2014 (10) TMI 577 - HC - Income Tax

Maintainability of appeal - Miscellaneous application u/s 254(2) Rectification of mistake apparent from record - Whether the order on the rectification application is traceable to section 254(1) of the I.T. Act or the same is passed under section 254(2) of the I.T. Act Held that - There is a fundamental error on the part of the revenue in submitting that the order under challenge is a consequential one and, therefore, appealable - once a party has challenged the order of the Tribunal on an application for rectification, the appeal u/s 260A of the I.T. Act is not maintainable as decided in Chem Amit Versus Assistant Commissioner of Income-Tax 2004 (11) TMI 24 - BOMBAY High Court - the Tribunal has allowed the miscellaneous application dated 25th March, 2011 - That was an application by the assessee - The Tribunal has recalled its original order for a de novo consideration of the issue of depreciation and partially restored the appeal to its file - the appeal cannot be said to be challenging the order in appeal passed by the Tribunal Decided against revenue.

Summary

Issues:
Appeal under section 260A of the Income Tax Act, 1961 challenging the order passed by the Income Tax Appellate Tribunal in a miscellaneous application invoking section 254(2) of the IT Act for rectification.

Analysis:
The appeal filed contested the order dated 16th November, 2011, by the Income Tax Appellate Tribunal in response to a miscellaneous application under section 254(2) of the Income Tax Act, 1961. The respondent-assessee sought modification of the original order for the assessment year 1997-98, claiming an error apparent on the face of the record. The Tribunal partially recalled its original order based on the application submitted.

During the argument, the legal provisions invoked were examined to determine the nature of the order under challenge. The petitioner maintained that the order was appealable, passed under section 254(2) of the IT Act, amending the original order. However, the Court disagreed with the revenue's submission that the order was consequential and appealable. Referring to a previous judgment, it concluded that once an order is challenged on a rectification application, an appeal under section 260A of the IT Act is not maintainable.

The Court found that the Tribunal had allowed the respondent's miscellaneous application, recalling the original order for a fresh consideration on the issue of depreciation. As a result, the present appeal was deemed not maintainable as it did not challenge the order in appeal passed by the Appellate Tribunal. Consequently, the appeal was dismissed, clarifying that other remedies besides section 260A of the Income Tax Act could be pursued by the revenue to challenge the impugned order, leaving all such options open for both parties. No costs were awarded in this matter.