TMI Blog1970 (11) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) of the Income-tax Act, 1922, fixing the hearing on 20th January, 1960, was served on the petitioner on 13th January, 1960. The hearing was adjourned from time to time and finally it was fixed on 15th February, 1960, but as the petitioner could not remain present and as his application for adjournment was refused, the 1st respondent (4th Income-tax Officer, A-I Ward), proceeded with assessment ex parte and he passed his best judgment assessment order on that day under section 23(4) whereby he assessed the petitioner's income at Rs. 3,88,177. Against the said best judgment assessment order of the 1st respondent, the petitioner on 12th April, 1960, filed an appeal to the Appellate Assistant Commissioner, being Appeal No. APR-66. On 13th April, 1960, the petitioner filed an application before the 1st respondent under section 27 of the Act for cancellation of the ex parte assessment order which application was rejected on 6th June, 1960. On 21st November, 1960, the Appellate Assistant Commissioner partly allowed the appeal and the total income as assessed by the 1st respondent was reduced by Rs. 54,000. On 25th January, 1961, the petitioner preferred an appeal to the Income-tax Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal's order dated 24th October, 1961, and seeking a rehearing of his appeal on merits. Though the application was stated to be for rectification of a mistake under section 35 of the Act, a two-fold submission was put forward by the petitioner in his said application: first, that the order dated 24th October, 1961, dismissing his appeal for default of appearance was bad in law and could never be passed in view of the aforesaid Supreme Court judgment, and, secondly, in the alternative, the said order suffered from a mistake apparent on the face of the record which should be rectified and on either of these grounds the petitioner sought a rehearing of his appeal on merits. At the hearing of the application counsel for the petitioner reiterated the two-fold submission before the Tribunal. In the first place, he urged that rule 24 of the Appellate Tribunal Rules, 1946, as amended in 1948, having been declared altra vires as being repugnant to section 33(4) of the Act by the Supreme Court, the Tribunal's order dated 24th October, 1961, dismissing the petitioner's appeal for default of appearance was a nullity and as such the petitioner's appeal filed on 25th January, 1961, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Rules having been held to be ultra vires, the Tribunal should have in exercise of its inherent powers directed a rehearing of the appeal, for, a court or tribunal cannot allow any party to suffer because of its own wrong or mistake. Thirdly, he contended that even if the Tribunal's order dated 24th October, 1961, was regarded as a mere erroneous order with jurisdiction and even if the petitioner's miscellaneous application was to be treated as an application for rectification of a mistake apparent on the face of the record, the mistake could have been and should have been rectified by the Tribunal under section 254(2) of the new Act, inasmuch as, under the latter part of that provision, where the mistake was sought to be rectified at the instance of an assessee, there was no question of any bar of limitation; and in this behalf he relied upon the difference between the two provisions, one under section 35 of the old Act and other obtaining under section 254(2) of the new Act. He, therefore, urged that the impugned orders were liable to be quashed. On behalf of the respondents, Mr. Joshi in the first place urged that the petitioner was guilty of laches since by the present peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n my view, each case will have to be considered on its own facts, though the general principle enunciated in that case has, of course, to be borne in mind. Having regard to the facts and circumstances of the present case, I do not think that the petitioner should be denied the relief sought by him on the ground of laches, if he is otherwise found entitled to it. It is true that the petitioner is seeking to set aside the order passed by the Tribunal on 24th October, 1961, but, at the same time, it cannot be forgotten that he is also seeking to set aside the latest order passed by the Tribunal on 5th September, 1969, whereby his miscellaneous application was rejected by the Tribunal and this has been done by approaching this court on 18th December, 1969. It is also true that the Tribunal has held in one of the earlier proceedings that the petitioner had come to know of the order dated 24th October, 1961, soon after the passing of the order and not on 4th January, 1968, as alleged by the petitioner. By assuming that the petitioner had come to know of the impugned order dated 24th October, 1961, soon after that order had been passed, it is clear that so long as the Supreme Court had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing