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Ryatar Sahakari Sakkarre Karkhane Niyamit v. Asst. Commissioner of Income Tax C-1 and Ors.

Civil Appeal · 2019 INSC 608Decided 1 May 2019
Civil Appeal Nos. 4515-4524 of 2019
Justice Abhay Manohar Sapre · Justice Dinesh Maheshwari

Background

The appellant-assessee's income-tax appeals before the Karnataka High Court (along with cross-appeals by the Revenue) were disposed of together by a common order, with the assessee's appeals being dismissed and the Revenue's being allowed. The assessee challenged this before the Supreme Court, pointing out that the High Court had never formally framed any "substantial question of law" before hearing and deciding the appeals, as mandated by Section 260-A(3) of the Income Tax Act.

Decision Breakdown

The Supreme Court found this case identical to a recent precedent it had itself decided (PR. Commissioner of Income Tax Central-2 vs. A.A. Estate Pvt. Ltd.), where it held that a High Court cannot properly decide a Section 260-A tax appeal merely by listing the questions the parties raised: it must actually admit the appeal and formally frame the substantial question(s) of law itself before hearing arguments. Since the Karnataka High Court skipped this mandatory step, the Supreme Court allowed the appeals, set aside the High Court's order, and remanded the matter for the High Court to hear the case afresh after properly framing the required questions of law. The Court deliberately expressed no view on the actual merits of the tax dispute.

Lesson Learnt

In income-tax appeals to a High Court, following correct procedure, formally framing the substantial question(s) of law before hearing the case, is not a technicality; skipping it can get the entire decision set aside and sent back for a fresh hearing, regardless of who ultimately wins or loses on the underlying facts.

Official source (sci.gov.in)View Judgment (PDF)

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