High Court's Jurisdiction to Recall Order Despite Counsel's Absence. Distinction Between Substantive and Procedural Review

The High Court had jurisdiction to recall an ex parte order despite the absence of the assessee's counsel. It distinguished between substantive and procedural review, emphasizing its inherent powers to ensure justice. The court held that the Limitation Act does not apply to tax case references, allowing for the condonation of delay. Various legal precedents were examined to support the court's decision to recall the judgment and direct a re-hearing of the reference case before an appropriate Bench.

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Issues Involved:
1. Jurisdiction to recall an ex parte order.
2. Power of substantive review vs. procedural review.
3. Inherent powers of the High Court.
4. Applicability of the Limitation Act.
5. Legal precedents and their applicability.

Issue-wise Detailed Analysis:

1. Jurisdiction to Recall an Ex Parte Order:
The primary question was whether the High Court could recall an ex parte order. The court noted that the matter was initially decided ex parte because the counsel for the assessee was not present. Despite the absence of the assessee's counsel, the court answered the reference on merits, favoring the Revenue. The assessee later filed an application alleging that the matter was not listed in the cause list, and the counsel's name did not appear, leading to non-appearance.

2. Power of Substantive Review vs. Procedural Review:
The court distinguished between substantive and procedural review. Substantive review requires statutory provision, while procedural review is inherent in every court. The court emphasized that it could exercise procedural review to ensure justice, especially when the absence of a party was due to reasons beyond their control.

3. Inherent Powers of the High Court:
The court asserted that the High Court, being a constitutional authority, holds inherent powers to recall its own orders to render complete justice. It referenced several cases, including *Grindlays Bank Ltd. v. Central Government Industrial Tribunal*, which distinguished between substantive and procedural review, affirming that procedural review does not need explicit statutory provision.

4. Applicability of the Limitation Act:
The court discussed whether the Limitation Act applied to proceedings under Section 256 of the Income-tax Act. It noted that the Limitation Act does not apply to tax case references, which means there is no fixed period for filing applications under Section 256. Therefore, the question of condoning delay does not arise.

5. Legal Precedents and Their Applicability:
The court examined various precedents:
- *J.N. Sahni v. ITAT* and *Director of Income-tax (Exemption) v. ITAT* were cited by the Revenue to argue against the court's power to recall orders. However, the court differentiated these cases, emphasizing the High Court's inherent powers.
- *Mangat Ram Kuthiala v. CIT* and *Pierce Leslie India Ltd. v. CIT* supported the view that courts have inherent powers to correct palpable mistakes or orders obtained by fraud.
- *K.T.M.S. Mohammad v. CIT* was discussed concerning the procedural aspects and the court's advisory role under Section 256.
- Apex court decisions in *Grindlays Bank Ltd.*, *A.R. Antulay v. R.S. Nayak*, and *Budhia Swain v. Gopinath Deb* were referenced to underline the court's duty to ensure justice and correct its mistakes.

The court concluded that justice must be seen to be done, and procedural lapses leading to ex parte decisions could be rectified using inherent jurisdiction. Consequently, the judgment dated October 15, 2001, was recalled, and the reference case was directed to be placed before an appropriate Bench for re-hearing.

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