TaxTMI 
TaxTMI 
1997 (5) TMI 20
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....clared Shri Lalit Suri 21-8-1992 Rs. 89,490--including salary from Bharat Hotels Ltd. (Rs. 1,13,400) Mrs. Jyotsna Suri 28-8-1992 Rs. 1,01,460 including salary from Bharat Hotels Ltd. (Rs. 1,15,200) Miss Divya Suri 28-8-1992 Rs. 91,993 including income from other sources (Rs. 98,993) Miss Deeksha Suri 28-8-1992 Rs. 80,778 including income from other sources (Rs. 87,777) The assessments were framed on March 28, 1995, under section 143(3) of the Act. There were additions made under section 68 of the Act, also keeping in view the provisions of section 69A. In their statements of income attached with the returns, the petitioners by way of note indicated the following amounts received and deposited in their accounts in the Hong Kong and Shanghai Banking Corporation Ltd., on November 22, 1991, under the Remittance of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991, and the scheme framed thereunder (hereinafter the Scheme, for short) which were not income : Shri Lalit Suri US$ 3,00,000 equivalent to Rs. 77,33,952 Mrs. Jyotsna Suri US$ 2,00,000 equivalent to Rs. 51,55,968 Miss Divya Suri US$ 1,50,000 equivale....
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....e 46A as also the appeals. He also formed an opinion that the requirements of rule 46A enabling admission of additional evidence in appeal were not satisfied. The petitioners preferred further appeal to the Income-tax Appellate Tribunal. One of the grounds taken, inter alia, before the Income-tax Appellate Tribunal was illegal rejection of the application under rule 46A by the Commissioner of Income-tax (Appeals). The petitioners also moved applications dated March 6, 1996 and May 10, 1996, both under rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking admission by way of additional evidence before the Income-tax Appellate Tribunal of the very same set of documents which formed the subject-matter of application under rule 46A before the Commissioner of Income-tax (Appeals). The appeals came up for hearing on October 23, 1996, before Bench-B of the Tribunal consisting of two members. On that day, the Bench passed the following order : "Application under rule 29 of the Income-tax (Appellate Tribunal) Rules is to be disposed of first." Thereafter, the matter was adjourned. The appeals again came up for hearing on December 2, 1996. However, the constitution of the B....
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.... jurisdiction of the Tribunal which was sought to be invoked by moving this application. However, on April 2, 1997, the petitioners moved yet another application wherein they have referred to the application filed on February 5, 1997, having been made under section 254(2) of the Act. It was further stated that the earlier application was got drafted by the appellant without seeking any legal guidance and hence yet another application accompanying the application dated April 2, 1997, may be brought on record treating it as amending/modifying/substituting the previous application. The application accompanying is titled as one under section 254(2) of the Act read with section 151 of the Civil Procedure Code. In this application, a grievance is raised that the order dated January 3, 1997, having been passed by overlooking the earlier order dated October 23, 1996, of the Tribunal, the order dated January 3, 1997, deserves to be recalled. A grievance as to the applicability of sections 68 and 69A of the Act was also raised. These were stated to be "very serious errors or mistakes" having crept into the appellate order of the Tribunal resulting in manifest injustice. Para. 10 of the appli....
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....ted position. All the same, we did make an offer to learned counsel for the assessee for perusing our log books and satisfy himself of this position. This was declined. On the contrary the argument now is that because at an earlier hearing before a different combination of the Bench, it was pressed and an order made that the same be taken up first and even though the said application was not argued but because of the noting of the earlier combination, it was to be disposed of first, its pendency gives rise to a mistake apparent from record, as is canvassed by the applicants. The fact that no arguments were addressed is also admitted in the resume of arguments filed on May 21, 1997, after the conclusion of hearing under the signature of Shri Anoop Sharma, advocate. 13.1 Here we consider it appropriate to mention in brief the procedure for hearing before the Tribunal. In the Tribunal traditionally every week Benches are constituted with an accountant member and a judicial member who in combination hear the appeal listed for hearing. Since the combination is changed almost every week, different Benches hear the appeal in different combination. The appeals which are heard but hearing ....
