Additional substantial question of law cannot be revived after earlier refusal in the same tax appeal

In an appeal under Section 260A of the Income-tax Act, a substantial question of law may be framed later only if it was omitted or had escaped earlier consideration; a question consciously refused at the admission stage cannot be revived in the same proceedings through a miscellaneous application. The court treated this restraint as consistent with the law of the case principle and rejected the Revenue's request to reopen the earlier refusal. With the additional question not entertained and the disputed tax effect falling below the CBDT threshold, no further merits adjudication was undertaken and the appeal was disposed of accordingly.

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Issues: (i) Whether, in an appeal under Section 260A of the Income-tax Act, 1961, the Court could reconsider and frame a substantial question of law that it had earlier refused to formulate in the same proceedings; (ii) Whether, in view of the CBDT circular on low tax effect, the remaining questions required adjudication.

Issue (i): Whether, in an appeal under Section 260A of the Income-tax Act, 1961, the Court could reconsider and frame a substantial question of law that it had earlier refused to formulate in the same proceedings.

Analysis: The proviso to Section 260A(4) permits formulation of an additional substantial question of law not earlier formulated if the Court is satisfied that the case involves such question, but that power does not extend to reopening a question that was consciously considered and rejected at the admission stage. The principle applied is akin to the law of the case doctrine, which prevents a later Bench in the same proceedings from taking a contrary view on a matter already decided earlier, absent a higher court's intervention. The Court distinguished between an omitted question and one positively refused earlier, and held that the latter cannot be revived by a miscellaneous application.

Conclusion: The Court held that the earlier refusal to frame the third substantial question of law could not be reconsidered in the same proceedings, and the Revenue's request was not maintainable.

Issue (ii): Whether, in view of the CBDT circular on low tax effect, the remaining questions required adjudication.

Analysis: The disputed tax was below the monetary threshold prescribed by the CBDT circular relied upon by the Revenue's counsel. Once the request to frame an additional question was rejected, only the already framed questions remained, and the Revenue accepted that no further adjudication was necessary if the Court did not accede to its request. The appeal therefore did not warrant a merits determination.

Conclusion: The remaining questions were not adjudicated and the appeal was dismissed.

Final Conclusion: The judgment finally closes the challenge by declining to reopen a question earlier refused at admission and by disposing of the appeal on the low tax effect policy.

Ratio Decidendi: In an appeal under Section 260A of the Income-tax Act, 1961, the High Court may formulate an additional substantial question of law only when it was omitted or escaped earlier consideration, not when it had been consciously refused in the same proceedings.

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