INCOME TAX APPELLATE TRIBUNAL IS NOT AN INCOME TAX AUTHORITY

[Mr. M. GOVINDARAJAN]

Section 253 of the Income Tax Act, 1961 ('Act' for short) provides for filing appeal to the Appellate tribunal against-

An order of Commissioner of Income Tax (Appeals); or

An order passed by an Assessing Officer under Section 158BC© in respect of search initiated under Section 132 or books of accounts, other documents or any assets requisitioned under Section 132 A, after 30.6.1995 but before 01.01.1997; or

An order passed by an Assessing Officer under Section 115VZC(1); or

An order by Commissioner under Section 12AA or Section 80(G)(5)(vi) or Section 263 or Section 271 or Section 272A or under Section 154 amending his order under Section 263; or

An order passed by a Chief Commissioner or a Director General or a Director under Section 272A

Within sixty days on the date of such order sought to be appealed against is communicated to the assessee or to the Commissioner as the case may be.

            The Appellate Tribunal is not form part of the Income Tax Department. It is entirely separated from the departmental system.   This is well explained in case law 'J.C. Augustine V. Asst. Commissioner of Income Tax' - (2009) 312 ITR (AT) 60 (Cochin).

            Chapter XIX-A of the Act deals with the settlement of cases. Income Tax Settlement Commission has been constituted by the Central Government under Section 245B of the Act for settlement of cases. Section 245HA deals with the abatement of proceeding before Settlement Commission. The said section provides where an application made before Settlement Commission has not been allowed to be proceeded or has been declared as invalid the proceedings before Settlement Commission shall abate on the specified date. Where a proceeding before the Settlement Commission abates, the Assessing Officer, as the case may be, any other income tax authority before whom the proceeding at the time of marking the application was pending, shall dispose of the case in accordance with the provisions of the Act.

            In the case 'J.C. Augustine V. Assistant Commissioner of Income Tax' (supra) the tribunal held that when the proceedings before the income tax authorities get transferred to Settlement Commission and the proceedings before the Settlement Commission abate, the proceedings would revive only before that income tax authority. The Income Tax Appellate Tribunal is not an income tax authority for the purposes of the Income Tax Act, 1961. 

            In this case the appellant is an individual regularly assessed to income tax. There was a search and seizure operation under Section 132 in the residential premises of the assessee. The income escaping assessments were completed in the backdrop of that search. Those assessments were taken before the Commissioner of Income Tax (Appeals) at Kochi. In the meantime the assessee approached the Settlement Commission for an early settlement of tax disputes. The petitions filed by the appellant were accepted by the Settlement Commission but the proceedings before the Settlement Commission got abated for the reason that the appellant did not pay the additional tax on the income admitted before the Settlement Commission.

            In the meantime as the assessee has sought to move applications before the Settlement Commission, the Commissioner of Income Tax (Appeals) dismissed the first appeals filed by the appellant as infructuous on the ground that the Commissioner of Income Tax (Appeals) does not have jurisdiction where the matter is seized before the Settlement Commission. The appellant filed this present appeal before the Tribunal on the ground that the Commissioner of Income Tax (Appeals) ought to have considered the merits of the appeals filed by the assessee and at any rate the assessee having failed in pursuing the alternate remedy, these appeals should have been disposed on the merits.

            The tribunal observed that the appeal is filed after a delay of 7 years and 202 days. Even though the appellant has a good reason to explain the delay in filing the appeal before the tribunal the tribunal considered that the appeals are not maintainable before the tribunal the tribunal is not in a position even to examine the condonation petition.

            The assessee has sought the intervention of the Settlement Commission while the first appeals were pending before the Commissioner of Income Tax (Appeals). The tribunal held that once the issues are placed before the Settlement Commission, the proceedings before the Commissioner (Appeals) have become infructuous. He has lost jurisdiction to decide the appeals. Even if he wanted to decide appeals on the merits he had no jurisdiction to do so. The dismissal order of the Commissioner of Income Tax (Appeals) is only a technical order disposing of the appeals for statistical purpose. No appealable orders are available in the hands of the appellant to be placed before the Appellate Tribunal in second appeal.  There is no basis in the argument of the appellant that the Commissioner of Income Tax (Appeals) has not considered the appeal on merits. 

            The tribunal analyzed the provisions of Section 245HA of the Act which deals with the abatement of proceedings before the Settlement Commission. The tribunal held that the proceedings in the form of first appeals were pending before the Commissioner of Income Tax (Appeals) when the applications were made before the Settlement Commission. Accordingly, the said proceedings would revive only before the Commissioner of Income Tax (Appeals) to dispose of the matter as if there was no application made by the assessee before the Settlement Commission. Therefore the appellant has to move a restoration petition before the Commissioner of Income Tax (Appeals) to proceed further in this matter. 

            The tribunal further held that when the proceedings pending before the income tax authorities got transferred to Settlement Commission and once the proceedings before the Settlement Commission got abated, the proceedings would revive only before those income tax authorities. The Income Tax Appellate Tribunal is not an income tax authority for the purpose of the Income Tax Act, 1961. Therefore the tribunal has no reason to come into the picture at all. It is only after the Commissioner of Income Tax (Appeals) passing orders in the appeals after restoration or revival, the tribunal gets jurisdiction, if circumstances so arise.