TaxTMI 
TaxTMI 
2017 (2) TMI 1374
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...."Tribunal") in Misc. Application No. 119 and 120/Luc/2008, arising out of I.T.A. No. 218/Luc/2005 and was admitted on following substantial questions of law: "I. Whether the Income Tax Appellate Tribunal is empowered under Section 254(2) of I.T. Act to recall its order finally deciding appeal for the reasons other than those dealt in under Rules 24 and 25 of Appellate Tribunal Rules, 1963. II. Whether under the facts and in the circumstances of the Income Tax Appellate Tribunal has erred in law in recalling its order dated 21.09.2007 without appreciating that issues raised in Misc. Applications are outside the scope of mistake apparent from record. III. Whether under the facts and in circumstances, Income Tax Appellate Tribunal has erred in law in recalling their order dated 21.09.2007 without appreciating that recalling of order necessitates rehearing, re-adjudication and passing of fresh order. Income Tax Appellate Tribunal failed to appreciate that re-adjudication is not permissible within parameters of mistake apparent from record and the order dated 21.09.2007 of Income Tax Appellate Tribunal which stood merged in the order dated 18.07.2008 of Income....
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.... of Section 11 of Act, 1961, since purpose and object of Society was charitable in nature and primary object of Society is to impart education. 8. During course of assessment proceedings, a notice under Section 131 of Act, 1961 issued to K.B. Lal, Secretary of Society, asking for certain information including transfer of funds from Society. On the basis of information provided in pursuance of notice, it was found that a sum of Rs. 1,96,400/- was transferred from the account of Society to the account of K.B. Lal though according to K.B. Lal his income was only Rs. 7500/- per month, equivalent to Rs. 90,000/- per month as salary which he received from Society. This information was collected by AO after getting it verified from the Bank. 9. K.B. Lal was asked to explain about Maruti Car 800, which was purchased by him in the name of Society after getting it financed from one M/s Apple Finance. In reply to it, Sri K.B. Lal submitted that M/s Apple Finance expressed some difficulty to finance vehicle in the name of Trust and in order to meet such problem, vehicle was transferred in his name and K.B. Lal, Secretary of Society has paid installments to Financier, M/s Apple Finance Li....
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....d another against order dated 18.07.2008, on similar grounds, under Section 254(2). During pendency of application moved against order dated 18.07.2008, Tribunal on application moved against ordr dated 21.09.2007, vide its order dated 05.12.2008 allowed the same and recalled order dated 21.09.2007 and listed matter for hearing. 13. Aggrieved by order dated 05.2.2008, Revenue preferred ITA No. 35 of 2009 before this Court. 14. Thereafter Tribunal heard the matter again and vide order dated 31.03.2009 dismissed Revenue's appeal No. 218/Luc/2005. Thereafter ITA No. 1000 of 2009 has been filed by Revenue challenging order dated 31.03.2009. 15. The submission of learned counsel for Revenue is that Tribunal has acted wholly without jurisdiction. It had no authority to recall or review its own order under the garb of Section 254(2) of Act, 1961, specially when application moved under Section 254(2) was already rejected by Tribunal with a detailed order dated 18.07.2008, after examining merit of the objections raised by Assessee against order dated 21.09.2007. It was further submitted that principle of res judicata is applicable in this case and once order rejecting applicatio....
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....ord and submissions of the ld. A.R. We, therefore, recall our order dated 21.09.07 and direct the registry to fix the appeal for fresh hearing in due course. 7. In the result, the misc. applications are allowed." (emphasis added) 20. Judgment dated 21.09.2007 is running in 22 paragraphs. After discussing issues in detail, findings commenced from para 10. The ultimate conclusion drawn in paras 20 and 21 of the judgment, read as under: "20. In view of above discussion, we are also of the view that there had been a definite violation of provisions of section 13 of the Act by the assessee and the Assessing Officer has rightly held that benefit of the provisions of section 11 are not available to the assessee in the assessment year under consideration. We, therefore, set aside the order of the ld. C.I.T.(A) and restore that of the Assessing Officer by allowing the grounds of appeal taken by the Department. 21. In the result, appeal of the Department is allowed and cross objection of the assessee is dismissed." 21. This order dated 21.09.2007 did not find to contain any such mistake so as to require rectification and for that reason application e....
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....pellate Tribunal.--(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the asessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard: Provided further that any application filed by the assessee in this sub-section on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees. (2A) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financia....
