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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.1349 OF 2007

Maharaja Amrinder Singh ….Appellant(s)

VERSUS

The Commissioner of Wealth Tax    ….Respondent(s)

WITH

CIVIL APPEAL No.1350 OF 2007

J U D G M E N T

Abhay Manohar Sapre, J.

1) These  appeals  are  filed  against  the  final

judgment and orders dated 24.08.2004 passed by

the  High  Court  of  Punjab  and  Haryana  at

Chandigarh  in  Wealth  Tax  Appeal  Nos.  10  &

11/2001  and  3,4  &  5/2002  respectively  whereby

the  High Court   allowed the  appeals  filed  by  the

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Revenue  (Commissioner  of  Wealth  Tax)  under

Section  27-A  of  the  Wealth  Tax  Act,  1957

(hereinafter referred to as “the Act”) and set aside

the order dated 05.07.2011 passed by the Income

Tax  Appellate  Tribunal  (hereinafter  referred  to  as

“the  Tribunal”),  Chandigarh  Bench  in  W.T.A.

No.11,12  &  13/Chandi/95  &  C.O.

No.37/Chandi/95 in W.T.A. No.11/Chandi/95  and

order dated 13.06.2001 in W.T.A. Nos.213, 191 and

192/Chandi/94  and  restored  the  order  of

assessment  passed  by  the  Assessing  officer  for

levying  penalty  for  the  entire  period  of  delay  in

respect of Assessment Years 1981-82, 1982-83 and

1983-84.  

2)  Few  facts  need  mention  for  disposal  of  the

appeals.

3) The appellant is the wealth tax assessee and is

subjected to payment of Wealth Tax under  the Act.

The case pertains to the Assessment Years 1981-82,

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1982-83 and 1983-84. The issue involved in these

three assessment years was decided by the Tribunal

in favour of the appellant (assessee) which gave rise

to filing of the appeals before the High Court by the

Revenue under Section 27-A of the Act questioning

therein the legality and correctness of the orders of

the Tribunal. As mentioned above, the High Court

allowed the appeals filed by the Revenue, which has

given rise to filing of  these appeals by way of special

leave before this Court by the assessee.

4) The  short  question,  which  arises  for

consideration in these appeals, is whether the High

Court was justified in allowing the appeals filed by

the  Revenue  and  thereby  was  justified  in  setting

aside the orders passed by the Tribunal.

5) Having  heard  the  learned  counsel  for  the

parties and on perusal of the record of the case, we

are inclined to allow the appeals and while setting

aside  of  the  impugned  orders  of  the  High  Court

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remand the case to the High Court for deciding the

appeals  afresh  on  merits  after  formulating  the

substantial  questions of  law, if  it  so arises in the

case.  

6) Section 27 - A of the Wealth Tax Act reads as

under  

“27-A Appeal to High Court. —

(1) The  assessee  or  the  Chief Commissioner  or  Commissioner  may within one  hundred  twenty  days  of  the  day  upon which he is  served with notice of  an order under section 24 or section 26 or clause (e) of sub-section (1) of section 35, file on or after the 1st day of October, 1998 but before the date  of  establishment  of  the  National  Tax Tribunal appeal before the High Court.

(1A) The  High  Court  may  admit  an appeal after the expiry of the period of one hundred  and  twenty  days  referred  to  in sub-section (1), if it is satisfied that there was sufficient cause for not filing the same within that period.

(2) An appeal shall lie to the High Court  before the date of establishment the National Tax  Tribunal  from  every  order  passed  in appeal  by  the  Appellate  Tribunal,  under sub-section (1) of section 24 only if the High Court  is  satisfied  that  the  case  involves  a substantial question of law.

(3) In an appeal under this section, the Memorandum of Appeal shall precisely state

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modeled on existing Section 100 of the Code of Civil

Procedure,  1908  (hereinafter  referred  to  as  “the

Code”). Indeed, as would be clear, the language of

Section 27-A of the Act and Section 100 of the Code

is identical.  Both the Sections are, therefore, in pari

materia. It is a case where Section 100 of the Code

is bodily lifted from the Code and incorporated in

Section 27-A of the Act with minor additions and

alterations by following the principle of “legislation

by incorporation".

