InCivil Appeal No. 5490/2023 -SC- Top Court sets aside Delhi High Court order for not following procedure under Section 260A of Income Tax Act; remands case for re-consideration
Justice B.V. Nagarathna & Justice Ujjal Bhuyan [29-08-2023]

Read Order: Bikram Singh V. Principal Commissioner of Income Tax

Chahat Varma

New Delhi, September 8, 2023: The Supreme Court has set aside an order of the Delhi High Court for not framing a substantial question of law in an appeal filed by the Revenue. The Top Court held that the High Court had not followed the procedure outlined in Section 260A of the Income Tax Act, which requires the High Court to first formulate the substantial question of law before admitting the appeal.

In the matter at hand, the appellant-assessee had raised a concern about the Delhi High Court's handling of the Revenue's appeal. The appellant had argued that the High Court had not first formulated a substantial question of law, as mandated by Section 260A of the Income Tax Act.

The bench of Justice B.V. Nagarathna& Justice Ujjal Bhuyanclarified that a High Court can entertain an appeal based on a substantial question of law (not a question of fact or only a question of law). When dealing with such an appeal, the High Court must first formulate the substantial question of law, admit the appeal, and then hear both parties on the formulated question.

The bench ruled that the issuance of notice prior to admission without framing any substantial question of law is not in accordance with Section 260A of the Income Tax Act. The High Court's correct course of action should be to either admit or reject the appeal. If the appeal is admitted, substantial question of law must be framed, and the respondent should be notified about these questions. On the other hand, if the High Court believes that no substantial question of law exists, the appeal should be dismissed. In this case, the bench held that the High Court's procedure did not align with what Section 260A of the Act mandates, and as a result, the impugned judgment was set aside on this basis alone.

Consequently, the division bench decided to remand the matter to the High Court for a re-consideration of the appeal filed by the Revenue, taking into account the requirements of Section 260A and in compliance with the law.