Tribunal Exceeded Jurisdiction: Revenue Wins Appeal Against Order Recall Under Income Tax Act.

The court ruled in favor of the revenue, determining that the Tribunal exceeded its jurisdiction by recalling an order under section 254(2) of the Income Tax Act. It held that the Tribunal's power to rectify mistakes cannot be used to review or recall an entire order, as it lacks review authority. Consequently, the appeal was allowed, and the Tribunal's impugned order was set aside.

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Issues: Jurisdiction of Tribunal to recall order under section 254(2)

The appeal raised the issue of whether the Tribunal exceeded its jurisdiction by recalling the order of an application u/s 254(2) and passing the impugned order. The court referred to the case of CIT v. Vichitra Construction (P) Ltd. [2004]269ITR371(Delhi) and held that the power to rectify a mistake under section 254(2) cannot be used for recalling the entire order. It emphasized that the Tribunal does not have the power of review under the Income Tax Act and cannot indirectly do what it cannot do directly. The court concluded that if the assessed was aggrieved, they could approach the appropriate forum, but the Tribunal could not review the entire judgment delivered earlier under section 254(2).

The court stated, "In view of the provisions and judicial pronouncement indicated hereinabove, we are of the view that the power to rectify a mistake under section 254(2) cannot be used for recalling the entire order. No power of review has been given to the Tribunal under the Income Tax Act. Thus, what it cannot do directly, cannot be allowed to be done indirectly. If the assessed was aggrieved, it was open for him to approach the appropriate forum but the Tribunal could not have reviewed the entire judgment delivered by it earlier in the garb of exercising its power under section 254(2). Accordingly, the answer is required to be given in favor of the revenue and against the assessed."

Therefore, the court ruled in favor of the revenue and against the assessed, allowing the appeal based on the jurisdictional issue regarding the Tribunal's power to recall orders under section 254(2).

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