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....ribunal shall rectify such mistake. Therefore, power of rectification suo motu is enabling one while rectification is obligatory if brought to the notice of Tribunal by Assessee or Revenue. 25. Before us also learned counsel for Revenue did not dispute, if there is a mistake apparent from record and Respondent-Assessee brought it to the notice of Tribunal, it must have exercised such power under Section 254(2) of Act, 1961. However what he argued is that in the guise of exercise of power under Section 254(2), Tribunal cannot review its own judgment by clothing such power upon it though not vested on it but that is what has been done in the case in hand. 26. Per contra, learned counsel for Assessee argued otherwise. 27. Court in Assistant Commissioner, Income Tax, Rajkot Vs. Saurashta Kutch Stock Exchange Ltd. (supra) while analyzing scope and ambit of Section 254(2), has observed, that there is no inherent power of review of adjudicating authority if it is not conferred by law. It placed reliance on an earlier judgment in Patel Narshi Thakershi and Ors. vs. Shri Pradyumansinghji Arjunsinghji, AIR 1970 SC 1273 which was in the context of Order 47, Rule 1 C.P.C. and Court sa....
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.... Supreme Court upheld Gujarat High Court's judgment in Suhrid Geigy Limited v. Commissioner of Surtax, Gujarat (supra) in Assistant Commissioner, Income Tax, Rajkot Vs. Saurashta Kutch Stock Exchange Ltd. (supra), wherein it was held, if a point is covered by a decision of Jurisdictional Court rendered prior or even subsequent to order of rectification, it could be said to be "mistake apparent from record" under Section 254(2) of the Act and could be corrected by Tribunal. Supreme Court held that rectification of an order stems from fundamental principle that justice is above all. It is exercised to remove error and to disturb finality. 33. This Court has also dealt with this aspect and held that there is no power of review under Section 254(2) in Commissioner of Income Tax, Kanpur Vs. M/s Sahara India Financial Corporation Ltd., Lucknow (Income Tax Appeal Defective No. 44 of 2000), decided on 29.11.2013. 34. In the light of above judgment learned counsel for Revenue could not dispute, if there is an apparent mistake while exercising power of rectification, Tribunal can also recall its order and, therefore, view taken by Orissa High Court in Commissioner of Income Tax and....
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....a High Court has taken a view that under Section 254(2) Tribunal cannot absolutely obliterate its earlier order by recalling it and proceed to rehear the matter on de novo arguments. Para 17 reads as under: "17. Regarding total recall of the Tribunal's own order, my view is that this type of absolute obliteration of its earlier order is not within the jurisdiction of the Tribunal. It cannot totally recall its order under Section 254(2) and proceed to rehear the matter on de novo arguments." 39. In para 18 of the judgment Court has also said as under: "18. ....It is conceivable, if Section 254(2) were to clothe the Tribunal with a power of total recall that it decides in one way, then recalls the order and an absolutely different decision is reached on a second hearing after equally protracted arguments, This would be neither amendment nor rectification but a type of rehearing which even ordinary courts of law can hardly indulge in." 40. With regard to maintainability of appeal, Calcutta High Court, in para 19 of judgment, has taken a view that from any and every order of Tribunal appeal under Section 260A would not lie and has given illustration that an ....
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....hat purpose it would not be material whether it is a judgment deciding appeal or otherwise. Moreover, if an order is passed on an application under Section 254(2) so as to recall the judgment of Tribunal which is otherwise final and referable to Section 254(1) and (4), it would be an order whereagainst appeal would lie under Section 260A but the pre-condition is that there must have been arisen a substantial question of law. In taking the above view we are fortified with some authorities, as may be referred, hereinbelow. 45. This Court in Jagdish Chand and Sons vs. Income Tax Appellate Tribunal and Anr., 2004(266) ITR 165 (All.) has held that an appeal is maintainable wherein Tribunal dismiss appeal by an ex parte order and Assessee's application for recall of such order was also rejected. 46. Before Karnataka High Court in L. Sohanraj and others Vs. Deputy Commissioner of Income Tax and another, 2003(260) ITR 147 a similar question arose wherein applications filed under Section 254(2) of Act, 1961 by Assessee were rejected by Tribunal observing that Assessee is seeking review which is not permissible. Karnataka High Court held that such an order passed by Tribunal is app....