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....the bland statement signed by the assessees themselves who were not present in the court at the time of hearing of the appeals, there is no basis for the submission that arguments were not adduced on merits. In view of the above facts, the non-disposal of the application under rule 29 would indeed not be a mistake much less one apparent from the record. Our notes indicate beyond doubt that learned counsel was asked to and actually addressed us on the merits of the case para.5.6, he was replied to (para 6.5/6.5) and in rejoinder merits were again referred to (para.7) and dealt with by the Bench (paragraphs 10-10.2). 13.5 The events from the filing of the first miscellaneous petition in February, 1997, and substitution thereof by miscellaneous application dated April 2, 1997 (the subject-matter of this order), and to the filing of the written submissions on May 21, 1997, after conclusion of the hearing indicate a shift of stand on the part of the assessee. Originally, the assessee submitted that no submissions on merits were made as it was announced in the open court. The stand later was that counsel was not allowed to address on merits (implying that he wanted to do so). Shri Sharm....
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.... dealt with in extenso the letter dated February 21, 1995, there is no mistake apparent from record calling for rectification under section 254(2) of the Act and restricting the appellant to the material on record sans additional evidence, was in order and not a mistake apparent from record. We, therefore, find no merit in these applications and dismiss the same." Learned counsel for the petitioners has submitted that by order dated October 23, 1996, the Tribunal had categorically expressed its opinion that the application under rule 29 would be disposed of first. That order regulated the subsequent course of hearing, even jurisdiction of the Tribunal hearing the appeals. It was obligatory on the part of the Tribunal to have taken note of the said application and decided it judicially which having not been done the order dated January 3, 1997, cannot be said to have judicially and effectively disposed of the appeals. This has occasioned grave injustice to the petitioners. The appeals must be deemed to be pending for the failure of the Tribunal to dispose of the application under rule 29. The order dated January 3, 1997, deserved to be recalled followed by a hearing afresh and then....
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....ted January 3, 1997. On April 4, yet another application was filed on behalf of the petitioners wherein they have sought for leave of the Tribunal to amend the application dated February 5, 1997, so as to amend/modify/substitute proper questions of law on the basis of which reference was being sought to the High Court. A perusal of the questions which are suggested on behalf of the petitioners before the Tribunal goes to show that the merits of the plea raised by the petitioners touching the placing of the onus, acceptance of the explanation given by the assessee and the assessability as income under section 68/69A of the impugned sum which was received as gift according to the assessee, all form the subject-matter of the questions suggested by the petitioners themselves. The following questions are also sought to be referred which are pertinently relevant for the purpose of the present petitions and hence are reproduced verbatim : "1(a) Whether the order of the Tribunal dated January 3, 1997 is in violation of the principles of natural justice and consequently null and void in law ? 1(b). Whether the Tribunal did not err in law in not considering the evidence filed before the C....
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....lead evidence before the Tribunal which went to the root of the controversy before the Tribunal) and still had proceeded to decide the appeal on merits ? C. Whether, on the facts and in the circumstances of the case, the Tribunal did not err in not holding that the first appellate authority acted illegally in not allowing the petitioner-appellant to lead evidence under rule 46-A of the Income-tax Rules ?" The petition came up for hearing on the question of admission before the Division Bench of the High Court on March 21, 1997. Counsel for the respondent had also made appearance. The Division Bench held as under: "In our view, the remedy under section 256 of the Income-tax Act, is available to the petitioner against the order dated 3rd January, 1997, and in this view we decline to entertain this petition in exercise of our jurisdiction under article 226 of the Constitution. Dismissed." The petitioner, Smt. Jyotsna Suri filed an SLP before the Supreme Court feeling aggrieved by the abovesaid order. Their Lordships dismissed the SLP by a speaking order which reads as under: "The High Court has rejected the writ petition of the petitioner on the ground that she has an alternative....
