2013 (10) TMI 1085 - HC - Income Tax

Tribunal Error: Appeal Dismissed Without Merits Review. Rule 24 Breach. Recall Application Time-Barred.

Bharat Petroleum Corporation Limited Versus Income Tax Appellate Tribunal And Others

The Tribunal erred in dismissing the appeal for non-prosecution without considering the merits, breaching Rule 24 of the Tribunal Rules. The application ... Powers of ITAT the Appellate Tribunal to dismiss an appeal for want of prosecution – Miscellaneous application seeking recalling of order after 4 years was also dimissed by the tribunal - Held that:- Reliance has been placed upon the judgment in the case of Chemipol vs. Union of India [2009 (9) TMI 177 - BOMBAY HIGH COURT] - Though every Court or Tribunal has an inherent power to dismiss the proceeding for non prosecution yet this inherent power is lost where the statute requires the Court or the Tribunal to hear the appeal on merits. In this case Rule 24 of the Tribunal Rules mandates the Tribunal to decide the appeal on merits even in absence of the appellant after hearing the respondents. In view of the above, Tribunal did commit an error in passing the order dated 6 December 2007 in dismissing the appeal on the ground of want of prosecution. Application of section 254(1) or section 254(2) for rectification in the order - Whether an application to set right the above error in the order dated 6 December 2007 would be an application to correct the same under Section 254(1) of the Act as contended by the petitioner or under Section 254(2) of the Act as contended by the revenue – Held that:- if there is an error apparent on the face of the record, Section 254(2) of the Act alone is applicable. Where Parliament has provided a specific provision in the Act to deal with a particular situation, it is not open to ignore the same and apply some other provision. Section 254(2) of the Act empowers the Tribunal to correct/rectify its order only within four years from the date of the order which is sought to be rectified. Is there limitation applicable, if an application is to be filed against the order, which is void – Held that:- Reliance has been placed on the Apex Court judgment in the case of Sneh Gupta v/s. Dev Sarup [2009 (2) TMI 744 - SUPREME COURT]., wherein it has been held that It is not the law that where the decree is void, no period of limitation shall be attracted at all - Therefore, in the present case also the period of four years from the date of order sought to be rectified/recalled will apply as provided in Section 254(2) of the Act. This is so even if it is assumed that the order dated 6 December 2006 is a void order - The error is in having ignored the mandate of Rule 24 of the Tribunal Rules which required the Tribunal to dispose of the matter on merits after hearing the respondents. In these circumstances, an application for rectification would lie under Section 254(2) of the Act. The recall of an order would well be a consequence of rectifying an order under Section 254(2) of the Act - No reason to interfere with the order of the Tribunal holding that Miscellaneous Application filed by the appellant is barred by limitation under Section 254(2) of the Act as it was filed beyond a period of four years from the order sought to be rectified. Issues Involved:1. Whether the Tribunal has power in terms of Rule 24 of the Tribunal Rules to dismiss an appeal before it without considering the merits of the appeal and only on the ground for want of prosecution.2. Whether the application for recall of an order dismissing the petitioner's appeal for want of prosecution falls under Section 254(1) of the Act or under Section 254(2) of the Act.3. Whether the Tribunal is barred from entertaining an application for recall of an order by any period of limitation or by laches on the part of the petitioner if the application is under Section 254(1) of the Act.Detailed Analysis:Issue 1: Tribunal's Power to Dismiss for Want of ProsecutionThe Tribunal dismissed the petitioner's appeal on 6 December 2007 for want of prosecution without considering the merits. Rule 24 of the Tribunal Rules mandates that if the appellant is not present, the Tribunal must dispose of the appeal on merits after hearing the respondent, not for default. The Tribunal did not exercise its inherent jurisdiction to adjourn the hearing or decide the appeal on merits, thus breaching Rule 24. The Supreme Court in CIT vs. S. Chenniappa Mudaliar (1969) held that dismissing an appeal for default is ultra vires, as the Tribunal is mandated to decide appeals on merits. Therefore, the Tribunal erred in dismissing the appeal for non-prosecution.Issue 2: Application for Recall under Section 254(1) or 254(2)The petitioner argued that the application for recall of the order dated 6 December 2007 should be considered under Section 254(1) of the Act, not Section 254(2). However, the court found that the order dismissing the appeal for non-prosecution was an error apparent on the face of the record, falling under Section 254(2) of the Act. The Bombay High Court in Khushalchand B. Daga vs. T.K. Surendran held that dismissing an appeal for default is an error apparent on the face of the record. Therefore, the Tribunal's power to rectify such an error lies under Section 254(2), which allows rectification within four years from the date of the order.Issue 3: Limitation Period for Recall ApplicationsThe petitioner contended that the application under the proviso to Rule 24 of the Tribunal Rules does not have a limitation period. However, the court held that the proviso to Rule 24 applies only when the main part of Rule 24 is invoked, i.e., the appeal is disposed of on merits after hearing the respondent. Since the main part of Rule 24 was not applied in this case, the proviso does not apply. The application to correct the error falls under Section 254(2), which has a four-year limitation period. The Tribunal correctly dismissed the application filed beyond this period.Conclusion:The Tribunal's order dated 6 December 2007 dismissing the appeal for non-prosecution was in breach of Rule 24 of the Tribunal Rules, constituting an error apparent on the face of the record. The application to correct this error falls under Section 254(2) of the Act, subject to a four-year limitation period. The Tribunal was correct in dismissing the Miscellaneous Application filed beyond this period. The petition is dismissed with no order as to costs.