1964 (8) TMI 74 - HC - Income Tax

Tribunal's Inherent Power for Rectification Upheld

The court held that the Tribunal had inherent powers to rectify its mistakes, despite the limitation period under the Excess Profits Tax Act and ... - Issues Involved:1. Whether there was any period of limitation for making an application for rectification under the Excess Profits Tax Act.2. Whether the petitioner was guilty of laches in filing the writ petition.Detailed Analysis:1. Period of Limitation for Rectification Application:The petitioner was assessed to excess profits tax for the periods ending March 31, 1945, and March 31, 1946, and filed appeals which were rejected by the Appellate Assistant Commissioner. The petitioner then appealed to the Income-tax Appellate Tribunal, which treated the excess profits tax appeals as consequential to the income-tax appeals, inadvertently ignoring a specific ground raised by the petitioner.An application was filed on April 2, 1956, requesting the Tribunal to re-hear the excess profits tax appeals. The Tribunal rejected this application on June 9, 1956, citing that it was barred by the four-year limitation period under section 35 of the Income-tax Act, 1922. The petitioner challenged this order through a writ petition.The court identified a lacuna in the Excess Profits Tax Act, noting that section 20, which provides for rectification of mistakes, did not account for the Tribunal, as it was enacted before the Tribunal's existence. Section 19(2) of the Act, which conferred appellate powers on the Tribunal, did not explicitly include rectification powers. The court concluded that neither the four-year limitation under section 20 of the Excess Profits Tax Act nor section 35 of the Income-tax Act applied to the Tribunal's rectification powers due to this legislative omission.The court referenced the Supreme Court's decision in Shivdeo Singh v. State of Punjab, which held that courts of plenary jurisdiction have inherent powers to rectify manifest and palpable mistakes. The Tribunal, having plenary jurisdiction, thus had inherent powers to rectify its mistakes, making the Tribunal's rejection of the application on limitation grounds unsustainable in law.2. Laches in Filing the Writ Petition:The court examined whether the petitioner was guilty of laches, which would preclude the exercise of extraordinary writ jurisdiction. The petitioner diligently pursued various remedies, including filing reference applications under section 66(1) and section 66(2) of the Income-tax Act, and an application to the Central Board of Revenue. The petitioner also moved an application under section 66(4) during the preparation of the statement of the case under section 66(2), which was ultimately rejected based on the Supreme Court's decision in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax.The court noted that the petitioner was not negligent, as he pursued remedies diligently, albeit through potentially incorrect channels. The petitioner's actions demonstrated active pursuit of relief rather than negligence or inaction.The court dismissed the contention that the High Court's previous involvement under sections 66(2), 66(4), and 66A precluded granting the petitioner's prayer, as no finding was recorded on whether the application was time-barred.Conclusion:The court set aside the Tribunal's order dated June 9, 1956, and directed the Tribunal to dispose of the application afresh in accordance with the law, emphasizing that there would be no order as to costs.