1. Application under Section 256(2) of the Income Tax Act, 1961, regarding the validity of a notice issued under Section 34 of the Indian Income Tax Act, 1922. (Para 1 )
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1992 Supreme(SC) 575
SUPREME COURT OF INDIA
A.S.Anand : J.S.Verma
Commissioner Of Income Tax, Gujarat
Versus
Bababhai Pitamberdas (Huf)
Case No. : 1591-93(nt) of 1977
Date of Decision : 8/27/92
The term "issued" in statutory provisions, specifically Section 297(2)(d)(i) of the Income Tax Act, 1961, must be construed according to the specific context and setting in which it occurs, as its meaning may vary depending on that context.
Headnote:(A) Income Tax Act, 1961 - Section 256(2) and Section 297(2)(d)(i) - Indian Income Tax Act, 1922 - Section 34 - Validity of notice served under the 1922 Act after the 1961 Act came into force - Question of law - Meaning of the word "issued" to be construed in the context and setting in which it occurs so that its meaning may vary depending on the context (Para 3).
Facts of the case:
Applications were filed under Section 256(2) of the Income Tax Act, 1961, seeking a direction for the Tribunal to state a case and refer a question of law to the High Court. The question concerned whether a notice served under Section 34 of the Indian Income Tax Act, 1922, after the 1961 Act had come into force, and the subsequent proceedings and orders, were invalid. The High Court rejected the applications, viewing the matter as concluded by a prior decision of the Supreme Court.
Findings of Court:
The High Court and the Tribunal erred in holding that the question of law was concluded. A subsequent decision of the Supreme Court had explained the earlier ruling, emphasizing that the interpretation of the word "issued" depends on the context in which it is used.
Issues: Whether the question of law regarding the validity of a notice served under the 1922 Act after the commencement of the 1961 Act was concluded by a previous judicial decision.
Ratio Decidendi: The meaning of the word "issued" occurring in Section 297(2)(d)(i) of the Income Tax Act, 1961, must be interpreted based on its context and setting. Because a subsequent Supreme Court decision clarified and explained the earlier precedent, the question of law remained open and could not be treated as concluded.
Result: Appeals allowed.
Legal Category Hierarchy
Table of Contents
2. Whether the legal question regarding the validity of the notice was concluded by prior judicial precedent. (Para 2 )
3. The term issued must be construed based on context, and subsequent judicial decisions may explain or modify earlier interpretations. (Para 3 )
4. A question of law is not concluded if a subsequent decision explains or modifies the interpretation of the preceding authority. (Para 3 )
5. Appeals allowed and impugned orders set aside; High Court directed to order the Tribunal to refer the question of law for decision. (Para 4 )
6. How should the term issued be interpreted under the Income Tax Act?
The meaning of the word issued must be construed within the specific context and setting in which it occurs, and its meaning may vary depending on that context. (Para 3 )
7. Does a prior decision of the court necessarily conclude a question of law if subsequent decisions explain it?
No, a question of law is not treated as concluded if a subsequent decision of the court considers and explains the earlier decision. (Para 3 )
8. What is the remedy when a High Court erroneously rejects an application to state a case based on a concluded question of law?
The court may set aside the impugned orders and direct the High Court to require the tribunal to state the case and refer the question of law for decision. (Para 4 )
(1) THESE appeals by special leave are against the common order dated 8/03/1976 rejecting three application Nos. 68, 69 and 70 of 1975 made by the appellant under Section 236(2 of the Income Tax Act, 1961 for an order directing the Income Tax Appellate tribunal to state a case and refer the question of law arising out of the tribunals order for the decision of the High court. The question of law is as under: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that notice served on 10/04/1962 under Section 34 of the Indian Income Tax Act, 1922, after the coming into force of the Income Tax Act, 1961, and the proceedings commenced in pursuance of the said notices and the orders passed therein were invalid and bad in law?"
(2) THE High court rejected these applications taking the view that the matter was concluded by a decision of this court as indicated in the Tribunals order rejecting the appellants applications made under Section 256(1 of the Act wherein it was stated that the question of law is concluded by the decision in Banarsi Debi v. ITO
(3) HAVING heard both sides we are of the opinion that the High court as well as the tribunal were in error in taking the view that the question of law is concluded in the present case by the decision in Banarsi Deb The decision of this court in Banarsi Deb was considered and explained in a subsequent decision of this court in R.K. Upadhyaya v. Shanabhai P.Patel. It was pointed out that the meaning of the word "issued" is to be construed in the context and the setting in which it occurs so that its meaning may vary depending on the context. The question involved for decision in the present case is the meaning of the word "issued" occurring in Section 297(2(d)(i) of Income Tax Act, 1961. This question of law arises out of the tribunals order and cannot be treated as concluded by the decision of this court in Banarsi Debi as stated by the tribunal as well as the High court.
(4) FOR the aforesaid reasons these appeals are allowed. The impugned orders are set aside. The High court is required to direct the tribunal to state a case and refer to it the aforesaid question of law for its decision.
(5) NO costs.
