Facts of the Case

The appellant filed an appeal (ITA No. 244/2008) before the Hon’ble Delhi High Court challenging the order of the Income Tax Appellate Tribunal (ITAT) dated August 9, 2007, passed in ITA No. 2248/Del/2005 for the Assessment Year 1999-2000. During the pendency of this High Court appeal, the appellant/assessee also pursued a rectification application under Section 254(2) of the Income Tax Act, 1961, before the ITAT (numbered as MA 624/Del/2007). On April 30, 2008, the ITAT allowed the rectification application, recalled its original order dated August 9, 2007, and directed that the matter be posted for a fresh hearing.


Issues Involved

Whether an appeal preferred before the High Court survives and can be adjudicated upon if the underlying order of the Income Tax Appellate Tribunal (ITAT) has been recalled by the Tribunal under Section 254(2) during the pendency of the High Court appeal.


Petitioner’s Arguments

The appellant (represented by Mr. P N Monga and Mr. Manu Monga, Advocates) brought to the attention of the Court that because the ITAT had successfully allowed their Miscellaneous Application (MA 624/Del/2007) under Section 254(2) and recalled the original impugned order, the very foundation of the present appeal before the High Court had ceased to exist.


Respondent’s Arguments

The Respondent/Revenue (represented by Mr. R D Jolly and Mr. Paras Chaudhary, Advocates) noted the developments. The primary concern safeguarded was that if the Revenue chose to challenge the ITAT’s rectification order dated April 30, 2008 (which recalled the original decision), the legal rights and grounds of the parties regarding the merits should remain preserved.


Court Order / Findings

The Division Bench of the Delhi High Court, comprising Hon'ble Mr. Justice Badar Durrez Ahmed and Hon'ble Mr. Justice Rajiv Shakdher, held that under these circumstances, the present appeal had become infructuous. Since the ITAT recalled its original order dated August 9, 2007, the order appealed against no longer survived in the eyes of the law. Consequently, the High Court dismissed the appeal as infructuous.


Important Clarification

The Court provided a vital clarification: if the Revenue prefers an appeal against the Tribunal’s subsequent rectification order dated April 30, 2008, the appellant/assessee is fully at liberty to take all legal grounds available to them in opposition to the Revenue's appeal.


Section Involved

·         Section 254(2) of the Income Tax Act, 1961 (Rectification of mistake from record by the Appellate Tribunal).

·         Section 260A of the Income Tax Act, 1961 (Appeal to High Court).

 

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2008:DHC:12432-DB/BDA22072008ITA2442008_101005.pdf

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