Case Law Details

Case Name : PCIT Vs Nokia India Pvt. Ltd (Supreme Court of India)
Appeal Number : Civil Appeal No. 3450 of 2019
Date of Judgement/Order : 08/04/2019
Related Assessment Year : 1999-2000
Courts : Supreme Court of India (1119)

Advocate Akhilesh Kumar Sah

PCIT Vs Nokia India Pvt. Ltd (Supreme Court of India)

In PCIT vs. Nokia India Pvt. Ltd. [Civil Appeal No. 3450 Of 2019 (Arising out of S.L.P.(C) No.32222 of 2017), decided on 08.04.2019], appeal was filed against the final judgment and   order   dated   21.04.2017 passed   by   the   High  Court of Delhi at New Delhi in ITA No.854 of 2016 whereby   the   Division   Bench   of   the   High   Court dismissed the appeal filed by the appellant. In other words, the High Court was of the view that since the appeal did not involve any substantial  question of law, it deserved dismissal in limine.

Facts & Decision in brief: 

The appellant was the Revenue (CIT) and the respondent was an assessee. The issue arose out of AY 1999-2000.

The   issue   essentially   related   to   legality   and correctness of the notice issued by the Assessing Officer (AO) to the respondent under Section 148 of the Income Tax Act, 1961 (for short ‘the   Act’)   and   to   the   consequential   determination made by the AO in the assessment order for which the notice was issued to the respondent.

The   objections   raised   by   the   respondent (assessee) to the notice contending  inter alia  was that  since the notice was based on “change of the opinion” and hence bad in law was upheld by the   ITAT   resulting   in   allowing   the   respondent’s appeal   and   further   by   dismissing   the   Revenue’s appeal  by  the  High  Court.

The Revenue against the order of the High Court dismissing their   appeal   in limine filed   the above  appeal by way of special leave in the Apex Court.

The short question, which arose for consideration in the appeal was whether the High court was right in dismissing the Revenue’s appeal in limine holding that   it   did   not   involve   any substantial question of law.

Hon’ble Supreme Court after having   heard   the   learned   counsel   for   the parties and on perusal of the record of the case held that the High Court was not justified in dismissing the appeal on the ground that the appeal did not involve any substantial question of law.

As per considered   view of the Hon’ble Judges of the Supreme Court, the   following  substantial questions of law did arise in this appeal filed   by   the   Revenue   (appellant   herein)   under Section 260A of the Act in the High Court against the order dated 03.06.2016 passed by the ITAT in Appeal No. 1870/DEL/2010 and the same should have been framed by the High Court for deciding the appeal on merits in accordance with law:

1. Whether   the   ITAT   was   justified   in holding   that     the   notice   issued   by   the   AO under   Section   148       was   bad   in   law   when admittedly   the   impugned notice   was   issued in  the  case  where the  assessment was made under Section 143(1) of the Act but not under Section 143(3) of the Act.

2. Whether   the   ITAT   was   justified   in holding that the notice issued under Section 148 of the Act was bad because it was based on mere change of opinion by overlooking the fact that there was no foundation to form any such opinion.

3. When   admittedly   the   notice   in question   satisfied   the   requirements   of Section  148  of  the  Act  as   it  stood,  namely, that first, it contained the facts constituting the   “reasons   to   believe”   and   second,   it furnished the necessary details for assessing the escaped income of the assessee, whether the   ITAT  was   still   justified   in  declaring  the notice as being bad in law without taking into consideration any of these admitted facts.

4. In  case,   if  the  notice   is  held  proper and   legal,   whether   the   finding   recorded   by the  ITAT  on  the  merits  of  the  case  on  each item, which is subject matter of the notice, is legally sustainable.

The Hon’ble Judges of the Supreme Court set aside the impugned order and remanded the   case   to   the Delhi  High   Court for answering the aforementioned questions on merits in accordance with law. The Hon’ble Judges formed an opinion to remand the case to the High Court for its fresh disposal on merits and did not express any opinion on the merits of the case while deciding the above appeal and held that the High   Court   will,   therefore,   decide   the   appeal uninfluenced   by   any   observation   made   by   the Supreme Court in this order.

