PR. COMMISSIONER OF INCOME TAX (CENTRAL) NAGPURversusASHOKA BUILDCON LTD.

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                                                                                Priya Soparkar

                             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                 ORDINARY ORIGINAL CIVIL JURISDICTION


                                  INCOME TAX APPEAL NO. 2642 OF 2018
                      Pr. Commissioner of Income Tax, Central,               …Appellant
                      Nagpur.
                            Versus
                      Ashoka Buildcon Limited                              …Respondent


                      Mr. Ashok Kotangle with Mr. Pranav Kulkarni, for the Appellant.
                      Mr. Sameer G. Dalal, for the Respondent.


                                          CORAM: SUMAN SHYAM &
                                                 GAUTAM A. ANKHAD, JJ.
                                          DATED:      1st OCTOBER, 2026.


                      PC:-(Per Suman Shyam, J.)




                      1.    Heard Mr. Ashok Kotangle, learned counsel appearing for the

                      Appellant. Also heard Mr. Sameer G. Dalal, learned counsel

                      appearing for the Respondent.

PRIYA
RAJESH
SOPARKAR
Digitally signed by
                      2.    This Appeal has been preferred by the Department
PRIYA RAJESH
SOPARKAR
Date: 2026.10.06
18:30:46 +0530


                      (Revenue) under Section 260A of the Income Tax Act, 1961,

                      assailing the judgment and order dated 5th April, 2018 passed by

                      the learned Income Tax Appellant Tribunal (ITAT), Pune, in Income




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Tax Appeal No. 67/PUN/2016 for the Assessment Year 2004-05,

deleting the penalty imposed upon the Respondent.


3.    In the memorandum of Appeal, the Appellant had originally

projected the following substantial questions of law:-


      “(a) Whether on the facts and in the circumstances of the
      case and in law the Hon'ble Tribunal was justified in deleting
      the penalty u/s. 271(1)(c) of the Act?

      (b) Whether on the facts and circumstances of the case and
      in law, the Tribunal is right in deleting the penalty on
      technical grounds and not deciding the issue on merits, it
      being the highest fact finding authority?

      (c) Any other question to be raised at the time of appeal?”



4.    The facts of the case, as apparent from the material on

record, in a nutshell, are that the Respondent is a limited company

engaged in the business of construction, development, operation

and maintenance of infrastructure facilities. After the assessment

order (A.Y. 2024-05) dated 27th December, 2007 was passed by the

Assessment Officer (AO) on the revised return of income filed by

the Respondent on 30th October, 2015 showing the revised income

as Rs. NIL, proceeding under Section 147 of the Act, 1961 was

initiated by issuing notice under Section 148 of the Income Tax




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Act, 1961. On re-assessment, the income of the assessee

company/Respondent was finalized at Rs.12,42,43,556/- by

disallowing    the    brought     forward       losses     and    unabsorbed

depreciation of amalgamating companies. Penalty proceedings

under    Section     271(1)(c)    were     also    initiated     against   the

Respondent and penalty order dated 26 th March, 2015 was issued.

The Respondent challenged the order of penalty before the CIT

(Appeals) who had granted relief to the Respondent in respect of

disallowance made by the AO for an amount of Rs.8,68,974/- on

account of delayed payments of contribution to PF and ESIC.

Assailing the order of the learned CIT(Appeals), the Revenue had

approached the ITAT, Pune by filing Appeal No.67/PUN/2016

which was dismissed by the learned ITAT. The learned ITAT had

also set aside the order of penalty. Aggrieved thereby, the present

Appeal has been filed by the Revenue.


