Facts of the Case

  1. The Revenue filed an application before the Income Tax Appellate Tribunal under Section 254(2) of the Income-tax Act, 1961 seeking rectification of an order.
  2. The Tribunal allowed the Revenue’s application under Section 254(2).
  3. Aggrieved by the Tribunal’s order, the assessee filed an appeal before the Delhi High Court under Section 260A of the Income-tax Act.
  4. During the hearing, the Court considered the Full Bench judgment of the Delhi High Court in Lachman Dass Bhatia v. Assistant Commissioner of Income Tax (ITA No. 724/2010), which had already settled the issue relating to maintainability of appeals against orders passed under Section 254(2).

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 assessee could invoke the appellate jurisdiction of the High Court against such rectification orders of the Tribunal?

Petitioner’s Arguments (Assessee)

  • The assessee challenged the order passed by the Tribunal whereby the Revenue’s application under Section 254(2) had been allowed.
  • The assessee sought appellate intervention of the High Court under Section 260A of the Income-tax Act.

Respondent’s Arguments (Revenue)

  • The Revenue relied upon the legal position emerging from the Full Bench judgment of the Delhi High Court in Lachman Dass Bhatia v. Assistant Commissioner of Income Tax.
  • It was contended that an appeal under Section 260A is not maintainable against an order passed under Section 254(2) of the Act.

Court Findings

  • The Delhi High Court noted that the issue was already covered by the Full Bench decision in Lachman Dass Bhatia v. Assistant Commissioner of Income Tax.
  • The Full Bench had categorically held that an appeal under Section 260A of the Income-tax Act is not maintainable against an order passed by the Tribunal under Section 254(2) of the Act.
  • Since the impugned order before the Court was an order passed under Section 254(2), the appeal filed by the assessee was not maintainable.

Court Order

  • The appeal filed by the assessee was dismissed.
  • The Court held that an appeal under Section 260A against an order passed under Section 254(2) of the Income-tax Act cannot be entertained.
  • However, liberty was granted to the assessee to avail any other remedy available under law for challenging the Tribunal’s order.

Important Clarification

  • Orders passed by the Income Tax Appellate Tribunal under Section 254(2) are rectification orders.
  • In view of the Full Bench ruling in Lachman Dass Bhatia v. Assistant Commissioner of Income Tax, such orders are not appealable before the High Court under Section 260A.
  • A party aggrieved by an order under Section 254(2) must explore other remedies available under law, if any.
  • The decision reinforces the distinction between substantive appellate orders and rectification orders passed by the Tribunal.

Relevant 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:9679-DB/AKS16092010ITA10262008_145202.pdf 

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