Introduction:

In a recent development, the Hon’ble Supreme Court of India in the matter of ADIT (Int Taxn) 2 HYD and Anr. Versus Deepanjan Roy ITA 157270/2025, dismissed the SLP and upheld the impugned order of Hon’ble High Court for the State of Telangana in W.P. 23573/2024. The High Court had passed its Order in the matter of Sri Venkataramana Reddy Patloola versus Deputy Commissioner of Income Tax, Circle 1(1), Hyderabad and Others W.P. 13353/2024,which was challenged by the Income Tax Department in the Supreme Court.

This dismissal has once again brought into focus the ongoing legal controversy surrounding the scope of powers exercised by the Jurisdictional Assessing Officer (JAO) and the Faceless Assessing Officer (FAO) in issuing notices under Sections 148A and 148 of the Income-tax Act, 1961, specifically after the introduction of Section 151A and the issuance of CBDT Notification No. 18/2022 dated 29.03.2022.

The judicial landscape remains divided, with multiple High Courts across India adopting varying interpretations, some in favour of the revenue, others siding with the assessee thereby escalating the need for a final pronouncement by the Supreme Court. The dismissal of the SLP in Deepanjan Roy invites a closer examination of its implications under the doctrine of merger and the nature of precedential value, if any, that can be attributed to such a dismissal.

Article 136 of the Constitution of India:

The article 136 of the constitution of India titled ‘special leave to appeal by the Supreme Court’, gives discretionary power to the Supreme Court of India to grant a special leave to appeal from any judgment, decree, determination, sentence or order passed by any court or tribunal in the territory of India except by any court, tribunal constituted by or under any law related to the armed forces of India. The Article, as the heading suggests, provides a “special” power overriding the Articles in Chapter IV of the Constitution of India.

The power is intended to correct patent and manifested injustice caused to the aggrieved and correct errors of law if any in the previous judgment, decree, determination, sentence or orders. Justice R.C. Lahoti in the matter of Kunhayammed vs State of Kerala, reported in (2000) 6 SCC 359 described the power of discretion in Article 136 as “an untrammelled reservoir of power incapable of being confined to definitional bounds; the discretion conferred on the Supreme Court being subjected to only one limitation, that is, the wisdom and good sense or sense of justice of the judges”.

Article 136 entails a two-stage process: (a) The Court first considers whether the case merits admission under its special leave jurisdiction (b) If leave is granted, the petition is converted into a regular appeal and adjudicated accordingly.

Supreme Court Rules:

Under the Supreme Court Rules, 2013 (Order XXI), dismissal of an SLP can be with or without notice to the opposite party and may be expressed via a speaking or non-speaking order. It is crucial to understand that dismissal at the SLP stage does not involve an exercise of appellate jurisdiction per se, but rather reflects the Court’s discretion not to interfere.

Legal Consequence of SLP Dismissal:

Dismissal of SLP by the apex court can be through a speaking or a non-speaking order. It is the discretion of the court whether it provides reasons for the dismissal of the petition.

The legal effect of an SLP dismissal depends heavily on its form. In case of a Non-Speaking Order i.e. a simple, unexplained rejection (e.g., “SLP dismissed”) implies only that the Court chose not to exercise its jurisdiction under Article 136. Such a dismissal carries no precedential value and does not result in the application of the doctrine of merger. Whereas, in case of a Speaking Order (With Reasons); if the dismissal is accompanied by reasons, it still does not trigger merger as per Kunhayammed v. State of Kerala (supra), but any legal principles declared in the Order would attain binding force under Article 141 of the Constitution, applicable across all courts and authorities in India.

While hearing the SLP the court is not exercising its appellate jurisdiction rather it is applying its discretionary jurisdiction to decide whether to grant the appeal or not. If the SLP is dismissed then the expression of the opinion of the Court is limited to that a case for invoking appellate jurisdiction of the court was not made out.

Doctrine of Merger :

Doctrine of merger is a common law doctrine founded on principles of propriety in the hierarchy of the judicial system as per which, where an appeal or revision is preferred against an order and the superior court or forum or tribunal modifies, reverses, or affirms the order of the inferior court or forum or tribunal then the decision of the inferior court or forum or tribunal merges in the decision of the superior forum and decision of the superior forum subsists and remains operative and is enforceable in the eyes of the law. Courts have laid down that three preconditions attract applicability of the doctrine of merger: (a) jurisdiction exercised is appellate, revision or review; (b) the jurisdiction is exercised after issue of notice; (c) there is full hearing in presence of both the parties.

