2009 (2) TMI 97 - HC - Income Tax

Whether ITAT has the powers to make an order as regards admissibility of an appeal filed in the Tribunal - Tribunal is constituted u/s 252(1) of IT Act by the Central Govt. - Tribunal, cannot exercise powers or discharge functions which are not conferred by the Act - Tribunal has lost sight of the fact that, both the assessee and the revenue, are statutorily vested with a right to file an appeal or cross-objections under the Act - Tribunal committed serious error in not admitting the appeals

Summary

Issues Involved:
1. Whether the Appellate Tribunal is right in law and on facts in dismissing the appeal of the revenue on the ground that approval of Committee of Dispute was not obtained?
2. Whether the Tribunal has the power to determine the admissibility of an appeal?

Issue-wise Detailed Analysis:

1. Dismissal of Appeal Due to Lack of Committee of Dispute Approval:
The Tribunal dismissed the appeals filed by both the revenue and the assessee, citing the lack of approval from the Committee of Dispute (COD). The Tribunal's reliance on the Supreme Court's decision in Oil and Natural Gas Commission & Anr. Vs. Collector of Central Excise and the Rajasthan High Court's decision in State of Rajasthan Vs. Income Tax Appellate Tribunal was deemed erroneous. The Tribunal misunderstood the scope and applicability of the COD, which was intended for disputes between Central Government departments and Public Sector Undertakings, not involving State Government entities. The Gujarat High Court clarified that the COD's jurisdiction does not extend to disputes between a Department of the Central Government and a State Government Undertaking. The Tribunal's order was found to be an error in law, as it misapplied the Supreme Court's directives, which were specific to disputes involving Central Government entities.

2. Tribunal's Power to Determine Admissibility of Appeals:
The Tribunal's authority is derived from the Income-tax Act, 1961, specifically Sections 252, 253, and 254. Section 253 outlines the types of orders that can be appealed before the Tribunal and the conditions for filing such appeals, including the period of limitation. Section 254 empowers the Tribunal to pass orders on appeals after hearing both parties. The Tribunal does not have the authority to determine whether an appeal should be admitted, except in cases where the appeal is filed beyond the prescribed period of limitation, as per Section 253(5). The Tribunal's role is to hear and decide appeals on their merits, not to pre-determine their admissibility. The Tribunal's decision to dismiss the appeals on the ground of lack of COD approval was beyond its statutory powers, as the Tribunal cannot divest the statutory right of appeal granted under the Act.

Conclusion:
The Gujarat High Court quashed the Tribunal's order, restoring the appeals filed by both the assessee and the revenue for fresh hearing on merits. The Court held that the Tribunal exceeded its jurisdiction by requiring COD approval and dismissing the appeals on that ground. The statutory right to appeal under the Income-tax Act cannot be curtailed by the Tribunal's erroneous assumption of powers. The appeals were remanded to the Tribunal for a decision on merits in accordance with the law.