8) A three Judge Bench of this Court in Santosh

Hazari  vs.  Purushottam  Tiwari  (Deceased)  by

L.Rs., (2001) 3 SCC 179 had examined the scope of

Section 100 of the Code of the Civil procedure, 1908

(hereinafter referred to as “the Code”). Justice R.C.

Lahoti (as His Lordship then was) speaking for the

Bench laid down the following proposition of law in

Para 9:

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“9. The High Court cannot proceed to hear a second  appeal  without  formulating  the substantial  question  of  law  involved  in  the appeal and if it does so it acts illegally and in abnegation or abdication of the duty case on Court. The existence of substantial question of law is the sine qua non for the exercise of the jurisdiction under the amended Section 100  of  the  Code.  (See  Kshitish  Chandra Purkait  v.  Santosh  Kumar  Purkait,(1997)  5 SCC  438  Panchugopal  Barua  v.  Umesh Chandra  Goswami,  (1997)  4  SCC  413  and Kondiba  Dagadu  Kadam v.  Savitribai  Sopan Gujar, (1999) 3 SCC 722.)”

9) His Lordship then in Paras 10 to 14 succinctly

explained  the  meaning  of  the  words  “substantial

question of law” and “question of law” and held that

in  order  to  admit  the  second  appeal,  what  is

required to be made out by the appellant being sine

qua non for exercise of powers under Section 100 of

the  Code,  is  existence  of  “substantial  question  of

law” arising in the case so as to empower the High

Court  to  admit  the  appeal  for  final  hearing  by

formulating such question.  In the absence of any

substantial  question of  law arising  in  appeal,  the

same merits dismissal in limine  on the ground that

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the  appeal  does  not  involve  any   substantial

question of law within the meaning of Section 100 of

the Code.  

10) In our  considered opinion,  the  interpretation

made  by  this  Court  of  Section  100  in  Santosh

Hazari’s  Case (supra),  would  equally  apply  to

Section  27-A  of  the  Act  because  firstly,  both

Sections  provide  a  remedy  of  appeal  to  the  High

Court;  Secondly,  both  Sections  are  identically

worded and in pari materia; Thirdly, Section 27-A is

enacted by following the principle of “legislation by

incorporation”; fourthly, Section 100 is bodily lifted

from the Code and incorporated as Section 27-A in

the Act; and lastly, since both Sections are akin to

each other  in  all  respects,  the  appeal  filed  under

Section 27-A of  the  Act  has  to  be  decided  like  a

second appeal under Section 100 of the Code.

11)  Now coming to the facts of the case, we find

that the High Court proceeded to decide the appeals

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without  formulating  the  substantial  question(s)  of

law. Indeed, the High Court did not make any effort

to find out as to whether the appeals involved any

substantial  question(s)  of  law  and,  if  so,  which

is/are that question(s) and nor it formulated such

question(s),  if  in  its  opinion,  really  arose  in  the

appeals.  The High Court  failed to see that  it  had

jurisdiction  to  decide  the  appeals  only  on  the

question(s)  so  formulated  and  not  beyond  it.

[Section 27(5)].  

12) In the light of foregoing discussion and keeping

in view the law laid down in the case of  Santosh

Hazari  (supra), we are of the considered view that

the impugned orders are not legally sustainable and

thus liable to be set aside.  

13) As  a  result,  the  appeals  succeed  and  are

allowed.  Impugned orders  are  set  aside.  Both the

cases are remanded to the High Court for deciding

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the  appeals  afresh  in  accordance  with  the

observations made above.      

               ………...................................J.

[R.K. AGRAWAL]             

                        …... ……..................................J.

        [ABHAY MANOHAR SAPRE] New Delhi; September 05, 2017