REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No.3968 OF 2019 (Arising out of S.L.P.(C) No.29524 of 2017) PR. Commissioner of Income Tax Central 2 .Appellant(s) VERSUS M/s A.A. Estate Pvt. Ltd. .Respondent(s) [[ J U D G M E N T Abhay Manohar Sapre, J. 1. Leave granted. 2. This appeal is filed against final judgment and order dated 09.01.2017 passed by High Court of judicature at Bombay in ITA No.1239 of Signature Not Verified 2014 whereby High Court dismissed appeal Digitally signed by ASHOK RAJ SINGH Date: 2019.04.16 16:51:42 IST Reason: of Revenue Commissioner of Income Tax Mumbai(appellant herein). 1 3. few facts need mention hereinbelow for disposal of this appeal, which involves short point. 4. appellant is Revenue Commissioner of Income Tax, Mumbai, whereas respondent is assessee. 5. respondent assessee is Company engaged in business of development and building of properties. dispute relates to assessment year 2008 09. 6. On 24.12.2009, Assessing Officer (for short, AO ) completed assessment under Section 143(3) read with Section 153A of Income Tax Act, 1961 (hereinafter referred to as Act ) and determined total income at Rs.7,77,49,790/ . 7. On 22.09.2010, AO issued notice under Section 148 of Act seeking therein to re open assessment of respondent assessee which was made on 24.12.2009. This notice was issued by 2 AO on basis of information received from ADIT (investigation) Unit II (2). 8. By this notice, AO proposed to make addition of Rs.1,70,94,000/ towards unaccounted sale proceeds alleged to have been made by respondent assessee in assessment year in question (2008 2009) because, in his opinion, it was in nature of escaped assessment. 9. AO proposed this addition on basis of one document (Annexure AB 1), which was seized by Revenue Department in their search operation carried on 30.11.2007 in business premises of another assessee by name M/s Ashok Buildcom Ltd. 10. In other words, foundation for issuance of notice under Section 148 of Act to respondent assessee for adding aforementioned sum was document Annexure AB 1. 3 11. respondent assessee objected to issuance of notice contending inter alia that first, there is no factual foundation for issue of notice; Second, there is no case for any escaped assessment , and Third, there is no case to reason to believe . 12. By order dated 30.12.2011, AO overruled objections raised by respondent assessee and passed re assessment order by adding sum of Rs.1,70,94,000/ in total income of respondent assessee. He held that, in his opinion, it was case of escaped assessment and secondly, there was enough material to add said sum in total income of respondent assessee for assessment year under consideration. 13. respondent assessee felt aggrieved and filed appeal before CIT (appeal). By order dated 21.02.2013, CIT (appeal) dismissed appeal and upheld addition made by AO. respondent assessee felt aggrieved and filed second 4 appeal before ITAT. By order dated 05.02.2014, Tribunal allowed appeal and set aside order of CIT (appeals). 14. Commissioner of Income Tax felt aggrieved and filed appeal before High Court under Section 260 of Act. By impugned order, High Court dismissed appeal and affirmed order of Tribunal giving rise to filing of special leave to appeal by Commissioner of Income Tax in this Court. 15. So, short question, which arises for consideration in this appeal, is whether High Court was justified in dismissing appeal filed by Commissioner of Income Tax (appellant herein). 16. Heard Mr. H.R. Rao, learned counsel for appellant and Mr. Salil Kapoor, learned counsel for respondent. 17. Having heard learned counsel for parties and on perusal of record of case and 5 written submissions filed by learned counsel, we are inclined to allow this appeal and while setting aside impugned order, remand case to High Court for deciding appeal afresh. 18. In our view, need to remand case to High Court has occasioned for more than one reason as stated hereinbelow. 19. First, High Court did not formulate any substantial question of law as was required to be framed under Section 260 of Act. 20. Second, in Para 2 of impugned order, High Court observed that Revenue urges following questions of law for our consideration . 21. As is clear from reading of Para 2, two questions set out in Para 2 were not questions framed by High Court as was required to be framed under Section 260 A(3) of Act for hearing 6 appeal but were questions urged by appellant. 22. In our view, there lies distinction between questions proposed by appellant for admission of appeal and questions framed by Court. 23. questions, which are proposed by appellant, fall under Section 260 (2) (c) of Act whereas questions framed by High Court fall under Section 260 (3) of Act. appeal is heard on merits only on questions framed by High Court under sub section (3) of Section 260 of Act as provided under Section 260 (4) of Act. In other words, appeal is heard only on questions framed by Court. 24. Third, if High Court was of view that appeal did not involve any substantial question of law, it should have recorded categorical finding to that effect saying that questions proposed by 7 appellant either do not arise in case or/and are not substantial questions of law so as to attract rigor of Section 260 of Act for its admission and accordingly should have dismissed appeal in limine. 25. It was, however, not done and instead High Court without admitting appeal and framing any question of law issued notice of appeal to respondent assessee, heard both parties on questions urged by appellant and dismissed it. In our view, respondent had right to argue at time of hearing of appeal that questions framed were not involved in appeal and this respondent could urge by taking recourse to sub section (5) of Section 260 of Act. But this stage in this case did not arise because as mentioned above, High Court neither admitted appeal nor framed any question as required under sub section (3) of Section 260 of Act. 8 expression such question referred to in sub section (5) of Section 260 of Act means questions which are framed by High Court under sub section (3) of Section 260 at time of admission of appeal and not one proposed in Section 260 (2) (c) of Act by appellant. 26. We are, therefore, of view that High Court did not decide appeal in conformity with mandatory procedure prescribed in Section 260 of Act. 27. Fourth, High Court should have seen that following substantial questions of law do arise in appeal for being answered on their respective merits: (i) Whether reasons contained in Notice under Section 148 are relevant and sufficient for issuance of said Notice dated 22.09.2010 ? (ii) Whether any case of escaped assessment within meaning of Section 147 read with Section 148 of Act for assessment year in question is made out by 9 Commissioner of Income Tax on basis of reasons set out in notice ? (iii) Whether case of presumption as contemplated under Section 132(4A) of Act could be drawn against respondent assessee on basis of document (Annexure AB 1) which was seized in search operation carried in business premises of another assessee M/s Ashok buildcom by adding sum of Rs.1,70,94,000/ for determining total tax liability of respondent for year in question as escaped assessment so as to enable Department to issue notice dated 22.09.2010 under Section 148 of Act to respondent? 28. In light of foregoing discussion, we consider it just and proper to remand case to High Court for deciding appeal afresh to answer questions framed above on merits in accordance with law. 29. appeal thus succeeds and is accordingly allowed. impugned order is set aside. case is remanded to High Court for deciding appeal filed by Commissioner of Income Tax Mumbai afresh on merits as provided under Section 10 260 A(4) of Act to answer three questions framed by this Court under Section 260 A(3) of Act. 30. High Court will decide appeal uninfluenced by any observations made in impugned order and in this order because having formed opinion to remand case, we have not expressed any opinion on merits of case. . ...................................J. [ABHAY MANOHAR SAPRE] ... ..................................J. [DINESH MAHESHWARI] New Delhi; April 16, 2019 11 Pr. Commissioner of Income-tax, Central-2 v. A.A. Estate Pvt. Ltd