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....r dated June 27, 1997, deserves to be quashed followed by setting aside of the order dated January 3, 1997 as well. Learned counsel for the respondent has submitted that the petitions do not lie at all. The petitioners have an alternate efficacious remedy by filing an application under section 256(1) which now is the only remedy available to the petitioners in the light of the order dated September 12, 1997, even in C.W. P. No. 1255 of 1997 by this court and maintained by the Supreme Court. The impugned order was also defended on the merits. We may place on record that at the first blush we were inclined to grant some relief to the petitioners in view of the fact that the genuineness of the documents sought to be filed by the petitioners before the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal by way of additional evidence, is not in dispute. Learned counsel for the respondent very frankly admitted that the Department was not disputing the genuineness of the documents. We were tentatively of the opinion that if the genuineness of the documents was not in dispute, why not permit the petitioner-assessees to bring the documents on record and thereafter t....
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....ers on which challenge was laid or could have been laid to the order dated January 3, 1997, formed the subject-matter of C.W.P. No. 1255 of 1997. The petition has been dismissed as not maintainable on the ground of availability of alternate efficacious remedy. In our opinion, the order dated March 21, 1997, passed by the High Court in C.W.P. No. 1255 of 1997 filed by Mrs. Jyotsna Suri would bind all the four assessees not only as a precedent but also on the principle of propriety and consistency. The three assessees other than Mrs. Jyotsna Suri cannot be permitted to wriggle out of the effect of the order dated March 21, 1997, passed in C.W.P. No. 1255 of 1997 on the plea that they being not the writ petitioners therein were not bound by the abovesaid order. The concept of consistency is a reflection of the rule of law. We can safely assume that the High Court would have passed the same order as was passed in the case of Mrs. Jyotsna Suri if the other three assessees had also filed their own writ petitions. In Vishnu Trader v. State of Haryana [1995] Suppl. 1 SCC 461, their Lordships have held "the need for consistency of approach and uniformity in the exercise of judicial discreti....
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.... Shri G. C. Sharma, learned senior advocate, who appeared for the petitioners, did not also dispute the abovesaid proposition. Rightly he did not urge that the Tribunal could have reviewed its order. Eloquently and persuasively he put forth the following two propositions, pressing them alternatively and submitting that the interest of justice demanded the petitioners being allowed relief by the Tribunal by exercising either of the following two jurisdictions : (i) Section 254 of the Act obliges an Appellate Tribunal to dispose of an appeal ; an order purportedly disposing of an appeal oblivious of its own earlier order and without disposing of a pending application for admission of additional evidence cannot be said to be disposal of an appeal which should be treated as still pending in the eyes of law. The Tribunal should have held so on the petitioner's applications dated February 5, 1997, and April 4, 1997, and then should have posted the appeals for hearing and disposal afresh. No specific provision of law is required for conferring such jurisdiction on the Tribunal. Every court and every Tribunal vested with the judicial functions has an inherent power to recall its order....
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....aw has been well stated by the Punjab High Court in Mangat Ram Kuthiala v. CIT [1960] 38 ITR 1 in the following terms : "... It was a settled rule that a judicial Tribunal could recall and quash its own order in exceptional cases when it was shown that it was obtained by fraud or by palpable mistake or was made in utter ignorance of a statutory provision and the like, and for the application of that rule the class of the Tribunal was not a material matter but what was of substance and material was the nature of the proceedings before it : if the proceedings were in the nature of judicial proceedings, then irrespective of the class of the Tribunal the rule applied." Obviously "and the like" has to be read ejusdem generis. In the cases at hand, the order of the Tribunal dated January 3, 1997, is not even suggested to be an outcome of fraud or collusion. None of the grounds which according to the well-settled legal principles vitiate a judgment rendering it void or a nullity, have been alleged much less shown to exist. Merely because the Tribunal overlooked an interim order of its own while deciding the appeal finally (assuming it to be so) it will not render the judgment void or a....
