Revival of withdrawn tax appeal cannot be barred by rectification limitation where reinstatement liberty was reserved.
An application to revive a withdrawn tax appeal, where liberty to seek reinstatement had earlier been reserved under the Vivad Se Vishwas process, could not be rejected by treating it as a rectification request under Section 254(2) of the Income-tax Act. The High Court distinguished revival of an appeal from rectification of an order, held that the six-month rectification limit was inapplicable, and found the Tribunal's refusal to restore the appeal unsustainable. The appeal was directed to be restored and heard on merits.
Issues: Whether an application filed for revival of an appeal, after withdrawal in view of the Vivad Se Vishwas scheme, could be rejected by applying the limitation prescribed for rectification under Section 254(2) of the Income-tax Act, and whether the Tribunal ought to have restored the appeal.
Analysis: The writ petition arose from the Tribunal's refusal to entertain an application seeking restoration of the withdrawn appeal. The Tribunal had earlier granted liberty to seek reinstatement if the scheme application failed. The impugned order proceeded on the footing that Section 254(2) governed the application and that the six-month period for rectification had expired. The Court held that rectification of an order and revival of an appeal are distinct remedies and cannot be equated. Since the earlier order itself contemplated reinstatement and the petitioner otherwise would be left without a remedy, the Tribunal ought to have treated the application as one for revival of the appeal rather than rejecting it on the basis of Section 254(2).
Conclusion: Section 254(2) did not bar the revival application, and the Tribunal's order refusing restoration was unsustainable. The appeal was directed to be restored and decided on merits.
Final Conclusion: The assessee succeeded in obtaining restoration of the tax appeal, with the Tribunal directed to hear and dispose of it afresh in accordance with law.
Ratio Decidendi: An application seeking revival of a withdrawn appeal, especially where liberty to reinstate was earlier reserved, cannot be treated as a mere rectification application governed by the limitation in Section 254(2) of the Income-tax Act, 1961.
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