2015 (2) TMI 861 - HC - Income Tax

Condonation of the delay rejected by CIT(A) u/s 119(2)(b) - application against the rejection by CIT(A) dismissed by ITAT as non maintainable - ITAT has allowed the rectification application wanted to convey/direct the Commissioner to consider the case afresh including the issue of condonation of delay - Held that - Tribunal dismissed the appeal as not maintainable and as such rightly held that the appeal was not maintainable. Once the appeal itself was held to be not maintainable, it is not appreciable how the rectification application in an appeal which was held to be not maintainable, can be said to be maintainable. The rectification application in the appeal which was held not maintainable, ought not to have been entertained by the learned Tribunal, unless in a rectification application it was submitted that the learned Tribunal has committed an error in holding that the appeal is not maintainable and the learned Tribunal takes the view that the appeal was maintainable. In the present case, that is not so. Neither there was any contention that the appeal was maintainable against the order passed by the Commissioner nor infact there is any finding given by the learned Tribunal in the impugned order that the appeal is held maintainable. Under the circumstances, as such the order passed by the learned Tribunal in rectification application/miscellaneous application is wholly without jurisdiction, as if in the original order, Tribunal was of the opinion that the order passed by the Commissioner was not appealable, in exercise of rectification powers the Tribunal simply could not have given directions to the Commissioner to pass fresh order on the respondent s application. As such by passing the impugned order in the rectification application, the Tribunal has nullified the original order of the Commissioner and directed him to pass a fresh order after hearing the respondent. - Decided in favour of revenue.

Summary

Issues:
1. Jurisdiction of the learned ITAT in allowing the rectification application.
2. Maintainability of the appeal before the learned ITAT.
3. Legality of the impugned order passed by the learned ITAT.

Jurisdiction of the learned ITAT in allowing the rectification application:
The petitioner, Commissioner of Income Tax-II, Vadodara, filed a petition under Articles 226, 227 of the Constitution of India to challenge the impugned order passed by the Income Tax Appellate Tribunal (ITAT) in a Miscellaneous Application. The ITAT had directed the Commissioner to consider the case afresh, including the issue of condonation of delay, and pass necessary orders. The petitioner argued that the ITAT's order was without jurisdiction as the appeal was dismissed as not maintainable, and the ITAT had no authority to entertain a rectification application in an appeal deemed not maintainable. The petitioner contended that the ITAT had effectively nullified the original order of the Commissioner by directing a fresh order without any specific findings or directions. The High Court held that the impugned order passed by the ITAT in the rectification application was without jurisdiction and quashed and set it aside.

Maintainability of the appeal before the learned ITAT:
The initial appeal was filed by the assessee against the Commissioner's order under section 119(2)(b) of the Income Tax Act, 1961, requesting condonation of delay in filing the return of income. The ITAT dismissed the appeal as not maintainable, stating that the Commissioner's order was administrative and not appealable. Subsequently, the assessee filed a rectification application, which was allowed by the ITAT, effectively setting aside the Commissioner's order and directing a fresh consideration. The High Court noted that the ITAT had not explicitly quashed the Commissioner's order or provided specific directions. The Court emphasized that since the appeal was held not maintainable, the ITAT had no jurisdiction to entertain the rectification application and issue directions for a fresh order.

Legality of the impugned order passed by the learned ITAT:
The High Court further analyzed the impugned order passed by the ITAT and found serious legal defects. It emphasized that if the original order deemed the Commissioner's decision non-appealable, the ITAT could not have directed a fresh order in the rectification application. By nullifying the original order and instructing a fresh decision, the ITAT acted beyond its authority. The Court concluded that the impugned order was without jurisdiction, lacked legal basis, and was unsustainable. Consequently, the High Court quashed and set aside the impugned order passed by the ITAT in the Miscellaneous Application, ruling in favor of the petitioner, the Commissioner of Income Tax-II, Vadodara.

This comprehensive analysis of the judgment provides a detailed breakdown of the issues involved and the High Court's reasoning behind quashing the impugned order passed by the ITAT.