or on any other day to which the hearing may be adjourned, the appellant does not appear when the appeal is called on for hearing, the Tribunal may in its discretion, either dismiss the appeal for default or may hear it ex parte." The rule contained no provision for restoration of an appeal dismissed for default. The validity of this rule came up for consideration before the Supreme Court in the case of Commissioner of Income-tax v. S. Chenniappa Mudaliar and reading it in the context of the language used in section 33(4) of the Income-tax Act, the Supreme Court held the said rule to be invalid and ultra vires being repugnant to section 33(4) of the Act. After considering the scheme of the provisions of sections 33 and 66 of the Act, the court observed as follows: "It follows from all this that the Appellate Tribunal is bound to give a proper decision on questions of fact as well as law which can only be done if the appeal is disposed of on the merits and not dismissed owing to the absence of the appellant . . . . . Thus, looking at the substantive provisions of the Act there is no escape from the conclusion that under section 33(4) the Appellate Tribunal has to dispose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legality or mistake apparent on the face of the record needing rectification under section 35 of the Act. In paragraphs 6 and 7 of its order the Tribunal has stated thus: "The only point that remains for consideration, therefore, is whether as a result of the decision of the Supreme Court in the said case of Commissioner of Income-tax v. S. Chenniappa Mudaliar, the assessee is entitled to say that the ex parte order passed by the Tribunal on October 24, 1961, is a nullity and, therefore, the Tribunal has to deal with the appeal filed by the assessee afresh. In our opinion, it is difficult to accept the submissions as made by Shri Kolah before us. It is not possible to say that the order passed by the Tribunal on October 24, 1961, is, a nullity. The said order passed by the Tribunal was an order which the Tribunal could pass, though, subsequently, it may be found that the order as passed was not correct." After expressing the above view, the Tribunal has referred to a number of decisions of various High Courts with a view to show that an order containing illegality or error apparent on the face of the record is required to be rectified under section 35 of the Act. It is imposs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient cause which had prevented the appellants or their representatives from attending before the Tribunal on the date fixed for hearing the appeal; on these facts a specific question was referred to the High Court by way of reference under section 66(2) of the Act, whether the Appellate Tribunal had the power and Jurisdiction to restore the assessee's appeal which had been dismissed under rule 24 for default of appearance of the assessee and the High Court answered that question by stating that although there was no power to restore the assessee's appeal which had been dismissed under rule 24 for default of appearance, the order of dismissal which was incompetently passed could be rectified under section 35 of the Act. It is thus clear that the aspect, whether the Tribunal's order dismissing an appeal for default of appearance is a nullity or not and if so whether it will at all require rectification under section 35 of the Act or not, was not considered by the Madhya Pradesh High Court in that case. This decision, therefore, cannot avail the respondents. The other decisions referred to by the Tribunal in its order were not even pressed into service by Mr. Joshi, as obviously those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was under an obligation to decide the appeal on merits under section 33(4) and that mistake on the part of the Tribunal would obviously cause serious prejudice to the petitioner in the matter of prosecuting efficiently the further remedies by way of reference to the High Court and an appeal to the Supreme Court. In my view, therefore, the Tribunal ought to have directed the appeal to be reheard on merits, even on the basis that its previous order dated 24th October, 1961 was an erroneous order or an order containing an error apparent on the face of the order. In view of the conclusion which I have reached on the first two submissions made by Mr. Nariman, I do not think it is necessary to go into the question as to whether the miscellaneous application preferred by the applicant for rectification of the mistake was barred by limitation or not. In the result, I make the rule absolute in terms of prayers (a) and (b) to the extent that the Tribunal's orders dated 24th October, 1961, and 5th September, 1969, are set aside and the Tribunal is directed to hear the petitioner's appeal being I. T. A. No. 10236 of 1961/62 on merits and dispose of the same according to law. No order as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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