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....ion 254(2) of the Act amending the order passed by the Tribunal with a view to rectify any mistake apparent from the record ? The language of the provisions is clear. The foundation for exercising the jurisdiction is "with a view to rectify any mistake apparent on the record" and the object is achieved by "amending any order passed by it". The power so conferred does not contemplate a rehearing which would have the effect of re-writing an order affecting the merits of the case. Else there would be no distinction between a power to review and a power to rectify a mistake. What is not permitted to be done by the statute having deliberately omitted to confer review jurisdiction on the Tribunal, cannot be indirectly achieved by recourse to section 254(2) of the Act. In T. S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC), their Lordships have held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. (Also see M. Shanmugam v. S. R. V. S. (P.)....
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....ion under section 254(2). He had invited the attention of the court to a number of decisions out of which it would suffice to mention a few : Popular Engineering Co. v. CIT [1983] 140 ITR 398 (MP), CIT v. ITAT [1994] 206 ITR 126 (AP) and Asst. CIT v. Dr. Ved Prakash [1994] 209 ITR 448 (AP). We have carefully considered all the decisions cited by learned counsel for the petitioners. There appears to be a divergence of opinion amongst other High Courts, but so far as the Delhi High Court is concerned, the law is settled by at least three decisions, namely, Punjab National Bank v. ITAT [1990] 87 CTR 122 (Delhi), CIT v. K. L. Bhatia [1990] 182 ITR 361 (Delhi), ITO v. President, ITAT [1998] 232 ITR 420 (Delhi) (C. W. No. 1010 of 1997) decided on March 10, 1997. We may quote only from Punjab National Bank's case [1990] 87 CTR 122 (Delhi): "In the present case what has happened is that the petitioner had filed an application under section 256 against the original order of the Tribunal but has not filed any application against the order dismissing the application under section 254. Merely because the petitioner has chosen not to file an application under section 256 against the order....
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.... constitutionally obliged to deny indulgence in writ jurisdiction to the petitioners on the ground of availability of efficacious alternative remedy to them. By way of abundant caution we place on record that the finding on various questions of law recorded by us in this judgment are for the purpose of holding that the petitioners have an alternative efficacious remedy available under section 256 of the Act. We do not intend to pre-empt the jurisdiction of the Tribunal to hear and dispose of the petitioner's application under section 256 on its own merits and taking such view of the facts and law as it may deem fit to take unobsessed by any of the findings recorded hereinabove. Subject to this observation, the petitions are dismissed though without any order as to costs. J. K. MEHRA J.---I have the benefit of perusing the judgment in the case which reached me last evening and wish I had more time for disposal to deliberate over it. While the petitions are being dismissed on the simple ground of availability of alternate remedy under the statute in view of the judgments of this court which view is contrary to the view of other High Courts, I would like to stress a few facts. A....
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....h have since been initiated, the assessee can bring on record these documents and the authority concerned will look into those and the benefit thereof, if available, would be available to the assessee in his defence of penalty proceedings and that the Assessing Officer will not be bound by the impugned decisions. I may further add that the authorities below have not to forget that the rules of procedure are meant to promote the cause of justice and not vice versa. The procedural rules are the handmaiden of justice which is the mistress. In the present case, I find that the authorities at no point of time have cared to consider the relevance, authenticity or desirability of looking into the documents before rendering their decision. Looking to the circumstances and the fact that procurement of the certificates from the banks abroad normally would take time and the fact that from March 21, 1995, till March 31, 1995, the documents were obtained and filed, it shows that there was no lack of diligence on the part of the assessee and these were the factors which could have been considered by the appellate authority. In the present case although no application under section 256(1) was fil....