Facts of the Case

The present appeal was filed by the Revenue against the order dated 31.10.2022 passed by the Income Tax Appellate Tribunal (ITAT) in a Miscellaneous Application. The said Miscellaneous Application arose from an earlier order dated 20.05.2022, whereby the Tribunal had extended the stay on recovery of outstanding tax demands for Assessment Years (AYs) 2015-16, 2016-17, and 2017-18.

The appeal before the Delhi High Court was confined specifically to AY 2017-18. It was also noted that the Tribunal had initially granted stay via order dated 13.03.2020.

 Issues Involved

  1. Whether an appeal under Section 260A of the Income Tax Act, 1961 is maintainable against an order passed by the ITAT in a Miscellaneous Application.
  2. Whether the Revenue has an alternative remedy under Article 226 of the Constitution of India in such circumstances.

 Petitioner’s (Revenue’s) Arguments

  • The Revenue challenged the ITAT’s order extending the stay on recovery of outstanding tax demands.
  • It was contended that the Tribunal erred in granting such extension, thereby necessitating appellate intervention by the High Court.

 Respondent’s Arguments

  • The Respondent raised a preliminary objection regarding the maintainability of the appeal.
  • It was argued that no appeal under Section 260A would lie against an order passed in a Miscellaneous Application.
  • Reliance was placed on the Delhi High Court decision in Lachman Dass Bhatia vs Assistant Commissioner of Income Tax (ITA 724/2010), wherein it was held that such appeals are not maintainable.
  • It was further submitted that the appropriate remedy, if any, lies by way of a writ petition under Article 226 of the Constitution.

 Court’s Findings / Order

  • The Delhi High Court acknowledged the legal position laid down in Lachman Dass Bhatia that no appeal under Section 260A is maintainable against such orders.
  • The Court noted that although earlier decisions permitted conversion of such appeals into writ petitions, the Revenue chose to file a fresh writ petition instead.
  • Accordingly, the Court granted liberty to the Revenue to file a writ petition under Article 226.
  • The appeal was disposed of with such liberty.

 Important Clarification

  • Orders passed by the ITAT in Miscellaneous Applications (including stay extension orders) are not appealable under Section 260A.
  • The correct legal remedy in such cases is to invoke writ jurisdiction under Article 226 of the Constitution of India.
  • The judgment reinforces procedural discipline in tax litigation and clarifies the appropriate appellate forum.

 Sections Involved

  • Section 260A of the Income Tax Act, 1961
  • Article 226 of the Constitution of India

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/60804072023ITA3382023_102007.pdf

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