Facts of the Case

  • The Revenue filed appeals against the respondent (assessee), Housing & Urban Development Corporation Ltd.
  • The dispute arose from orders passed by the ITAT under Section 254(2) of the Act.
  • The ITAT had allowed rectification applications filed by the assessee and restored the appeals for fresh hearing.
  • The Revenue challenged whether such rectification orders could be passed beyond the statutory limitation period of six months.

Issues Involved

  1. Whether the ITAT can decide an application under Section 254(2) beyond the prescribed limitation period of six months?
  2. Whether the amendment to Section 254(2) (effective from 01.06.2016) is mandatory in nature?

Petitioner’s Arguments (Revenue)

  • The Revenue contended that Section 254(2) clearly prescribes a strict limitation period of six months.
  • It was argued that the ITAT exceeded its jurisdiction by entertaining and deciding the rectification application beyond this time limit.
  • The Revenue sought interference by the High Court on the ground of violation of statutory limitation.

Respondent’s Arguments (Assessee)

  • The assessee submitted that subsequent to the ITAT’s rectification order, the appeals had already been reheard.
  • It was pointed out that final orders in those reheard appeals had been reserved.
  • Therefore, interference at this stage would be inappropriate and academic in nature.

Court Order / Findings

  • The Delhi High Court declined to interfere in the matter.
  • The Court noted that the appeals had already been reheard pursuant to the ITAT’s order and orders had been reserved.
  • Considering the subsequent developments, the Court held that it was not appropriate to interfere.
  • The appeals filed by the Revenue were dismissed.
  • No costs were awarded.

Important Clarification by Court

  • The Court expressly left the question of law open, i.e., whether ITAT can decide applications beyond the six-month limitation period under Section 254(2).
  • This issue was not adjudicated on merits and may be decided in an appropriate future case.

Sections Involved

  • Section 254(2) of the Income Tax Act, 1961
  • Amendment effective from 01 June 2016 (Time limit of 6 months for rectification)

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2019:DHC:7412-DB/SMD06082019ITA3362019_163419.pdfTop of Form

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