Case Note & Summary
The Revenue (Commissioner of Income Tax) appealed against the order of the Income Tax Appellate Tribunal dated 4 September 2014. The High Court admitted the appeal on 7 January 2016, framing two substantial questions of law and refusing to frame a third. Subsequently, the Revenue filed a miscellaneous application seeking to frame the same or similar substantial question of law, citing a Supreme Court judgment. The court examined whether a coordinate bench could reconsider the earlier refusal. The disputed tax was less than ₹1 crore, and the Revenue had issued a circular not to contest such matters. The court held that judicial discipline prevents a coordinate bench from reconsidering an earlier order of the same strength. The Revenue's application was dismissed, and the appeal was disposed of without adjudicating the two framed questions due to the low tax effect.
Headnote
A) Civil Procedure - Judicial Discipline - Coordinate Bench - Reconsideration - A coordinate bench of the same strength cannot reconsider an earlier refusal to frame a substantial question of law, as it would violate judicial discipline and the principle of stare decisis. The earlier order, even if erroneous, binds the subsequent bench unless appealed. (Paras 1-3, 8-9)
B) Income Tax - Appeal - Low Tax Effect - Revenue's Circular - The Revenue's circular not to contest matters with disputed tax less than ₹1 crore applies, and the appeal is dismissed on that ground alone. (Para 4)
C) Income Tax - Substantial Question of Law - Framing - Section 260A of Income Tax Act, 1961 - The court refused to frame the third substantial question of law as the earlier bench had already refused, and the Revenue's miscellaneous application was dismissed. (Paras 8-9)
Issue of Consideration
Whether a coordinate bench of the same strength can reconsider and frame a substantial question of law after an earlier bench had refused to frame it.
Final Decision
The miscellaneous application filed by the Revenue is dismissed. The tax appeal is disposed of without adjudicating the two framed substantial questions of law, as the disputed tax is less than ₹1 crore and the Revenue's circular applies.
Law Points
- Doctrine of judicial discipline
- Coordinate bench cannot reconsider earlier refusal to frame substantial question of law
- Revenue's circular on low tax effect
- Section 260A of Income Tax Act
- 1961
Case Details
2020 LawText (BOM) (10) 82
M.S. Sonak, Dama Seshadri Naidu
Ms. Amira Razaq (for Appellant), Shri P. Pardiwala with Shri Ryan Menezes (for Respondent)
Commissioner of Income Tax
V. M. Salgaonkar Brothers Private Limited
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Nature of Litigation
Tax appeal by Revenue against order of Income Tax Appellate Tribunal
Remedy Sought
Revenue sought to have additional substantial question of law framed and appeal adjudicated
Filing Reason
Revenue dissatisfied with Tribunal order dated 4 September 2014
Previous Decisions
Assessing Officer disallowed expenditure under Section 14A; Commissioner (Appeals) partly allowed assessee's appeal; Tribunal dismissed Revenue's appeal and allowed assessee's appeal; High Court admitted appeal on 7 January 2016 framing two substantial questions of law and refusing third
Issues
Whether a coordinate bench can reconsider an earlier refusal to frame a substantial question of law
Whether the Revenue's circular on low tax effect applies
Submissions/Arguments
Revenue argued that a Supreme Court judgment on identical issue warrants framing of the third substantial question of law
Respondent-assessee objected to the miscellaneous application
Ratio Decidendi
A coordinate bench of the same strength cannot reconsider an earlier refusal to frame a substantial question of law, as it would violate judicial discipline. The earlier order, even if erroneous, binds the subsequent bench unless appealed. Additionally, the Revenue's circular not to contest matters with disputed tax less than ₹1 crore applies.
Judgment Excerpts
The Revenue is the appellant in this tax appeal; it was dissatisfied with the order, dated 4 September 2014, of the Income Tax Appellate Tribunal.
Now the question before us is this: can we—a Bench of different composition but of the same strength, though—reconsider the issue, disregarding its earlier refusal, and frame a substantial question of law, afresh?
The disputed tax is less than ₹ one crore. Suppose we confine ourselves to the two substantial questions of law already framed. In that case, we need not adjudicate them on the merits because of the Circular the Revenue has issued earlier, setting out the Revenue’s policy not to contest the matters with less than one crore disputed tax.
Procedural History
Assessment year 2008-09: Assessee filed returns; Revenue issued notice under Section 143(2) in August 2009; Assessing Officer passed order on 13 December 2010 disallowing expenditure under Section 14A; Assessee appealed to Commissioner (Appeals) who partly allowed appeal in November 2013; Both parties appealed to ITAT; ITAT dismissed Revenue's appeal and allowed assessee's appeal on 31 October 2014; Revenue filed Tax Appeal No. 72/2015; High Court admitted appeal on 7 January 2016 framing two substantial questions of law and refusing third; Revenue filed miscellaneous application seeking to frame third substantial question of law; Present judgment on 13 October 2020.
Acts & Sections
- Income Tax Act, 1961: Section 14A, Section 143(2), Section 260A
