of Section 260­A of the Act. The expression “such question” referred to in sub­ section (5) of Section 260­A of the Act means the questions which are framed by the High Court under sub­section (3) of Section 5

260­A  at the time of admission of the appeal and not the one proposed in Section 260­A (2) (c) of the Act by the appellant. 26. We are, therefore, of the view that the High   Court   did   not   decide   the   appeal   in conformity   with   the   mandatory   procedure prescribed in Section 260­A of the Act. 28. In the light of the foregoing discussion, we consider it just and proper to remand the case   to   the   High   Court   for   deciding   the appeal afresh to answer the questions framed above on merits in accordance with law.” 11. The   facts   of   the   case   at   hand   and   the   one involved in M/s A.A. Estate Pvt. Ltd. quoted above are identical and, therefore, keeping in view the law laid down by this Court in  M/s A.A. Estate Pvt. Ltd.(supra), these appeals have to be allowed and the case needs to be remanded 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 High Court for hearing afresh   only   after   framing   appropriate   substantial 6

question(s) of law as required under Section 260­ A(3) of the Act. 13. Having formed an opinion to remand the case to   the   High   Court,   we   have   not   expressed   any opinion on the merits of the issues involved in these appeals. The High Court will, therefore, decide the appeals   strictly   in   accordance   with   law, uninfluenced   by   any   observations   made   in   the impugned order and in this order.

.………...................................J. [ABHAY MANOHAR SAPRE]

…...……..................................J. [DINESH MAHESHWARI] New Delhi; May 01, 2019 7