Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2092 OF 2006
Commissioner of Income Tax ....Appellant
Central, Kanpur
Versus
J.K. Charitable Trust ....Respondent
Kamal Tower, Kanpur
With
CIVIL APPEAL NO. 1698 OF 2008
With
CIVIL APPEAL NO. 1699 OF 2008
With
CIVIL APPEAL NO. 2423 OF 2006
With
CIVIL APPEAL NO. 682 OF 2007
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J U D G M E N T
Dr. ARIJIT PASAYAT, J.
1. Challenge in these appeals in each case is to the order passed by a
Division Bench of the Allahabad High Court answering the reference made
by the Income Tax Appellate Tribunal, Allahabad Bench (in short the
‘ITAT’) under Section 256(1) of the Income Tax Act, 1961 (in short the
‘Act’) in favour of the assessee and against the revenue. For answering the
references in favour of the assessee the High Court relied upon its judgment
for two previous assessment years i.e. 1972-73 and 1973-74 in the
assessee’s case which is reported in Commissioner of Income Tax v. J.K.
Charitable Trust (1992 (196) IIR 31). The present dispute relates to several
assessment years, i.e. 1972-73 (in respect of an assessment re done under
Section 147(1) of the Act) and assessment years 1975-76 to 1982-83.
2. Learned counsel for the revenue appellant submitted that each
assessment year is a separate assessment unit and the factual scenario has to
be seen. Dispute relates to the question whether the respondent, assessee’s
trust was hit by the provisions of Section 13(1)(c) and 13(2)(a)(f) & (h) of
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the Act and therefore cannot be given the benefit of exemption provided
under Section 11 of the Act.
3. Learned counsel for the assessee submitted that for several years no
appeal has been filed even though the factual position is the same i.e. for
the assessment years 1983-84 upto assessment year 2007-08. Even no
appeal was filed against the decision reported in [1992(196) ITR 31]
(supra). It is also pointed out that several other High Courts have taken a
similar view and no appeal was preferred by the revenue against any of the
judgments of the different High Courts. Reference is made to the decisions
reported in CIT, Bombay City VII v. Trustees of the Jadi Trust [(1982) 133
ITR 494], CIT v. Hindusthan Charity Trust [(1983) 139 ITR 913], CIT v.
Sarladevi Sarabhai Trust No.2 [1988 (172) ITR 698] and CIT v. Nirmala
Bakubhai Foundation [1996 (226) ITR 394]. The first two judgments have
been rendered by the Bombay and Calcutta High Court respectively while
the other two decisions are of the Gujarat High Court.
4. Learned counsel for the revenue submitted that even though appeal
has not been preferred in respect of some assessment years, that does not
create a bar for the revenue filing an appeal for other assessment years.
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Reliance is placed on a decision of this Court in C.K. Gagadharan & Anr. v.
Commissioner of Income Tax [(2008)304 ITR 61 (SC)].
5. The factual scenario is undisputed that for a large number of
assessment years no appeal has been filed.
6. The basic question therefore is whether the revenue can be precluded
from filing an appeal even though in respect of some other years involving
identical dispute no appeal is filed.
7. For deciding the issue a few decisions of this Court need to be noted.
8. In Bharat Sanchar Nigam Ltd. v. Union of India (2006 (3) SCC 1) it
was noted as follows:
“The decisions cited have uniformly held that res
judicata does not apply in matters pertaining to tax for
different assessment years because res judicata applies to
debar courts from entertaining issues on the same cause
of action whereas the cause of action for each assessment
year is distinct. The courts will generally adopt an earlier
pronouncement of the law or a conclusion of fact unless
there is a new ground urged or a material change in the
factual position. The reason why the courts have held
parties to the opinion expressed in a decision in one
assessment year to the same opinion in a subsequent year
is not because of any principle of res judicata but
because of the theory of precedent or the precedential
value of the earlier pronouncement. Where facts and law
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in a subsequent assessment year are the same, no
authority whether quasi-judicial or judicial can generally
be permitted to take a different view. This mandate is
subject only to the usual gateways of distinguishing the
earlier decision or where the earlier decision is per
incuriam. However, these are fetters only on a coordinate
Bench which, failing the possibility of availing of either
of these gateways, may yet differ with the view
expressed and refer the matter to a Bench of superior
strength or in some cases to a Bench of superior
jurisdiction.
