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2010 (8) TMI 948 - HC - Income Taxmaintainability of appeal u/s 260A - HELD THAT - where as the consequence of an order passed on the rectification application u/s.254(2) the amendment in the order passed in appeal u/s 254(1) takes place such amended order in appeal as a consequence of the order passed in the rectification application however shall be amenable to appeal u/s.260A. Insofar as the present case is concerned the assessee has only challenged the order of the Tribunal rejecting the application of rectification the appeal u/s 260A is not maintainable. As the appeals in the present case are not maintainable we are disposed to think the same can be converted by filing proper application for conversion and by further complying with the necessary formalities as required under the rules to prefer the writ petition. The reference is answered accordingly. Matter be placed before the Division Bench for further adjudication.
Issues Involved:
1. Maintainability of appeal under Section 260A of the Income Tax Act, 1961, against orders passed under Section 254(2) of the same Act. Issue-wise Detailed Analysis: 1. Maintainability of Appeal under Section 260A: The primary issue addressed in the judgment is whether an appeal under Section 260A of the Income Tax Act, 1961, is maintainable against orders passed under Section 254(2) of the Act. The court considered various precedents and legal interpretations to reach its conclusion. Arguments by Revenue: - The language of Section 260A should be read such that only orders passed by the appellate tribunal in appeal are appealable, not orders under Section 254(2), which deals with rectification of mistakes. - Sub-sections (1) and (2) of Section 260A are conceptually connected and should be read together to mean that only orders passed in appeal are subject to appeal. - Orders under Section 254(2) do not confer the tribunal with the power of recall, and even if recalled, such orders cannot be appealed under Section 260A. Arguments by Assessee: - The Objects and Reasons for incorporating Section 260A should be considered. - Previous decisions of various High Courts support the view that orders under Section 254(2) can be appealed if they amend the original order. Court's Analysis: - The court examined Section 260A, which allows appeals to the High Court from "every order passed in appeal by the Appellate Tribunal." - Section 254(2) allows the tribunal to rectify any mistake apparent from the record and amend any order passed under sub-section (1). - The court referred to various precedents, including decisions from the High Courts of Bombay, Calcutta, Madras, Rajasthan, Punjab & Haryana, and Allahabad, which generally support the view that orders under Section 254(2) are not appealable under Section 260A unless they amend the original order. - The court distinguished the decision in Karan & Co. v. ITAT, which dealt with the scope of Section 254(2) but did not address the maintainability of appeals under Section 260A. Conclusion: - An order passed under Section 254(2) recalling an order in entirety is not appealable under Section 260A. - An order rejecting an application under Section 254(2) is not appealable. - If an order under Section 254(2) amends the order passed in appeal, it can be appealed under Section 260A on a substantial question of law. Remedy for Assessee: - If an appeal is not maintainable, the assessee can challenge the order by filing a writ petition under Articles 226 and 227 of the Constitution of India. - The court allowed the conversion of the appeal to a writ petition, subject to the filing of a proper application and compliance with necessary formalities. Disposition: - The reference was answered accordingly, and the matter was placed before the Division Bench for further adjudication.
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