Under the Income Tax Act, 1961, and the Constitution of India, an appeal can be filed before the Supreme Court against an order of the High Court in income tax matters. The key provisions governing this are:
1. Appeal Under Section 261 of the Income Tax Act, 1961
- Applicability:
- An appeal lies to the Supreme Courtif the High Court certifies that the case involves a “substantial question of law of general importance”.
- Procedure:
- The assessee/Revenue must file a petition before the High Courtseeking a certificate of fitness for appeal to the Supreme Court.
- If granted, the appeal must be filed within 60 days(extendable).
- Key Points:
- The Supreme Court will only hear cases that have broader legal implications.
- Example: Conflicting High Court judgments on tax law interpretation.
2. Special Leave Petition (SLP) Under Article 136 of the Constitution
- Applicability:
- If the High Court refuses to grant a certificateunder Section 261, the aggrieved party can file an SLP directly before the Supreme Court.
- Conditions:
- The Supreme Court has discretionary powerto admit or reject the appeal.
- Generally entertained in cases of:
- Grave injusticeor violation of natural justice.
- Contradictory judgmentsby different High Courts.
- Substantial questions of lawaffecting public interest.
- Time Limit:
- 90 daysfrom the High Court’s order (delay condonation possible).
- Procedure:
- File an SLP petitionwith grounds of appeal before the Supreme Court.
3. Key Differences Between Section 261 & Article 136
| ASPECT | APPEAL UNDER SECTION 261 (IT ACT) | SPECIAL LEAVE PETITION (ARTICLE 136) |
| Basis | High Court certifies the appeal | Supreme Court’s discretion |
| Time Limit | 60 days (from High Court’s order) | 90 days (from High Court’s order) |
| Chances of Admission | Higher (if HC grants certificate) | Discretionary (depends on merit) |
| Grounds | Substantial question of law | Exceptional circumstances, legal errors |
4. When Can an Appeal Be Filed?
The Supreme Court generally admits appeals in the following scenarios:
- Conflict Between High Courts– Different High Courts interpreting the same law differently.
- Substantial Legal Issue– Questions affecting tax policy or constitutional validity.
- Gross Injustice– If the High Court’s decision causes severe prejudice.
- Violation of Natural Justice– Denial of a fair hearing or procedural lapses.
5. Practical Considerations
- Legal Complexity: Supreme Court appeals require strong legal argumentsrather than factual disputes.
- Cost & Time: Litigation in the Supreme Court is expensive and time-consuming.
Alternate Remedy: If the tax amount is below the monetary limit (e.g., ₹2 crore tax effect for the Department), the appeal may not be pursued.
