Facts of the Case

The Revenue filed appeals before the Delhi High Court against the orders passed by the Income Tax Appellate Tribunal (ITAT) in respect of Assessment Years 1996-97 and 1997-98.

During the hearing, counsel for the Revenue confirmed that for Assessment Years 1989-90 to 1995-96, no appeals had been filed against the Tribunal's orders, which were in favour of the assessee. The Tribunal, while deciding the matters relating to Assessment Years 1996-97 and 1997-98, had followed its earlier decisions rendered for Assessment Years 1989-90 to 1995-96.

It was further submitted that although appeals were stated to have been filed against the Tribunal's decisions for Assessment Years 1996-97 and 1997-98, such appeals were not traceable. Since the Tribunal's subsequent decisions were based upon its earlier orders that had attained finality, the matter came before the High Court for consideration.

Issues Involved

  1. Whether the Revenue could challenge Tribunal orders for subsequent assessment years when it had accepted identical findings in earlier assessment years.
  2. Whether any substantial question of law arose for consideration by the High Court under Section 260A of the Income-tax Act, 1961.
  3. Whether the principle of consistency should be applied where earlier Tribunal decisions had not been challenged by the Revenue.

Petitioner’s Arguments (Revenue)

  • The Revenue challenged the orders passed by the Income Tax Appellate Tribunal for Assessment Years 1996-97 and 1997-98.
  • It was contended that appeals had been filed in respect of the relevant assessment years, though those appeals were not traceable.
  • The Revenue sought judicial scrutiny of the Tribunal’s findings despite the fact that the Tribunal had relied upon its earlier decisions covering Assessment Years 1989-90 to 1995-96.

Respondent’s Arguments (Assessee)

  • The assessee relied upon the Tribunal’s earlier decisions rendered for Assessment Years 1989-90 to 1995-96.
  • It was emphasized that the Revenue had not filed any appeals against those earlier orders.
  • Since the earlier decisions had attained finality and formed the basis of the Tribunal’s subsequent orders, the principle of consistency required that the same view be maintained.

Sections Involved

  • Section 260A of the Income-tax Act, 1961 – Appeal to the High Court against orders of the Income Tax Appellate Tribunal involving a substantial question of law.

Court Findings / Order

The Delhi High Court observed that:

  • No appeals had been filed by the Revenue against the Tribunal’s orders for Assessment Years 1989-90 to 1995-96.
  • The Tribunal’s decisions for Assessment Years 1996-97 and 1997-98 were based upon the earlier decisions that had remained unchallenged.
  • Applying the rule of consistency, once the Revenue had accepted the Tribunal’s view in earlier years, it could not seek a different treatment in subsequent years involving the same issue without any distinguishing circumstances.
  • Consequently, no substantial question of law arose for consideration by the Court.

Accordingly, the High Court dismissed the appeals filed by the Revenue.

Important Clarification

The judgment reinforces the settled principle that where the Revenue has accepted a particular legal position in earlier assessment years and has not challenged the findings, consistency should ordinarily be maintained in subsequent years involving identical facts and issues.

The Court emphasized that in such circumstances, no substantial question of law arises merely because the Revenue seeks to challenge a similar finding in a later year.

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2009:DHC:9776-DB/VJS08052009ITA9602008_165114.pdf

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