Tribunal's Jurisdictional Boundaries & Order Recall (2)

The Tribunal's action of recalling its order was found to be without jurisdiction as it cannot indirectly achieve what it cannot do directly. The review of its own order is forbidden, and the Tribunal's attempt to recall the order under section 254(2) was beyond its jurisdiction. The impugned order of the Tribunal recalling its order was set aside, and a writ of certiorari was issued. An application for reference to the court under section 256(1) of the Act was noted to be pending before the Tribunal.

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Issues Involved:
1. Whether the Income-tax Appellate Tribunal (ITAT) is empowered to recall its order passed on the merits under section 254 of the Income-tax Act, 1961.

Detailed Analysis:

Jurisdiction of ITAT under Section 254 of the Income-tax Act, 1961:
The core issue in this writ petition is whether the ITAT has the authority to recall its order passed on the merits under section 254 of the Income-tax Act, 1961. The petitioner contended that the Tribunal has no power of review and cannot recall an order passed on the merits while exercising its jurisdiction under section 254. The Department argued that the Tribunal could recall its order in the interest of justice, relying on the decision of the Rajasthan High Court in CIT v. Ramesh Chand Modi [2001] 249 ITR 323.

Tribunal's Power of Amendment:
Section 254(2) of the Income-tax Act states:
"The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer."
The Tribunal's power to amend an order is limited to rectifying mistakes apparent from the record. The Tribunal does not have an inherent power of review and cannot recall its order passed on the merits under the guise of rectification.

Procedural vs. Substantive Review:
The court distinguished between substantive and procedural review. While the Tribunal may have procedural powers of review, it does not have an express or implied substantive power of review. The Supreme Court in Grindlays Bank Ltd. v. Central Government Industrial Tribunal [1981] 58 FJR 140; AIR 1981 SC 606, 608, supported this distinction, stating that a tribunal could exercise ancillary or incidental powers necessary to discharge its functions effectively, but this does not extend to substantive review.

Case Law Analysis:
1. K.L. Bhatia's Case [1990] 182 ITR 361 (Delhi): The Tribunal has incidental or ancillary powers but cannot rehear a case on merits outside the purview of section 254(2).
2. Deeksha Suri (Ms.) v. ITAT [1998] 232 ITR 395 (Delhi): Overlooking an interim order does not render the final judgment void or null, and hence, it cannot be recalled.
3. ITO v. ITAT [1987] 168 ITR 809 (Raj): The Tribunal cannot exercise the power of review and recall the order under the guise of rectification.
4. CIT v. Ideal Engineers [2001] 251 ITR 743 (AP): Recalling an order passed on the merits takes away a vested right, which is not permissible.
5. CIT v. Prahlad Rai Todi [2001] 251 ITR 833 (Gauhati): The power under section 254(2) is limited, and the Tribunal cannot recall its order.
6. Smt. Baljeet Jolly v. CIT [2001] 250 ITR 113 (Delhi): A mistake rectifiable under section 254(2) must be patent and obvious, not requiring argument or elaboration.

Tribunal's Lack of Jurisdiction:
The Tribunal's action of recalling its order was found to be without jurisdiction. The Tribunal cannot indirectly achieve what it cannot do directly. The review of its own order is forbidden, and the Tribunal's attempt to recall the order under section 254(2) was beyond its jurisdiction.

Conclusion:
The impugned order of the Tribunal recalling its order was set aside. The Tribunal acted without jurisdiction, and the order suffered from misdirection in law. The writ petition was allowed, and a writ of certiorari was issued. An application for reference to the court under section 256(1) of the Act was noted to be pending before the Tribunal.

Final Order:
The impugned order of the Tribunal was set aside, and the writ petition was allowed with no order as to costs.

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