In case of dismissal of SLP, the apex court merely decides on the grant of leave of appeal to SLP and any rejection of the SLP is not in itself an imprimatur of the apex Court on the lead to the assumption that it had necessarily decided by implication the correctness of the decision under challenge. [Supreme court Employees Welfare Association vs Union of India (1989) 4 SCC 187]

Dismissal of the SLP means that court does not consider it to be a fit case for exercising its jurisdiction under Article 136 of the Constitution. An in limine dismissal of special leave petition does not mean that the apex Court has affirmed the judgment or the action impugned therein. The order rejecting the special leave petition at the threshold without detailed reasons does not constitute any declaration of law or a binding precedent. Therefore, it cannot be said that dismissal of SLP without a speaking order amounts to confirmation by the Court of the order against which leave was sought for and the order under challenge does not merge with order of the supreme court.

Judicial Consequences:

With respect to the applicability of doctrine of merger in case of dismissal of SLP by a reasoned Order, the Apex Court in Kunhayammed vs State of Kerala (Supra) has clearly laid down the law which has been followed through the years. As per the judgment in case of dismissal through a speaking order supported by reasons, then doctrine of merger does not apply but reasons stated by the court attract Article 141. If in the reasons there is a law declared then it would be binding on all the courts, tribunals and forums in the territory of India and if the reasons contain statements other than the points of law then it is binding on the parties and the court or tribunal whose order is challenged.

Doctrine of merger is applicable only after leave for special leave petition is granted by the apex court.

Hon’ble Supreme Court, in the case of P. Singaravelan vs. Distt. Collector, CIVIL APPEAL NO(S). 9538-9546 OF 2019, dt. 18.12.2019, had reiterated the position of law that If such an order of the Supreme Court is non-speaking, it does not constitute a declaration of law under Article 141 of the Constitution, or attract the doctrine of merger. In such a situation, it is open for any court to proceed to decide the appeals uninfluenced by the prior order of the Court dismissing SLP. However, it is to be borne in mind that the order of the High Court in that case will have the full effect to the rule of ‘binding precedence’.
It is clear that there has been no pronouncement by the Supreme Court constituting the law of the land as to the interpretation, where the SLP was dismissed by Supreme Court.
Analysis of the Order in ADIT (Int Taxn) 2 HYD and Anr. Versus Deepanjan Roy:

The court has pronounced the order stating “having heard the learned counsel appearing for the petitioners – revenue and having gone through the materials on record, we find no good reason to interfere with the impugned order passed by the High Court.”, while dismissing the SLP. The court makes an observation that after hearing the petitioners there was no reason to interfere with the Order of the High Court. Doctrine of merger is not applicable but the Order of the Court is binding on the parties to the matter and on the High Court of Telangana.

Unresolved Position on Section 151A Controversy:

The core controversy pertains to whether, post the introduction of Section 151A and the aforementioned CBDT Notification, jurisdiction to issue notices under Sections 148 and 148A lies exclusively with the FAO or can also be exercised by the JAO. High Courts across India have delivered divergent verdicts, resulting in legal uncertainty and inconsistent administrative practice. Importantly, the issue is sub judice before the Hon’ble Supreme Court in Union of India & Ors. v. Suryalakshmi Cotton Mills Ltd. SLP (C) No. 27736/2023 and batch matters. A conclusive interpretation from the apex court, following full admission and hearing, remains awaited and will be crucial in settling the legal position.

Conclusion:

The dismissal of the SLP in ADIT v. Deepanjan Roy does not resolve the larger legal conundrum surrounding the applicability and effect of Section 151A of the Income-tax Act. While the Supreme Court Order affirms the Telangana High Court’s ruling for the parties concerned, it does not establish a binding precedent for other jurisdictions nor does it attract the doctrine of merger. Until the Supreme Court issues a reasoned judgment in Suryalakshmi Cotton Mills and connected matters, the jurisprudential uncertainty on the issue is likely to persist. Practitioners and authorities must therefore tread carefully, factoring in the position of the jurisdictional High Court while adjudicating or defending reassessment proceedings under the new regime.

Posted on: July 29th, 2025