When the transformation skip process is performed on residual data in case an original image is an image of middle-range components, the transformation skip coefficient is of values illustrated in (d) of FIG. 13. Since a left bit shift process is performed is the transformation skip process so that the quantizing section can quantize the coefficient of the orthogonal transform and the residual data, the transformation skip coefficient illustrated in (d) of FIG. 13 is of values produced when the bit shift process is performed on the residual data illustrated in (c) of FIG. 13. In FIG. 13, illustrates quantized data of the transformation skip coefficient. When the quantized data are dequantized and further inversely orthogonally transformed, decoded residual data illustrated in (f) of FIG. 13 are obtained. Furthermore, decoded image data illustrated in (g) of FIG. 13 are obtained by adding predicted image data to the decoded residual image data. Specifically, the decoded imaged data in case the transformation skip process is performed represent a gradation whose pixel value changes are stepwise, failing to properly reproduce continuous gradation changes, compared with the input image data illustrated in (a) of FIG. 13.