A decision can be set aside in the same lis on a prayer
for review or an application for recall or under Article 32
in the peculiar circumstances mentioned in Hurra v.
Hurra (2002 (4) SCC 388) . As we have said, overruling
of a decision takes place in a subsequent lis where the
precedential value of the decision is called in question.
No one can dispute that in our judicial system it is open
to a court of superior jurisdiction or strength before
which a decision of a Bench of lower strength is cited as
an authority, to overrule it. This overruling would not
operate to upset the binding nature of the decision on the
parties to an earlier lis in that lis, for whom the principle
of res judicata would continue to operate. But in tax
cases relating to a subsequent year involving the same
issue as an earlier year, the court can differ from the
view expressed if the case is distinguishable or per
incuriam. The decision in State of U.P. v. Union of India
(2003(3) SCC 239) related to the year 1988. Admittedly,
the present dispute relates to a subsequent period. Here a
coordinate Bench has referred the matter to a larger
Bench. This Bench being of superior strength, we can, if
we so find, declare that the earlier decision does not
represent the law. None of the decisions cited by the
State of U.P. are authorities for the proposition that we
cannot, in the circumstances of this case, do so. This
preliminary objection of the State of U.P. is therefore
rejected.”
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9. In State of Maharashtra v. Digambar (1995(4) SCC 683) the position
was highlighted by this court as follows:
“We are unable to appreciate the objection raised
against the prosecution of this appeal by the appellant or
other SLPs filed in similar matters. Sometimes, as it was
stated on behalf of the State, the State Government may
not choose to file appeals against certain judgments of
the High Court rendered in writ petitions when they are
considered as stray cases and not worthwhile invoking
the discretionary jurisdiction of this Court under Article
136 of the Constitution, for seeking redressal therefor. At
other times, it is also possible for the State, not to file
appeals before this Court in some matters on account of
improper advice or negligence or improper conduct of
officers concerned. It is further possible, that even where
SLPs are filed by the State against judgments of the High
Court, such SLPs may not be entertained by this Court in
exercise of its discretionary jurisdiction under Article
136 of the Constitution either because they are
considered as individual cases or because they are
considered as cases not involving stakes which may
adversely affect the interest of the State. Therefore, the
circumstance of the non-filing of the appeals by the State
in some similar matters or the rejection of some SLPs in
limine by this Court in some other similar matters by
itself, in our view, cannot be held as a bar against the
State in filing an SLP or SLPs in other similar matters
where it is considered on behalf of the State that non-
filing of such SLP or SLPs and pursuing them is likely to
seriously jeopardise the interest of the State or public
interest.”
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10. In Government of West Bengal v. Tarun K. Roy [2004(1)SCC 347]
reference was made to the judgments in Digambar’s case (supra) and State
of Bihar v. Ramdeo Yadav (1996(3) SCC 493). It was noted as follows:
“28. In the aforementioned situation, the Division
Bench of the Calcutta High Court manifestly erred in
refusing to consider the contentions of the appellants on
their own merit, particularly, when the question as
regards difference in the grant of scale of pay on the
ground of different educational qualification stands
concluded by a judgment of this Court in State of West
Bengal v. Debdas Kumar {(1991) Supp(1) SCC 138] . If
the judgment of Debdas Kumar’s case (supra) is to be
followed, a finding of fact was required to be arrived at
that they are similarly situated to the case of Debdas
Kumar (supra) which in turn would mean that they are
also holders of diploma in Engineering. They admittedly
being not, the contention of the appellants could not be
rejected. Non-filing of an appeal, in any event, would not
be a ground for refusing to consider a matter on its own
merits. (See State of Maharashtra v. Digambar (1995) 4
SCC 683 )
29. In State of Bihar v. Ramdeo Yadav (1996) 3 SCC
493) wherein this Court noticed Debdas Kumar’s case
(supra) by holding: (SCC p. 494, para 4)
“ 4 . Shri B.B. Singh, the learned counsel for
the appellants, contended that though an appeal
against the earlier order of the High Court has
not been filed, since larger public interest is
involved in the interpretation given by the High
Court following its earlier judgment, the matter
requires consideration by this Court. We find
force in this contention. In the similar
circumstances, this Court in Digambar’s case
(supra) and in Debdas Kumar’s case (supra) had
held that though an appeal was not filed against
an earlier order, when public interest is involved
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in interpretation of law, the Court is entitled to
go into the question.”
