2004 (11) TMI 24 - HC - Income Tax

Clarification: Appeal Orders vs. Rectification Orders under Income-tax Act

Chem Amit Versus Assistant Commissioner of Income-Tax.

The court clarified that an order passed by the Appellate Tribunal on a rectification application under section 254(2) does not qualify as an order passed ... Appeal - Assessee has preferred this appeal under section 260A aggrieved by the order dated April 24, 2003, passed by the Tribunal, 'H' Bench, Mumbai, on the application u/s 254(2) seeking rectification of mistake in the order of the Tribunal dated October 24, 2002. - In a given case where as the consequence of an order passed on the rectification application under section 254(2), the amendment in the order passed in appeal under section 254(1) takes place, such amended order in appeal as a consequence of the order passed in the rectification application, however, shall be amenable to appeal under section 260A. In so far as the present case is concerned, the assessee has only challenged the order of the Appellate Tribunal rejecting the application of rectification, the appeal under section 260A is not maintainable. – appeal is dismissed Issues:1. Interpretation of section 260A of the Income-tax Act regarding the scope of appeal to the High Court from orders passed by the Appellate Tribunal.2. Determining whether an order passed by the Appellate Tribunal on an application for rectification under section 254(2) qualifies as an order passed in appeal by the Appellate Tribunal under section 260A.Analysis:1. The judgment addressed the interpretation of section 260A of the Income-tax Act, which allows appeals to the High Court from orders passed by the Appellate Tribunal involving substantial questions of law. The court highlighted that the provision specifies that an appeal lies to the High Court from orders passed in appeal by the Appellate Tribunal. The court emphasized that an order passed by the Tribunal on a rectification application under section 254(2) does not fall under the category of orders passed in appeal by the Appellate Tribunal as per section 260A(1). The court analyzed the legislative intent behind the wording of the provision to restrict appeals to the High Court to orders passed in appeal by the Tribunal, excluding orders on rectification applications.2. The judgment delved into the question of whether an order passed by the Appellate Tribunal on an application for rectification under section 254(2) should be considered an order passed in appeal by the Appellate Tribunal for the purpose of appeal to the High Court under section 260A. The court referred to a Supreme Court judgment in the case of CIT v. Durga Engineering and Foundry Works, which held that references under section 256 could be made from orders of the Tribunal on rectification applications under section 254(2). However, the court distinguished the language and intent of sections 256 and 260A, emphasizing that section 260A limits appeals to orders passed in appeal by the Tribunal. The court concluded that an order passed on a rectification application, which does not result in an amendment to the appeal order under section 254(1), is not subject to appeal under section 260A.3. The judgment clarified that if an amendment in the order passed in appeal under section 254(1) occurs as a consequence of an order on a rectification application under section 254(2), the amended order is appealable under section 260A. However, in the specific case under consideration, where the appeal was against the rejection of a rectification application by the Appellate Tribunal without an amendment to the original appeal order, the appeal under section 260A was deemed not maintainable. Consequently, the court dismissed the appeal based on the analysis of the scope and applicability of section 260A in the context of orders passed by the Appellate Tribunal.