5.      The questions initially projected by the Department in the

Memorandum of Appeal did not appear to us as “substantial

questions of law” far-less, those arising in this Appeal. As such,

during admission hearing of the Appeal held on 27th August, 2026,

this Court had granted time to the learned counsel for the




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Appellant to reformulate the substantial questions of law. Today

when the matter is called out,       Mr. Ashok Kotangle, learned

counsel appearing for the Appellant-Revenue has tendered the

following re-formulated substantial questions of law, under his

signature, which, according to the learned counsel, would arise for

consideration in the present proceeding:-


      “Whether, on the facts and in the circumstances of the case
      and in law, the Income Tax Appellate Tribunal was justified
      in deleting the penalty imposed under section 271(1)(c) of
      the Income-tax Act, 1961, without properly appreciating that
      the assessee had furnished particulars which resulted in
      determination of income contrary to the provisions of the
      Act?

      OR

      Whether the Tribunal erred in law in holding that the mere
      fact that the assessee's claim was disclosed in the return of
      income was sufficient to absolve the assessee from liability
      under section 271(1)(c), without examining whether the
      particulars furnished in support of such claim were legally
      and factually accurate?

      OR

      Whether, on the facts and circumstances of the case, the
      Tribunal was justified in treating the impugned claim as a
      bona fide claim merely because the claim was made in the
      return of income, when the claim was ultimately found to be
      inadmissible under the express provisions of the Income-tax
      Act?

      OR




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      Whether the Tribunal was correct in law in deleting the
      penalty without recording a finding that the explanation
      furnished by the assessee satisfied the requirements of
      section 271(1)(c) read with Explanation 1 thereto, and that
      the assessee had substantiated such explanation and
      established its bona-fides?

      OR

      Whether the Tribunal erred in law in failing to distinguish
      between a case where a mere legal claim is rejected and a
      case where the particulars furnished by the assessee lead to
      an impermissible claim resulting in concealment of income
      or furnishing of inaccurate particulars of income?”


6.    As per the projection made by the learned counsel for the

Appellant and in view of use of the conjunction “or” separating the

five questions from one another, it appeared to us that according to

the Appellant, only one of those five questions would arise for

consideration in the present Appeal. However, it is not clear from

his submission, as to which of the five questions, according to the

learned Departmental counsel, would arise in Appeal.


7.    This Court is conscious of the fact that at the stage of

admission hearing, a liberal construction of the projected

substantial questions of law is required to be adopted by the Court.

However, purely factual controversy cannot be treated as a

substantial question of law. A substantial question of law may also




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pertain to the facts and circumstances of a particular case.

However, unless it is projected as a question of law having a

substantial bearing in the outcome of the Appeal, the same cannot

be considered in an Appeal under Section 260A of the Act of 1961.

It is to be borne in mind that Section 260A does not confer general

appellate jurisdiction upon the High Court so as to entertain

Appeals in a routine manner, re-appreciate evidence or to

substitute its own view, for the concurrent finding arrived at by the

forums below on the questions of fact. A legal issue, merely

projecting a proposition of law, would not amount to “substantial

question of law” unless it gives rise to a question not settled by an

earlier decision of the Court and such legal question has a material

bearing in the outcome of the Appeal.


8.    The language employed in Section 260A of the Act of 1961

is clear and unambiguous. According to Section 260A, this Court

would have the jurisdiction to entertain an Appeal under Section

260A, only if it is convinced that there is/are substantial

question(s) of law which arise in the Appeal.


9.    What would amount to substantial questions of law has been

elaborately dealt with in a number of decisions of the Hon’ble




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Supreme Court. The expression “substantial question of law”,

though not defined in the Act of 1961, has received a settled

meaning through a long line of judicial precedents. In Vijay Kumar

Talwar v. CIT reported in (2011)1 SCC 673 , the Hon’ble Supreme

Court, while referring to the Constitution Bench judgment in Sir

Chunilal V. Mehta & Sons Ltd. v. Century Spg. and Mfg. Co. Ltd.

reported in AIR 1962 SC 1314, has laid down the test to be applied

in determining whether a question of law is substantial or not. The

relevant portion reads thus:-

        “20. In Sir Chunilal V. Mehta & Sons Ltd. v.
        Century Spg. and Mfg. Co. Ltd. Reported in AIR
        1962 SC 1314, a Constitution Bench of this
        Court, while explaining the import of the said
        expression, observed that:

