Supreme Court Grants Relief To ITAT Member Whose Appointment Was Delayed For Not Filing Income Tax Returns

The Supreme Court recently allowed a member of the Income Tax Appellate Tribunal to continue in the post till the age of 62 years as per the provisions of the Income Tax Act 1961. Although she had applied in pursuance of a notification issued in 2013, she was given appointment only in 2018, as there was a dispute regarding non-filing of income tax returns by her with respect to the relevant assessment year (2010-11). There was a litigation over this dispute. In June 2017, the Calcutta High Court had granted her relief by holding that she cannot be excluded merely on the ground that she had not filed income tax returns.

Following the Calcutta High Court's order, the department issued a letter of appointment to her in March 2018. In the meantime, the Centre had brought in new rules for appointment to Tribunals, namely Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules 2017. The letter of appointment was issued to her in terms of the 2017 Rules, fixing her term as three years.

However, she contended that since she had applied on the basis of a 2013 notification, her appointment cannot be governed by the 2017 Rules, and should be governed by the rules framed under the Income Tax Act 1961, which stipulate the retirement age of ITAT members as 62 years. 

In 2019, the Supreme Court struck down the 2017 Tribunal Rules in the case Rojer Mathew vs South Indian Bank and directed that the appointments should be made as per the provisions of the parent statute. Later, in the 2020 Madras Bar Association case, the Supreme Court dealt with the subsequent Rules framed by the Centre in 2020 in relation to tribunal appointments. In July 2021, the Supreme Court clarified in the Madras Bar Association case that all appointments made before 4 April 2021 would be governed by the parent statutes.

In this backdrop, the ITAT member filed a Miscellaneous Application in the Madras Association case seeking extension of her tenure till 62 years in terms of the Income Tax Act.

A bench comprising Chief Justice of India DY Chandrachud, Justice PS Narasimha and JB Pardiwala noted that the applicant had offered her candidature for appointment in pursuance of the circular of 2013. She was deprived of the selection only on the ground that she had not filed her income tax return for the relevant assessment year. The High Court of Calcutta High held that the candidature of the applicant shall not be rejected on the ground that her income tax return for Assessment Year 2010-2011 was not available. The Supreme Court stated that this judgement of the High Court had attained finality. Thus, it held that–

"The clear position on the facts of this case is that the right of the applicant to appointment had been crystallized even before the 2017 Rules. Therefore, the appointment of the applicant would be governed by the position as it existed prior to the 2017 Rules. In other words, her tenure shall be extended until she attains the age of 62 years."

Case Title: Madras Bar Association v. Union of India | M.A. No.111/2021 In W.P.(C) No.804/2020

Citation : 2023 LiveLaw (SC) 178

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