Facts of the Case

The assessee filed appeals before the Delhi High Court challenging the order dated 29.08.2008 passed by the Income Tax Appellate Tribunal (ITAT). The Tribunal had rejected the assessee’s application seeking permission to urge two additional grounds in the pending appeal before it.

It was noted that an earlier application filed by the assessee seeking permission to raise the same additional grounds had already been rejected by the Tribunal vide order dated 14.07.2008. Thereafter, the assessee filed a second application seeking identical relief, which was also rejected by the Tribunal.

Aggrieved by the rejection of the second application, the assessee preferred an appeal before the High Court under Section 260A of the Income-tax Act, 1961.

 

Issues Involved

  1. Whether an appeal under Section 260A of the Income-tax Act, 1961 is maintainable against an interim order of the Income Tax Appellate Tribunal rejecting an application to raise additional grounds.
  2. Whether the assessee can challenge the Tribunal’s refusal to permit additional grounds before the final disposal of the appeal pending before the Tribunal.
  3. Whether the rejection of a second application seeking the same relief as an earlier rejected application gives rise to a substantial question of law warranting interference by the High Court.

 

Petitioner’s Arguments

  • The assessee challenged the Tribunal’s order dated 29.08.2008 rejecting the application for urging two additional grounds.
  • It was contended that the Tribunal ought to have permitted the assessee to raise the additional grounds in the pending appeal.
  • The assessee sought interference from the High Court against the Tribunal’s refusal to entertain those additional grounds.

 

Respondent’s Arguments

  • The Revenue opposed the appeal and supported the Tribunal’s order.
  • It was submitted that the order challenged by the assessee was merely an interim order and did not finally determine the rights of the parties.
  • The Revenue further contended that a similar application had already been rejected earlier and therefore the Tribunal was justified in rejecting the subsequent application seeking identical relief.

 

Sections Involved

  • Section 260A of the Income-tax Act, 1961 – Appeal to High Court from orders of the Income Tax Appellate Tribunal.

 

Court Findings

The Delhi High Court observed that the order impugned by the assessee was only an interim order passed during the pendency of the appeal before the Tribunal.

The Court noted that:

  • The Tribunal had already rejected an earlier application seeking permission to raise the same additional grounds vide order dated 14.07.2008.
  • The subsequent application was substantially similar to the earlier application.
  • Therefore, the Tribunal's decision to reject the second application could not be considered improper.

The Court further held that if the final appeal before the Tribunal is ultimately decided against the assessee, it would remain open to the assessee to challenge the final order under Section 260A of the Income-tax Act and also raise the grievance that the Tribunal ought to have permitted the additional grounds.

Since an effective alternative remedy would be available after the final order of the Tribunal, the Court found no justification for entertaining the appeal at the interim stage.

 

Court Order

The Delhi High Court dismissed the appeal.

The Court held that an appeal against an interim order of the Tribunal rejecting an application for raising additional grounds is not required to be entertained at that stage, particularly when the assessee can challenge the issue while assailing the final order of the Tribunal under Section 260A of the Income-tax Act.

 

Important Clarification

  • Rejection of an application seeking permission to raise additional grounds during the pendency of an appeal before the ITAT is generally an interlocutory/interim order.
  • Such rejection does not necessarily warrant immediate interference by the High Court under Section 260A.
  • The aggrieved party may challenge the refusal to admit additional grounds while contesting the final order passed by the Tribunal.
  • Filing repeated applications seeking identical relief after rejection of an earlier application may not justify interference by higher courts.

 

Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2009:DHC:7250-DB/AKS10082009ITA2972009_161241.pdf

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