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JUDGEMENTS OWPIT 823/2000 Back To Index
OF JAMMU & KASHMIR
Date Of Decision :07-12-2000
M/s Nek Ram Sharma and Co.
Vs Income-tax Appellate Tribunal & Ors
Ms. Sindhu Sharma, Advocate,
JUDGEMENT AND ORDER
Per Dr. B. P. Saraf, Chief Justice (Oral):
This is an appeal under section 260A of the Income-tax Act, 1961 ("Act") against the order of the Income-tax Appellate Tribunal dated 31st August, 1999, by which the Income-tax Appellate Tribunal (Tribunal) remanded the matter to the Commissioner of Income-tax (Appeals) to decide the proper gross profit rate to be applied after giving an opportunity of hearing to both the assessee as well as the Assessing Officer and to pass a fresh order.
2. We have heard the learned counsel for the appellant, Ms. Sindhu Sharma, who submits that the Tribunal was not justified in remanding the matter to the Commissioner of Income-tax (Appeals) because it was obligatory on its part to consider the relevant facts and decide the proper gross profit rate itself. She submits that the question whether the Tribunal should have decided the matter instead of remanding the matter to the Commissioner (Appeals) is itself a question of law which should be examined by this Court in an appeal under section 260A of the Act. In support of the contention reliance is placed on the decision of the Supreme Court in Udhavdas Kewalram v CIT (1967) 66 ITR 462.
3. We have given our careful consideration to the above submission of the learned counsel for the appellant. We, however, find it extremely difficult to accept the same. The real controversy before the Tribunal in the instant case is about certain additions totaling Rs.19,20,915/- made by the Assessing Officer to the taxable income of the assessee on account of profits allegedly suppressed by him by under-billing. On appeal of the assessee, the Commissioner of Income-tax (Appeals) deleted the additions. Revenue appealed to the Tribunal. The Tribunal, on consideration of the facts and circumstances of the case, for the reasons set out in its order, found that the Commissioner (Appeals) had not applied his mind properly to the facts and circumstances of the case and the issues arising before him. The Tribunal, therefore, remanded the matter to the Commissioner (Appeals) for a fresh determination of the controversy after giving proper opportunity of hearing to the assessee and the revenue. The parties before the Tribunal raised no legal issues. Nor did the Tribunal decide any legal issue, which might give rise even to a question of law not to speak of substantial question of law to justify admission of appeal under section 260A of the Act.
4. Under section 260A of the Act, appeal lies to the High Court from an order passed in appeal by the Tribunal only if the case involves "a substantial question of law". Sub-section (2) of section 260A mandates that the appeal should be filed in the form of a memorandum of appeal precisely stating therein "the substantial question of law involved". Sub-section (3) requires the High Court to formulate the substantial question of law, if it is satisfied that such a question is involved in the case. Even after an appeal is admitted and a substantial question of law formulated by the High Court, it is still open to the respondent to contend at the time of hearing that the case does not involve any such question. Thus the very foundation of an appeal under section 260A of the Act is that the case involves a substantial question of law. The jurisdiction of the High Court under this section is confined to entertain only such appeals as involve a substantial question of law.
5. Though the expression "substantial question of law "has not been defined in the Act or in any of the statutes where this expression appears, e.g., section 100 of the Code of Civil Procedure, the true meaning and connotation of this expression is now well settled by various judicial pronouncements. There is a difference between question of law and substantial question of law. It is not a mere question of law but a substantial question of law that is required for the purpose of appeal under section 260A of the Act. A question of law will be a substantial question of law if it directly and substantially affects the rights of the parties. In order to be "substantial " it must be such that there may be some doubt or difference of opinion or there is room for difference of opinion. If the law is well-settled by the Supreme Court, the mere application of it to particular facts would not constitute a substantial question of law.
6. In Chunilal V. Mehta v. Century Spinning and Manufacturing Co. AIR 1962 SC 1314, the Supreme Court, after considering a number of decisions on the point, laid down the following test for determining whether a question of law raised in the case is substantial question of law or not:
" The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so, whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest Court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law.
Applying the above test to the facts of the case before it, the Supreme Court held that the construction of the Managing Agency Agreement was not only a question of law but was also not a question either simple or free from doubt and hence involved a substantial question of law. The Supreme Court also expressed its agreement with the opinion expressed by the Full Bench of Madras High Court in R. Subba Rao v N.Veeraju AIR 1951 Mad 969 wherein it was held that when a question of law is fairly arguable, where there is room for difference of opinion on it or where the Court thought it necessary to deal with that question at some length and discuss alternative views, then the question would be a substantial question of law.
7. In State of Kerala v R.E.DSouza (1971) 3 SCR 71, the Supreme Court held that once the Supreme Court has settled a question of principle, its application to the facts of a case is not a substantial question of law.
8. Substantial question of law does not necessarily mean that the question of law must be of general importance. It would be a substantial question of law, if there is a substantial question of law between the parties.
9. In the instant case, as stated earlier, even a question of law does not arise, not to speak of a substantial question of law. Moreover, in the present case, by the impugned order, the Tribunal even did not finally decide the factual dispute between the parties. It only remanded the matter to the Commissioner( Appeals) for deciding the controversy afresh after giving proper hearing to the parties. No substantial question of law or even a question of law can arise from such an order.
10. It is clear from the foregoing discussion that this appeal under section 260A of the Act is wholly misconceived. No substantial question of law is involved in this case. In fact, not to speak of a substantial question of law, even no question of law is involved, because the Tribunal has not decided any legal issue but has merely remanded the matter to the Commissioner (Appeals) for deciding the factual controversy between the parties afresh after giving them an opportunity of hearing.