2009 (5) TMI 107 - HC - Income Tax

Court Quashes Tribunal Order, Transfers Appeals

The court allowed the writ petition, quashing the Tribunal's order recalling its final order under section 254(1) and transferring the appeals to the ... Whether, on the facts and in the circumstances of the case, the Tribunal has erred in law and in facts in recalling its final order passed under section 254(1) with a view to rectify the same in exercise of powers under section 254(2) of the Act. - The objection raised by the respondents that the petitioners have an alternative remedy of appeal under section 260A of the Act in the facts of the instant case is of no substance for the reason that the appeal lies against the order passed under section 254(1) of the Act and any amendment made later on by the Tribunal under section 254(2) certainly merged into final order passed which is certainly appealable under section 260A. If final order under section 254(1) of the Act is recalled and the matter is to be re-heard afresh, there cannot be said to be an order under section 254(1) allegedly appealable under section 260A of the Act and that apart, if the order is without jurisdiction, that can certainly be assailed under the writ jurisdiction of this court under article 226 of the Constitution. – Petition is allowed – Held that only mistake apparent on record can be rectified by tribunal – further, it is held that tribunal is not permitted to review/recall its order Issues Involved:1. Whether the Tribunal erred in law and facts in recalling its final order under section 254(1) using powers under section 254(2) of the Income-tax Act.2. Whether the Tribunal had the authority to recall its final order suo motu under section 254(2).3. Whether the writ petition is maintainable given the statutory remedy of appeal under section 260A of the Act.4. The validity of the Tribunal's procedure and allegations of impropriety.Issue-wise Detailed Analysis:1. Tribunal's Error in Recalling Final Order:The primary issue is whether the Tribunal erred in recalling its final order dated March 29, 2006, under section 254(1) using powers under section 254(2). The Tribunal recalled its order, citing a mistake apparent from the record, specifically the order dated April 4, 2005, by the President, Income-tax Appellate Tribunal, Mumbai, which consolidated the appeals to be heard by the Mumbai Bench. However, the court found that no such order consolidating the specific appeals in question (ITSSA No. 105/JP/2004 and ITSSA No. 35/JP/2005) was present, and thus, there was no mistake apparent from the record justifying the recall under section 254(2).2. Tribunal's Authority to Recall Order Suo Motu:The court examined whether the Tribunal could exercise its powers under section 254(2) suo motu. It was concluded that the Tribunal does have the authority to rectify a mistake apparent from the record either on its own motion or upon application by either party. However, this power is limited to rectifying mistakes and does not extend to recalling orders for rehearing the entire matter, which would effectively amount to a review, a power not inherently possessed by the Tribunal.3. Maintainability of Writ Petition:The respondents argued that the writ petition was not maintainable due to the availability of an appeal under section 260A. The court held that while an appeal under section 260A is available for orders passed under section 254(1), the recall of an order under section 254(2) for rehearing does not constitute an appealable order under section 260A. Therefore, the writ petition was deemed maintainable, especially since the order was challenged as being without jurisdiction.4. Validity of Tribunal's Procedure and Allegations of Impropriety:The respondents raised allegations of impropriety against one of the Tribunal members, suggesting collusion in passing the final order. The court noted that such allegations, supported by the affidavit of the Registrar without personal knowledge, were not relevant to the issue at hand. The court refrained from commenting on these allegations, focusing instead on the legal grounds for recalling the order.Conclusion:The court allowed the writ petition, quashing the Tribunal's order dated March 31, 2008, recalling its final order under section 254(1) and the consequential order dated August 20, 2008, transferring the appeals to the Mumbai Bench. The Tribunal's action was found to be beyond its jurisdiction under section 254(2), as there was no mistake apparent from the record that justified the recall.