FULL TEXT OF THE SUPREME COURT JUDGMENT

1. Leave granted.

2. This appeal is filed against the final judgment and order dated 2 1.04.2017 passed by the High Court of Delhi at New Delhi in ITA No.854 of 2016 whereby the Division Bench of the High Court dismissed the appeal filed by the appellant herein.

3. A few facts need mention hereinbelow for the disposal of this appeal, which involves a short point.

4. By impugned order, the Division Bench of the High Court dismissed the Revenue’s (appellant herein) appeal filed under Section 260­A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) on the ground that it did not involve any substantial question of law within the meaning of Section 260­A of the Act.

5. In other words, the High Court was of the view that since the appeal did not involve any substantial question of law, it deserves dismissal in

6. The appellant is the Revenue (Commissioner of Income Tax) and the respondent is an assessee. The issue arises out of an assessment year (1999­2000).

7. The issue essentially relates to legality and correctness of the notice issued by the Assessing Officer (AO) to the respondent under Section 148 of the Act and to the consequential determination made by the AO in the assessment order for which the impugned notice was issued to the respondent.

8. The objections raised by the respondent (assessee) to the notice contending inter alia that since the impugned notice was based on “change of the opinion” and hence bad in law was upheld by the ITAT resulting in allowing the respondent’s appeal and further by dismissing the Revenue’s appeal by the High Court. The Revenue has felt aggrieved by the order of the High Court dismissing their appeal in limine and has filed the present appeal by way of special leave in this Court.

9. The short question, which arises for consideration in this appeal, is whether the High Court was right in dismissing the Revenue’s appeal in limine holding that it did not involve any substantial question of law.

10. Having heard the learned counsel for the parties and on perusal of the record of the case, we are of the view that the High Court was not justified in dismissing the appeal on the ground that the appeal did not involve any substantial question of law. We are, therefore, constrained to allow this appeal, set aside the impugned order and remand the case to the High Court for deciding the appellant’s appeal afresh on merits in accordance with law.

11. In our considered view, the following substantial questions of law do arise in this appeal filed by the Revenue (appellant herein) under Section 260­A of the Act in the High Court against the order dated 03.06.20 16 passed by the ITAT in Appeal No. 1870/DEL/2010 and the same should have been framed by the High Court for deciding the appeal on merits in accordance with law:

1. Whether the ITAT was justified in holding that the notice issued by the AO under Section 148 was bad in law when admittedly the impugned notice was issued in the case where the assessment was made under Section 143(1) of the Act but not under Section 143(3) of the Act.

2. Whether the ITAT was justified in holding that the notice issued under Section 148 of the Act was bad because it was based on mere change of opinion by overlooking the fact that there was no foundation to form any such opinion.

3. When admittedly the notice in question satisfied the requirements of Section 148 of the Act as it stood, namely, that first, it contained the facts constituting the “reasons to believe” and second, it furnished the necessary details for assessing the escaped income of the assessee, whether the ITAT was still justified in declaring the notice as being bad in law without taking into consideration any of these admitted facts.

4. In case, if the notice is held proper and legal, whether the finding recorded by the ITAT on the merits of the case on each item, which is subject matter of the notice, is legally sustainable.

12. In our considered view, the aforementioned four questions framed need to be answered by the High Court on their respective merits while deciding the appeal filed by the Revenue (appellant herein) under Section 260­A of the Act.

13. We are, therefore, of the view that such order is not legally sustainable in law and hence deserves to be set aside.

14. In view of the foregoing discussion, the appeal succeeds and is accordingly allowed. The impugned order is set aside. The case is remanded to the High Court for answering the aforementioned questions on merits in accordance with law.

15. Since we have formed an opinion to remand the case to the High Court for its fresh disposal on merits, we have not expressed any opinion on the merits of the case while deciding this appeal. The High Court will, therefore, decide the appeal uninfluenced by any observation made by this Court in this order.

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