2012 (12) TMI 1016 - AT - Income Tax

Limitation imposed u/s 254(2) is not applicable because the Tribunal s order was not u/s 254(1) but under section 255(5) read with Rule 12 of ITAT Rules.

Issues Involved:
1. Recall of Tribunal's order due to Supreme Court's decision.
2. Applicability of limitation period under section 254(2).
3. Nature of Tribunal's order under Rule 12 of ITAT Rules.
4. Retrospective effect of Supreme Court's decision.
5. Procedural aspects concerning appeals and COD approval.

Issue-Wise Detailed Analysis:

1. Recall of Tribunal's Order Due to Supreme Court's Decision:
The Department sought to recall the Tribunal's order dated 01/02/2007, which dismissed the Department's appeal for lack of COD approval, based on the Supreme Court's decision in Electronics Corporation of India Ltd. v. Union of India [2011] 332 ITR 58 (SC). The Supreme Court had recalled all its orders requiring COD approval for Public Sector Undertakings and Government Departments to initiate legal proceedings against each other.

2. Applicability of Limitation Period Under Section 254(2):
The counsel for the assessee argued that the miscellaneous application was barred by limitation under section 254(2) as it was filed beyond four years from the date of the Tribunal's order. The Special Bench decision in Arvindbhai H. Shah v. Asst. CIT [2004] 91 ITD 101 (Ahd.) (SB) was cited, which held that no order could be amended through rectification after four years from the date of the order. However, the Department contended that the limitation period should not apply in this case, drawing an analogy with sections 153(3) and 153(2A) of the Income Tax Act, which allow for extensions in specific circumstances.

3. Nature of Tribunal's Order Under Rule 12 of ITAT Rules:
The Department argued that the impugned order was not an order under section 254(1) but an order under Rule 12 of the Income Tax Appellate Tribunal Rules, 1963. Rule 12 deals with the rejection or amendment of the memorandum of appeal and is considered an interim order. The Tribunal had dismissed the appeal without adjudicating it on merits due to the lack of COD approval, but had granted liberty to seek adjudication on merits if COD approval was furnished later.

4. Retrospective Effect of Supreme Court's Decision:
The Tribunal noted that the Supreme Court's decision to recall its earlier orders on COD approval was not merely prospective. The Supreme Court's recall of its orders made the earlier requirement for COD approval non-existent. The Tribunal emphasized that the recall of an order by the Supreme Court makes the earlier order non est (non-existent). Therefore, the Department's contention that COD approval was not required after the Supreme Court's decision was accepted.

5. Procedural Aspects Concerning Appeals and COD Approval:
The Tribunal discussed the procedural aspects of appeals, emphasizing that the primary intention of the legislature is to ensure that rights and liabilities of parties are finally settled. The Tribunal has the power to pass interim orders to facilitate the decision of appeals on merits. The Tribunal concluded that the limitation period under section 254(2) did not apply to interim orders passed under Rule 12, as these are not final orders on appeal but procedural orders.

Conclusion:
The Tribunal held that the limitation imposed under section 254(2) was not applicable because the Tribunal's order was an interim order under Rule 12 of the ITAT Rules, not a final order under section 254(1). The Tribunal also clarified that where COD approval was awaited as of the Supreme Court's decision on 17/02/2011, the Tribunal's orders dismissing appeals for lack of COD approval must be recalled. Consequently, the miscellaneous application filed by the Department was allowed, and the Tribunal's order was recalled for adjudication on merits.

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