2015 (8) TMI 525 - SC - Income Tax

Supreme Court Upholds High Court's Decision on Judgment Recall

Commnr. Of Income Tax, Guwahati-I Versus M/s. Meghalaya Steels Ltd.

The Supreme Court upheld the High Court's decision to recall a judgment due to the failure to formulate substantial questions of law. It affirmed the High ... Existence of substantial questions of law - whether deductions to be made under Section 80IB of the Income Tax Act, 1961 were allowable on facts? - Held that:- We find that as a matter of fact what assessee has argued before us is reiterated by the very Division Bench which heard and reserved judgment on 16.09.2010 (9) TMI 679 - GAUHATI HIGH COURT ]. By the review order dated 08.04.2013 [2013 (12) TMI 369 - GAUHATI HIGH COURT ], the Division Bench felt that it should not have gone into the matter at all given the fact that on an earlier occasion, before 16.09.2010, it had reserved judgment on whether substantial questions of law in fact exist at all or not. This being the case, in a lengthy order the very Division Bench has thought it fit to recall its own earlier judgment. In the above circumstances, we do not feel inclined to interfere with the impugned judgment in view of what has been recorded in the impugned judgment dated 08.04.2013 [2013 (12) TMI 369 - GAUHATI HIGH COURT] Whether transport subsidies were or were not available together with other incentives - Held that:- Insofar as the second question is concerned, we accept the submission of assesssee that High Courts being Courts of Record under Art. 215 of the Constitution of India, the power of review would in fact inhere in them. This was in fact so decided in a slightly different context while dealing with the power of review of writ petitions filed under Art.226 by a judgment reported Shivdeo Singh & Ors. Vs. State of Punjab and Ors. [1961 (2) TMI 65 - SUPREME COURT] wherein held that there is nothing in Art. 226 of the Constitution to preclude a High Court from exercising the power of review which inheres in every court of plenary jurisdiction to prevent miscarriage of justice or to correct grave and palpable errors committed by it. We are in respectful agreement with what is stated in the aforesaid judgment. Apart from what has been said by us, it is also clear that on a cursory reading of Section 260A (7), the said Section does not purport in any manner to curtail or restrict the application of the provisions of the Code of Civil Procedure. Section 260A(7) only states that all the provisions that would apply qua appeals in the Code of Civil Procedure would apply to appeals under Section 260A. That does not in any manner suggest either that the other provisions of the Code of Civil Procedure are necessarily excluded or that the High Court's inherent jurisdiction is in any manner affected. Issues:- Review of judgment based on substantial questions of law- Jurisdiction of High Court for review under Section 260A- Power of review by High Courts as Courts of RecordReview of Judgment based on Substantial Questions of Law:The Supreme Court considered the case where the High Court delivered a judgment on the merits of the case without formulating substantial questions of law. The Division Bench, in a subsequent review petition, acknowledged the mistake and recalled the earlier judgment to ensure an effective hearing by formulating the necessary questions. The Court noted the importance of framing substantial questions of law before hearing an appeal to provide parties with a fair opportunity to present their arguments. The review petition succeeded, leading to the recall of the initial judgment.Jurisdiction of High Court for Review under Section 260A:The issue of jurisdiction under Section 260A was raised concerning the High Court's authority to review judgments. The Revenue contended that the High Court lacked the power to review the judgment based on the absence of substantial questions of law. However, the Court, after hearing arguments from both parties, upheld the Division Bench's decision to recall the judgment. It emphasized that the power of review is inherent in High Courts as Courts of Record under Article 215 of the Constitution of India.Power of Review by High Courts as Courts of Record:The Supreme Court further elaborated on the power of review by High Courts as Courts of Record. It referenced a previous judgment to support the notion that High Courts possess the authority to review their own orders to prevent miscarriage of justice or correct errors. The Court highlighted the significance of natural justice in allowing reviews, especially when the interests of parties not involved in the original proceedings are affected. Additionally, it clarified that Section 260A(7) does not limit the application of the Code of Civil Procedure, affirming the High Court's inherent jurisdiction for reviews.In conclusion, the Supreme Court declined to interfere with the recalled judgment, affirming the High Court's decision to recall the initial judgment based on the procedural irregularity of not formulating substantial questions of law. The Court recognized the High Court's authority to review judgments and emphasized the importance of ensuring fair hearings and correcting errors to uphold justice.