POWERS OF INCOME TAX APPELLATE TRIBUNAL.

[Mr. M. GOVINDARAJAN]

                        The aggrieved party can file appeal against the order of Commissioner of Income Tax (Appeals) before the Income Tax Appellate Tribunal. The Act and Rules prescribe the method of filing, time limit, disposal of the appeal, procedure for conducting the appeal and powers of the Tribunal.   In this article the various powers of the Appellate Tribunal is discussed with relevant rules and decided case laws.

POWER TO RESTORE EX-PARTE ORDER:

                        Rule 24 gives powers to the Tribunal to pass an ex-parte order. It provides that where on the days fixed for hearing or on any other date to which the hearing may be adjourned, the appellant does not appear in person or through an authorized representative when the appeal is called on for hearing the Tribunal may dispose of the appeal on merits after hearing the respondent.   When the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non appearance when the appeal was called on for hearing the Tribunal shall make an order setting aside the ex-parte order and restoring the appeal.

                        In ‘Devendra G. Pasale V. Assistant Commissioner of Income Tax’ – 2010 -TMI - 203559 - Gujarat High Court the High Court held that it is apparent that the Tribunal, instead of examining the issue from the angle as to whether there was sufficient cause for non appearance of the appellant when the appeals were called out for hearing has disagreed and taken into account irrelevant factors.  The Tribunal has also brushed aside the explanation given for non appearance when the appeals were called out for hearing by observing that no facts are explained about non appearance on the date of hearing.   Thus it appears that the Tribunal has not bothered to read the averments made in the application, since the aforesaid finding recorded by the Tribunal is contrary to law.

POWER TO RESTORE APPEAL:

                        In ‘Nawal Kishore and Sons Jewelers V. Asst. Commissioner of Income Tax’ – (2011) 10 ITR 659 (Lucknow) the Tribunal dismissed the appeal on the ground of non prosecution.   The situation is due to the boycott of the Tribunal by Chartered Accountants and Advocates.   The Tribunal held that whatever may be the punishment given to the striking professionals the litigants should not suffer because of such strike and the ex-parte order should recalled.  The appeal was not decided on the merits for the default of the assessee.   Section 254(1) of Income Tax Act, 1961 provides that the Tribunal may, after giving both parties to the appeal, an opportunity of being heard, pass such orders as it thinks fit.   The Tribunal under Section 254(2) can recall its order in entirety if it is satisfied that prejudice has resulted to the party which is due to the Tribunal’s error or mistake and which error is manifest error and it has nothing to do with the doctrine or concept of inherent power.   The Tribunal set aside the exparte order and restored the appeal.

POWER OF REMAND:

                        Power of remand is a necessary adjunct to the powers of an appellate authority for obtaining all relevant information for a fair conclusion.  But this power shall not be exercised as a routine matter.

                        In ‘Commissioner of Income Tax V. Mira S. Khurana’ – 2010 -TMI - 204811 – (Gujarat High Court) the High Court held that the findings of the Tribunal are not borne out of from the orders of the subordinate authority.   The Tribunal has failed to appreciate that the Assessing Officer had granted opportunity to the assessee to prove the genuineness of the gift and credit worthiness of the donor but the assessee failed to adduce any proof in this regard.   The onus thus could not have been shifted by the subordinate authorities.   The Tribunal is duty bound to consider the reasons given by the appellate authority for its decision before upsetting the order made by the appellate authority.   The impugned order remanding is vitiated in law.   The High Court restored the case to the Tribunal to decide the case afresh in accordance with law after giving reasonable opportunities.

POWER TO ADMIT NEW PLEA:

                        Normally new plea is not admitted in appeal.   Likewise the Tribunal cannot entertain a new plea that had not been raised before lower authorities.  In ‘Commissioner of Income tax V. Hindustan Tin Works Limited’ – 2009 -TMI - 202621 – (Delhi High Court) the High Court rejected the plea of Revenue in so far as the Tribunal did not permit the Revenue to take up an additional ground pertaining to Sec. 14A of the Act.   The Court is of the view that the Tribunal has put the matter in correct perspective while rejecting the plea of the Revenue.   It is noticed upon a perusal of both the assessment order as well as the order of the Commissioner of Income Tax (Appeals) that no such plea was taken before two authorities.   Nothing has also been indicated in the appeal which would lead the court to believe that there was material which could have been looked into had the Tribunal permitted the Revenue to take up the said additional ground pertaining to Sec. 14 of the Act.   The Tribunal rightly rejected the plea.

                        In ‘National Thermal Power Co., Ltd., V. Commissioner of Income Tax’ 1996 -TMI - 5626 – (SUPREME Court) the Supreme Court held that the Tribunal has powers to entertain an additional ground even though the same was not raised before the authorities below so long as there is material on record.  But where the new question is related to validity of service of notice it is a matter which cannot be raised for the first time before the Tribunal.   In ‘Aravali Engineers (P) Limited V. Commissioner of Income tax’ (2011) 335 ITR 508 (P&H) the assessment related to a year earlier to the insertion of Section 292BB of the Act.   The High Court felt that the section supports the view though not applicable during the assessment year, since it is still a matter which could not fall under the discretion of the Tribunal. 

POWER OF REVIEW:

                        In ‘K.K. Ravindran V. Income Tax Appellate Tribunal and another’ – 2010 -TMI - 204418 – (Orissa High Court) the appellant assailed the order of the Tribunal in exercise of its power under Sec. 254(2).   Against the order of assessment which was confirmed by the First Appellate Authority, the petitioner preferred an appeal before the Tribunal.    The Tribunal partly allowed the appeal.   The Department filed a review petition on the ground that the addition of Rs.17,17,205/- on account of unexplained house property by the assessee is mistake apparent on the record for which the finding of the Tribunal is to be set aside.   The Tribunal set aside the order passed in appeal with a direction to hear the appeal afresh on merits in due course.

                        The High Court held that the Tribunal allowed the appeal holding that the addition of Rs.17,17,205/- based upon the report of the DVOs is not supported by any material evidence on record.   Nor it cannot be contended that it is vitiated on account of error in the face of the record.   The High Court further held that exercise of power under Section 254(2) of the Act by the Tribunal in recalling the entire order amounted to passing a fresh order in appeal which is not permissible.   Liberty is granted to Revenue to challenge the order of the Tribunal passed in appeal before the appropriate forum, if advised.

POWER OF RECTIFICATION:

                        The Supreme Court held that the power of rectification has been conferred on Tribunal to see that no prejudice is caused to either of the parties appearing from the record and that atonement to the wronged party by the court or the Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review.

POWER TO RECALL ITS ORDER;

                        In ‘Honda Siel Power Products Limited V. Commissioner of Income Tax’ – 2007 -TMI - 2224 – (Supreme Court of India) the Supreme Court held that the Tribunal in certain circumstances can recall its own order and Section 254(2) does not totally prohibited so.   Power to recall an order is prescribed in terms of Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 and that too only in cases where the assessee shows that it had a reasonable cause for being absent at a time when the appeal was taken up and decides ex-parte.