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by sayum
28 September 2026 8:25 AM
"Section 260-A does not confer a general appellate jurisdiction upon the High Court to reappreciate evidence or substitute its own view for the view concurrently taken by the authorities below on questions of fact." Bombay High Court held that the High Court’s jurisdiction under Section 260A of the Income Tax Act, 1961 is strictly limited to cases involving a "substantial question of law" and does not extend to the routine reappreciation of evidence or factual findings.
A bench comprising Justices Suman Shyam and Gautam A. Ankhad observed that an appeal cannot be admitted merely because the Revenue is dissatisfied with concurrent findings of fact arrived at by the authorities below.
The Income Tax Department had challenged an order passed by the Income Tax Appellate Tribunal (ITAT), Pune, which had granted the respondent-assessee a deduction under Section 80-IA(4) of the Act. The Assessing Officer had initially disallowed the claim, asserting that the assessee was a mere contractor rather than a developer of infrastructure facilities. The CIT(A) and the Tribunal, however, concurrently ruled in favour of the assessee, leading the Department to file an appeal before the High Court.
The primary issue before the court was whether the assessee’s activities qualified for deduction under Section 80-IA(4) of the Act, which the court had to determine within the narrow confines of Section 260A. Furthermore, the court had to decide whether the Tribunal's reliance on its own previous orders in similar matters constituted a "substantial question of law" warranting judicial interference.
The court emphasized that the definition of a "substantial question of law" is well-settled by Supreme Court precedents, including Sir Chunilal V. Mehta & Sons Ltd. v. Century Spg. and Mfg. Co. Ltd. and Santosh Hazari v. Purushottam Tiwari. For a question to be substantial, it must be debatable, not previously settled by law, and have a material bearing on the rights of the parties.
Strict Test For 'Substantial Question Of Law'
The Bench noted that the Department's appeal failed to meet this threshold. The Court held that the determination of whether an assessee is a "developer" of an infrastructure facility is a factual conclusion. Once such findings are made by the ITAT and the CIT(A) based on material evidence, the High Court cannot sit as a third-tier fact-finding authority to substitute its own perspective unless the findings are proved to be perverse or contrary to evidence.
"A point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law."
No Scope For Routine Appeals
Addressing the Department’s reliance on the ITAT’s use of its own prior decisions, the Court clarified that following a settled precedent or an earlier order—which had already been confirmed by the High Court—does not constitute an infirmity. It underscored that the legislative intent behind Section 260A is not to provide an automatic forum for further appeal, but to address specific, significant legal questions.
Judicial Caution Against Mechanical Filing
The Court expressed strong disapproval of the current trend where the Department files appeals mechanically, often re-litigating factual disputes already settled by the Tribunal. The Bench highlighted that such practices lead to an unnecessary backlog, which hinders the expeditious disposal of cases involving actual, serious questions of law that affect the interest of the Revenue.
The Court dismissed the appeal, noting that a co-ordinate bench had already dismissed an identical challenge concerning the same assessee for a different assessment year. The Bench directed that a copy of the judgment be forwarded to the Principal Chief Commissioner of the Income Tax Department, urging the authorities to implement corrective measures to prevent the filing of appeals that lack a substantial question of law.
Date of Decision: 23 September 2026
