Maharaja Amrinder Singh vs. CWT (Supreme Court)

(i) Section 27-A of the Act, which provides a remedy of appeal to the High Court against the order of the Income Tax Appellate Tribunal, is 6 modeled on existing Section 100 of the Code of Civil Procedure, 1908 (hereinafter referred to as “the Code”). Indeed, as would be clear, the language of Section 27-A of the Act and Section 100 of the Code is identical. Both the Sections are, therefore, in pari materia. It is a case where Section 100 of the Code is bodily lifted from the Code and incorporated in Section 27-A of the Act with minor additions and alterations by following the principle of “legislation by incorporation”.

(ii) A three Judge Bench of this Court in Santosh Hazari vs. Purushottam Tiwari (Deceased) by L.Rs., (2001) 3 SCC 179 had examined the scope of Section 100 of the Code of the Civil procedure, 1908 (hereinafter referred to as “the Code”). Justice R.C. Lahoti (as His Lordship then was) speaking for the Bench laid down the following proposition of law in Para 9: 7

“9. The High Court cannot proceed to hear a second appeal without formulating the substantial question of law involved in the appeal and if it does so it acts illegally and in abnegation or abdication of the duty case on Court. The existence of substantial question of law is the sine qua non for the exercise of the jurisdiction under the amended Section 100 of the Code. (See Kshitish Chandra Purkait v. Santosh Kumar Purkait,(1997) 5 SCC 438 Panchugopal Barua v. Umesh Chandra Goswami, (1997) 4 SCC 413 and Kondiba Dagadu Kadam v. Savitribai Sopan Gujar, (1999) 3 SCC 722.)”

(iii) His Lordship then in Paras 10 to 14 succinctly explained the meaning of the words “substantial question of law” and “question of law” and held that in order to admit the second appeal, what is required to be made out by the appellant being sine qua non for exercise of powers under Section 100 of the Code, is existence of “substantial question of law” arising in the case so as to empower the High Court to admit the appeal for final hearing by formulating such question. In the absence of any substantial question of law arising in appeal, the same merits dismissal in limine on the ground that 8 the appeal does not involve any substantial question of law within the meaning of Section 100 of the Code.

(iv) In our considered opinion, the interpretation made by this Court of Section 100 in Santosh Hazari’s Case (supra), would equally apply to Section 27-A of the Act because firstly, both Sections provide a remedy of appeal to the High Court; Secondly, both Sections are identically worded and in pari materia; Thirdly, Section 27-A is enacted by following the principle of “legislation by incorporation”; fourthly, Section 100 is bodily lifted from the Code and incorporated as Section 27-A in the Act; and lastly, since both Sections are akin to each other in all respects, the appeal filed under Section 27-A of the Act has to be decided like a second appeal under Section 100 of the Code.

(v) Now coming to the facts of the case, we find that the High Court proceeded to decide the appeals without formulating the substantial question(s) of law. Indeed, the High Court did not make any effort to find out as to whether the appeals involved any substantial question(s) of law and, if so, which is/are that question(s) and nor it formulated such question(s), if in its opinion, really arose in the appeals. The High Court failed to see that it had jurisdiction to decide the appeals only on the question(s) so formulated and not beyond it. [Section 27(5)].

(vi) In the light of foregoing discussion and keeping in view the law laid down in the case of Santosh Hazari (supra), we are of the considered view that the impugned orders are not legally sustainable and thus liable to be set aside.