Facts of the Case

The appeals before the Delhi High Court were filed against an order passed by the Income Tax Appellate Tribunal (ITAT) under Section 254(2) of the Income-tax Act, 1961. Section 254(2) empowers the Tribunal to rectify mistakes apparent from the record.

The appellants challenged the Tribunal’s rectification order by filing appeals under Section 260A of the Act before the Delhi High Court.

During the hearing, the Court considered the legal position already settled by the Full Bench of the Delhi High Court in the case of Lachman Dass Bhatia vs Assistant Commissioner of Income Tax (ITA No. 724 of 2010 decided on 06.08.2010).

 

Issues Involved

  1. Whether an appeal under Section 260A of the Income-tax Act, 1961 is maintainable against an order passed by the Income Tax Appellate Tribunal under Section 254(2) of the Act.
  2. Whether the High Court can entertain an appeal arising from a rectification order of the Tribunal passed under Section 254(2).

 

Petitioner’s Arguments

The appellants/petitioners filed appeals under Section 260A challenging the order of the Income Tax Appellate Tribunal passed under Section 254(2) of the Income-tax Act.

The appellants sought judicial review of the Tribunal’s rectification order through the statutory appellate mechanism available under Section 260A.

 

Respondent’s Arguments

The respondent relied upon the settled legal position laid down by the Full Bench of the Delhi High Court in Lachman Dass Bhatia vs Assistant Commissioner of Income Tax.

It was contended that an appeal under Section 260A is not maintainable against an order passed by the Tribunal under Section 254(2), and therefore the appeals deserved dismissal.

 

Court Findings

The Delhi High Court noted that the issue had already been conclusively settled by the Full Bench judgment in Lachman Dass Bhatia vs Assistant Commissioner of Income Tax (ITA No. 724 of 2010 decided on 06.08.2010).

Relying upon the said Full Bench decision, the Court held that:

  • An appeal under Section 260A of the Income-tax Act is not maintainable against an order passed by the Income Tax Appellate Tribunal under Section 254(2).
  • Orders passed by the Tribunal in rectification proceedings do not give rise to a statutory appeal under Section 260A.
  • The legal position being settled by the Full Bench, the present appeals could not be entertained.

 

Court Order

The Delhi High Court held that the appeals filed against the Tribunal’s order under Section 254(2) were not maintainable under Section 260A of the Income-tax Act.

Accordingly:

  • ITA No. 320/2008 and ITA No. 321/2008 were dismissed.
  • Liberty was granted to the appellants to initiate appropriate proceedings in accordance with law, if available.

 

Important Clarification

The judgment reiterates the principle laid down by the Full Bench in Lachman Dass Bhatia vs Assistant Commissioner of Income Tax that:

  • A rectification order passed by the Income Tax Appellate Tribunal under Section 254(2) cannot be challenged through an appeal under Section 260A.
  • Taxpayers and the Revenue must adopt such other remedies as may be permissible under law.
  • Section 260A is confined to appeals arising in circumstances recognized by the statute and does not extend to every order passed by the Tribunal.

Sections Involved

  • Section 254(2) of the Income-tax Act, 1961
  • Section 260A of the Income-tax Act, 1961

 

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2010:DHC:9664-DB/AKS23092010ITA3202008_144742.pdf 

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