Gujarat High Court dismisses appeals of Principal Commissioner of Income Tax

Gujarat High Court dismisses appeals of Principal Commissioner of Income Tax

States the pleading under Section 260A of the Income Tax Act can only be admitted if it adheres to the procedures

The Gujarat High Court has dismissed all appeals filed by the Principal Commissioner of Income Tax (Central) stating that they did not involve any substantial question of law.

The appeals were preferred by the Principal Commissioner of Income Tax (Central), Surat, under Section 260A of the Income Tax Act, based on the common order passed by the Income Tax Appellate Tribunal (ITAT).

The assessing officer (AO) had passed an assessment order, treating an amount of Rs.13,86,85,279 as an undisclosed capital gain of the assessee. The amount represented the sale consideration of one-third share in the land.

The assessee appealed against the AO’s order to the first appellate authority, meaning, the Commissioner of Income Tax (Appeals), which ruled in favor of the assessee.

Thereafter, the revenue department filed appeals before the ITAT, challenging the decision of the CIT-A. However, the tribunal dismissed the appeals through the impugned common order.

The bench comprising Justice Vipul M. Pancholi and Justice Devan M. Desai cited the Supreme Court ruling in the M. Janardhana Rao vs Joint Commissioner of Income Tax [LQ/SC/2005/108] case.

According to the ruling, without insisting on the statement of substantial question of law in the memorandum of appeal and formulating the same at the time of admission, the high court was not empowered to decide the appeal under Section 260A, without adhering to the procedure prescribed under Section 260A.

The term 'substantial question of law' has been defined through various judicial pronouncements, and refers to a question that directly or indirectly affects substantial rights of the parties, has public importance, the issue is not settled by the pronouncement of the court or privy council, or by the federal court, or is not free from difficulty, and calls for a discussion for alternative views.

Thus, the bench held, “If the facts are examined on the touchstone of the decisions rendered by the Supreme Court, the present appeals do not involve any substantial question of law.”