Karnataka High Court
The Pr Commissioner Of Income Tax vs Harisha on 4 March, 2025
Author: Krishna S Dixit
Bench: Krishna S Dixit
-1-
NC: 2025:KHC:9112-DB
ITA No. 37 of 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF MARCH, 2025
PRESENT
THE HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR
INCOME TAX APPEAL NO. 37 OF 2025
BETWEEN:
1. THE PR. COMMISSIONER OF INCOME - TAX,
CENTRAL, 3RD FLOOR, C.R. BUILDING,
QUEEN'S ROAD, BENGALURU - 560 001.
2. THE PR. COMMISSIONER OF
INCOME - TAX, CENTRAL, BANGALORE.
PRESENT ADDRESS
THE DEPUTY COMMISSIONER OF INCOME TAX,
CENTRAL CIRCLE, NO.305/AAYAKAR BHAVAN,
NO.21/16, RESIDENCY ROAD,
NAZARBAD, MYSURU - 570 010.
...APPELLANTS
(BY SRI. Y.V.RAVIRAJ., ADVOCATE)
Digitally signed by AND:
SHAKAMBARI
Location: HIGH
COURT OF HARISHA,
KARNATAKA
NO.217, A BLOCK, 7TH MAIN,
VIJAYANAGAR, MYSORE - 570 017.
PAN NO.ABCPH 3177L.
...RESPONDENT
(BY SRI.RAVISHANKAR S.V., ADVOCATE)
THIS ITA/INCOME TAX APPEAL IS FILED UNDER SEC.260-
A OF INCOME TAX ACT 1961, PRAYING TO i. FORMULATE THE
SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. ii. ALLOW
THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE
INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA
-2-
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ITA No. 37 of 2025
NO.816/BANG/2024 DATED 16.08.2024 FOR ASSESSMENT
YEAR 2019-2020 ANNEXURE - A AND CONFIRM THE ORDER OF
THE APPELLATE COMMISSIONER CONFIRMING THE ORDER
PASSED THE DEPUTY COMMISSIONER OF INCOME TAX,
CENTRAL CIRCLE, MYSORE.
THIS APPEAL, COMING ON FOR ORDERS, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR
ORAL JUDGMENT
(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)
Revenue is invoking the appellate jurisdiction of this
Court for assailing the ITAT order dated 16.08.2024,
whereby relief has been accorded to the Assessee.
2. The Revenue has structured this appeal on the
following substantial questions of law:
"Whether on the facts and in the
circumstances of the case, the Tribunal was
correct in law in setting aside the order under
section 263 passed by PCIT by holding that the
same is not within the purview of section 263 of
the act without considering the fact that the
assessment order without valuation report of the
DVO is erroneous and prejudicial to the interest of
Revenue"?
3. Learned counsel representing the Assessee
vehemently argues that going by the pith and substance of
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the same question, it cannot be termed as a 'question of
law', let alone 'Substantial Question of Law'.
4. This Court in ITA No.383/2016, disposed on
20.07.2022, has discussed the idea of Substantial
Question of Law keeping in view Section 100 of the CPC,
as under:
"A. THE RIGHT OF APPEAL U/S 260A; ITS SCOPE
& CONTENT:
(i) The Kerala High Court in CIT vs. WOONDUR
JUPITAR CHITS (P) LIMITED11 had pointed out that
the provisions of 1961 Act providing for reference on a
question of law arising out of an order of the Tribunal
were 'Archaic' and therefore there was an eminent
need for rationalisation of the same. Accordingly, the
Parliament vide Finance (2) Act, 1998 inserted inter
alia Sections 260A & 260B in Chapter - XX of the
1961 Act to provide for an appeal against the orders
of Tribunal directly to the High Court, within whose
jurisdiction, Office of the AO is situate. Sub-section (1)
of Section 260A reads as under:
"S. 260A. (1) An appeal shall lie to the High
Court from every order passed in appeal by the
Appellate Tribunal [before the date of
establishment of the National Tax Tribunal], if
the High Court is satisfied that the case involves
a substantial question of law."
(Other sub-sections not being much relevant are
not reproduced)
213 ITR 73
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Appeal lies only if the case involves a substantial
question of law, which the memorandum of appeal,
ideally speaking, has to precisely state. However, if
the High Court is satisfied that a substantial question
of law is otherwise involved, it may itself formulate
such question and admit the appeal. Appeal shall be
ordinarily heard on the question so formulated.
However, there is nothing, in the Act which would
abridge the power of Court to hear, for reasons to be
recorded, the appeal on any other substantial question
of law, in addition to or substitution of the one framed
in the appeal memo, if it is satisfied that the case
involves such other question.
(ii) The appeal, be it of the Revenue or the Assessee,
lies only "... if the High Court is satisfied that the case
involves a substantial question of law ..." Sub-Section
(7) of Section 260A states that the provisions of Code
of Civil Procedure, 1908 relating to appeals to the High
Court, as far as may be, apply to these appeals. This
Section is analogous to Section 100 of CPC.
Noticeably, both these Sections i.e., Section 260A of
1961 Act and Section 100 of CPC do not define the
expression 'substantial question of law'. The Apex
Court vide SANTOSH HAZARI vs. PURUSHOTTAM2 is of
the view that the word 'substantial' qualifies the term
'question of law'; it means a question having
substance, essential, real, of sound worth, important
or considerable. The substantial question of law on
which an appeal shall be heard need not necessarily
be a question of law of general importance. To be
'substantial', a question of law must be debatable and
it must have a material bearing on the decision of the
case in the sense that if answered either way insofar
as the rights of the parties are concerned.
(iii) It is profitable to see what Kanga & Palkhivala's
'Law and Practice of Income Tax', Vol. II, Eleventh
Edn., Lexis Nexus at pages 3316 - 17 states:
"...A question is a substantial question of law if:
(i) it directly or indirectly affects substantial
251 ITR 84
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rights of the parties; or (ii) it is of general
importance; (iii) it is an open question in the
sense that the issue has not been settled by a
pronouncement of the Supreme Court; (iv) it is
not free from difficulty; or (v) it calls for a
discussion for alternative view... The findings are
based on no evidence; (vii) relevant admissible
evidence has not been taken into consideration;
(viii) inadmissible evidence has been taken into
consideration; (ix) legal principles have not
been applied in appreciating the evidence; or
(x) the evidence has been misread..."
These tests are stated to be illustrative and in no
way exhaustive of the powers of the High Court to
entertain an appeal, if there is other substantive
ground of law. It hardly needs to be stated that a
provision for appeal should be liberally construed and
read in a reasonable & practical manner".
5. We are of the considered opinion that the
question framed is neither a question of law, nor a mixed
question of law & facts, more particularly when it related
to non-furnishing of valuation report of a particular
property allegedly because the Assessee did not co-
operate. Ordinarily, when the owner or occupier of the
property does not co-operate in the process of valuation,
the exercise should be undertaken by adopting best
judgment valuation principle. This reasoning animates the
impugned order of the Tribunal.
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In the above circumstances, the appeal being
unmeritorious is liable to be rejected and accordingly it is,
costs having been made easy.
Sd/-
(KRISHNA S DIXIT)
JUDGE
Sd/-
(RAMACHANDRA D. HUDDAR)
JUDGE
RD