            “6. … The proper test for determining
            whether a question of law raised in the
            case is substantial would, in our opinion,
            be whether it is of general public
            importance or whether it directly and
            substantially affects the rights of the
            parties and if so whether it is either an
            open question in the sense that it is not
            finally settled by this Court or by the
            Privy Council or by the Federal Court or
            is not free from difficulty or calls for
            discussion of alternative views. If the
            question is settled by the highest court
            or the general principles to be applied in
            determining the question are well
            settled and there is a mere question of




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     applying those principles or that the plea
     raised is palpably absurd the question
     would not be a substantial question of
     law.”

21. Similarly, in Santosh Hazari v. Purushottam
Tiwari reported in AIR 1962 SC 1314, a three-
Judge Bench of this Court observed that:

     “14. A point of law which admits of no
     two opinions may be a proposition of law
     but cannot be a substantial question of
     law. To be ‘substantial’ a question of law
     must be debatable, not previously settled
     by law of the land or a binding
     precedent, and must have a material
     bearing on the decision of the case, if
     answered either way, insofar as the rights
     of the parties before it are concerned. To
     be a question of law ‘involving in the
     case’ there must be first a foundation for
     it laid in the pleadings and the question
     should emerge from the sustainable
     findings of fact arrived at by court of facts
     and it must be necessary to decide that
     question of law for a just and proper
     decision of the case. An entirely new
     point raised for the first time before the
     High Court is not a question involved in
     the case unless it goes to the root of the
     matter. It will, therefore, depend on the
     facts and circumstance of each case
     whether a question of law is a substantial
     one and involved in the case, or not; the
     paramount overall consideration being
     the need for striking a judicious balance
     between the indispensable obligation to
     do justice at all stages and impelling
     necessity of avoiding prolongation in the
     life of any lis.”




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      22. In Hero Vinoth v. Seshammal reported in
      (2006) 5 SCC 545, this Court has observed that:

            “(iii) The general rule is that the High
            Court will not interfere with the
            concurrent findings of the courts below.
            But it is not an absolute rule. Some of
            the well-recognized exceptions are
            where (i) the courts below have ignored
            material evidence or acted on no
            evidence; (ii) the courts have drawn
            wrong inferences from proved facts by
            applying the law erroneously; or (iii)
            the courts have wrongly cast the burden
            of proof. When we refer to ‘decision
            based on no evidence’, it not only refers
            to cases where there is a total dearth of
            evidence, but also refers to any case,
            where the evidence, taken as a whole, is
            not reasonably capable of supporting
            the finding.”

10.   After a careful examination of the questions of law, which

were originally formulated and/or had been subsequently

reformulated by the Appellant’s counsel, we find that none of those

are substantial questions of law arising in the present Appeal. As a

matter of fact, it appears to us that the Appellant has dressed up

the legal objections to the judgment and order of the learned

Tribunal and projected them as substantial questions of law, which

recourse, in our considered view, was clearly impermissible under

the law.




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11.   It must be noted herein that there may be several legitimate

grounds including numerous legal objections that can be taken

against a judgment of the Tribunal. However, such grounds/legal

objections must raise questions of general public importance which

have not been decided either by the Supreme Court or the

jurisdictional High Court in order to partake the character of

“substantial question of law”.


12.   From an examination of the material placed before us, we

are of the view that the questions so formulated by the learned

Departmental counsel does not fulfill the threshhold requirement

of Section 260A of the Act of 1961 permitting this Court to admit

the Appeal. We also find that there is/are no other substantial

questions of law which would arise for consideration by this Court

in the present Appeal.


13.   Consequently, the Appeal stands dismissed.



(GAUTAM A. ANKHAD, J.)                       (SUMAN SHYAM, J.)
                                                                     {




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