Facts of the Case

The Revenue preferred an appeal before the Delhi High Court under Section 260A of the Income-tax Act, 1961 against the order passed in favour of M/s Malwa Mercantile Ltd.

The principal issue sought to be raised by the Revenue had already been examined and conclusively decided by the Delhi High Court in the earlier decision of Commissioner of Income-tax vs Bansal Credits Ltd. (2003) 259 ITR 69.

During the hearing, counsel appearing for the Revenue submitted that the Supreme Court had issued notices in certain Special Leave Petitions involving a similar issue and therefore the matter deserved consideration. 

Issues Involved

  1. Whether the Revenue's appeal under Section 260A of the Income-tax Act was maintainable when the legal issue already stood concluded by a binding judgment of the jurisdictional High Court.
  2. Whether issuance of notice by the Supreme Court in certain Special Leave Petitions on a similar issue constituted a ground for entertaining the appeal.
  3. Whether any substantial question of law survived for consideration by the High Court

Petitioner’s Arguments (Revenue)

The Revenue contended that:

  • The appeal should be entertained notwithstanding the earlier decision in CIT vs Bansal Credits Ltd.
  • The Supreme Court had issued notices in certain Special Leave Petitions involving similar questions.
  • Since the issue was pending consideration before the Apex Court, the appeal deserved adjudication by the High Court.


Respondent’s Arguments (Assessee)

Although no appearance was recorded on behalf of the assessee, the case of the respondent stood supported by the binding precedent already rendered by the Delhi High Court in CIT vs Bansal Credits Ltd.

The respondent's position effectively was that:

  • The controversy had already been settled by a binding judgment of the High Court.
  • No substantial question of law arose from the impugned order.
  • The Revenue could not seek reconsideration merely because notices had been issued in certain Special Leave Petitions.

Court Order / Findings

The Delhi High Court held that:

  • The issue sought to be raised by the Revenue was already concluded by the Court's earlier judgment in CIT vs Bansal Credits Ltd. (2003) 259 ITR 69.
  • Consequently, no question of law, much less a substantial question of law, survived for consideration under Section 260A of the Income-tax Act.
  • The Court was not persuaded by the Revenue's submission that notices had been issued by the Supreme Court in similar matters.
  • The Court noted that Special Leave Petitions filed both by the Revenue and the assessee against the judgment in Bansal Credits Ltd. had already been dismissed and the decision had attained finality.
  • Since the governing precedent had attained finality, there was no justification to entertain the appeal.

Accordingly, the appeal filed by the Revenue was dismissed.


Important Clarification

The judgment reiterates an important principle governing appeals under Section 260A:

  • An appeal under Section 260A is maintainable only where a substantial question of law arises.
  • When the issue is already settled by a binding precedent of the jurisdictional High Court and such precedent has attained finality, a fresh appeal on the same issue cannot be entertained.
  • Mere issuance of notice in another Special Leave Petition does not dilute the binding effect of an existing judgment that has attained finality.
  • Courts will decline to reopen settled questions where no substantial question of law survives.

Sections Involved

Section 260A – Income-tax Act, 1961

Provides for an appeal to the High Court from orders of the Income Tax Appellate Tribunal only where the case involves a substantial question of law.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2003:DHC:18808-DB/DKJ20102003ITA3752003_152954.pdf

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