By TIOL News Service

NEW DELHI, FEB 27, 2019: THE issue before the bench of the Supreme Court in this case is whether the High Court's judgment dismissing the Revenue's appeal is tenable, where it neither discusses nor assigns any reason for doing so. NO is the answer. The Apex Court also held that upon hearing the arguments of both sides, the High Court is statutorily obliged u/s 260A to frame some question of law and answer the same in the affirmative or in the negative.

Facts of the case

THE assessee was subjected to Search proceedings during the relevant AY. Later, block assessment proceedings were initiated for the relevant period, so as to ascertain their tax liability. Subsequently, the Tribunal settled the issue in favor of the assessee. Thereafter, the High Court proceeded to dismiss the Revenue's appeal.

On appeal, the Apex Court was of the view that,

++ a perusal of the relevant findings of the High Court shows that it has neither discussed and nor assigned any reason in support of its conclusion for the dismissal of the appeal;

++ besides the High Court committed another error, namely that while deciding the appeal, it heard the counsel for the parties, yet did not frame any substantial question of law arising in the case. The High Court has jurisdiction to dismiss the appeal filed u/s 260A of the Act on the grounds that it does not involve any substantial question of law. Such dismissal is considered as a dismissal of the appeal in limine. The High Court has also the jurisdiction to dismiss the appeal by answering the question(s) framed on merits or by dismissing the appeal on the ground that the question(s) though framed but such question(s) does/do not arise in the appeal. The High Court, though may not have framed any particular question at the time of admitting the appeal along with other question, yet it has the jurisdiction to frame additional question at a later stage before final hearing of the appeal by assigning reasons as provided in proviso to Section 260A(4) and Section 260A(5) of the Act and lastly, the High Court has jurisdiction to allow the appeal but this the High Court can do only after framing the substantial question(s) of law and hearing the respondent by answering the question(s) framed in appellant's favour;

++ in this case, the High Court did not dismiss the appeal in limine but dismissed it after hearing both the parties. In such a situation, it 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. 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 order suffers from jurisdictional errors and, therefore, legally unsustainable for want of compliance of the requirements of sub-sections (4) and (5) of Section 260A of the Act;

++ it 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. What is decisive for deciding the case is not the conclusion alone but the reason(s)/ground(s) assigned in support of such conclusion, which results in reaching to such conclusion. Hence the matter warrants remand to the High Court for fresh disposal.

(See 2019-TIOL-87-SC-IT)