11. In Ramdeo’s case (supra) reference was made to Debdas Kumar’s
case (supra) wherein it was observed at paragraph 5 as follows:
“It is then contended that Section 3(2) and (3) make
distinction between the employees covered by those
provisions and the employees of the aided schools taken
over under Section 3(2). Until the taking over by
operation of Section 3(4) recommendation is complete,
they do not become the employees of the Government
under Section 4 of the Act. The Government in exercise
of the power under Section 8 constituted a committee
and directed to enquire and recommend the feasibility to
take over the schools. On the recommendation made by
them, the Government have taken decision on 13-1-1981
by which date the respondents were not duly appointed
as the employees of the taken over institution. Therefore,
the High Court cannot issue a mandamus directing the
Government to act in violation of law.”
12. In Commissioner of Central Excise v. Hira Cement (2006(2)SCC
439) at paragraph 24 the position was reiterated.
13. In Chief Secretary to Government of Andhra Pradesh v. V.J.
Cornelius [(1981) 2 SCC 347] it was observed that equity is not a relevant
factor for the purpose of interpretation.
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14. It will be relevant to note that in Karamchari Union v. Union of India
[(2000)243 ITR 143 (SC) ] and Union of India v. Kaumudini Narayan Dalal
[(2001) 249 ITR 219] this Court observed that without a just cause the
Revenue cannot file the appeal in one case while deciding not to file an
appeal in another case. This position was also noted in CIT v. Shivsagar
Estate [(2004)9 SCC 420].
15. In C.K. Gangadharan’s case (supra) this Court held that where
different High Courts have taken different views and some of the High
Courts have decided in favour of the revenue, same is a just cause for the
revenue to prefer an appeal.
16. If the assessee takes the stand that the Revenue acted mala fide in not
preferring appeal in one case and filing the appeal in other case, it has to
establish malafides. As a matter of fact, as rightly contended by the learned
counsel for the revenue, there may be certain cases where because of the
small amount of revenue involved, no appeal is filed. Policy decisions have
been taken not to prefer appeal where the revenue involved is below a
certain amount. Similarly, where the effect of the decision is revenue
neutral there may not be any need for preferring the appeal. All these
certainly provide the foundation for making a departure.
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17. In C.K. Gangadharan’s case (supra) it was held that merely because in
some cases revenue has not preferred an appeal that does not operate as a
bar for the revenue to prefer an appeal in another case where there is just
cause for doing so or it is in public interest to do so or for a pronouncement
by the higher court when divergent views are expressed by the different
High Courts. In this case, it is accepted by the learned counsel for the
appellant-revenue that the fact situation in all the assessment years is same.
According to him, if the fact situation changes then the revenue can
certainly prefer an appeal notwithstanding the fact that for some years no
appeal was preferred. This question is of academic interest in the present
appeals as undisputedly the fact situation is the same.
18. The appeals are without merit and are accordingly dismissed. No
costs.
……..................................J.
(Dr. ARIJIT PASAYAT)
……..................................J.
(C.K. THAKKER)
….......................................J.
(LOKESHWAR SINGH PANTA)
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New Delhi;
November 7, 2008
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