TMI Blog2005 (6) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... it will be apparent from the above, that the very basis contention of the assessee has been rejected by recording an incorrect finding of fact by the Hon'ble Bench. In fact in the instant case as a matter of fact, the ITO did not serve notices on all the legal representatives of the deceased assessee. The notice under section 148 was served only to one of the legal representatives of the deceased. However, while passing the final order, he framed an assessment against the deceased assessee against the provisions of the law. It is thus most humbly submitted that there has not been disposal of the appeal in accordance with law and, it has been erroneously held that in this case the assessment was passed on the legal heir of the assessee who was representing the deceased and not against the deceased person." 4. In paras 5 and 6 of the miscellaneous application, it has been pleaded that the Tribunal has omitted to deal with certain judicial pronouncements to which reference was made on behalf of the assessee in support of the contention that the assessment order made after the death of the assessee was nullity in law. In this regard reference has been made to the following decisions: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art "A" and paras 7 to 8 in part "B". While the remedy sought in part "A" requires reconsideration of the issue already adjudicated by the Tribunal i.e., validity of the notice issued under section 148 of the Income-tax Act and consequently the validity of the assessment order, part "B" relates to remedy for issuing additional directions by amending the order of the Tribunal. We will take up these two parts separately in the following manner: Part 'A' - Remedy by way of reconsideration of the issue already adjudicated: 9. On going through the miscellaneous application it is found that the assessee is seeking rectification in the order of the Tribunal by pointing out mistakes of law as well as mistakes of facts. The alleged mistakes have been pointed in paras 1 to 6 referred to above. On examination of the order of the Tribunal dated 12-12-2003, it is found that the facts relating to the issue involved in the appeal of the Revenue as well as the case law on which reliance has been placed on behalf of the parties, have been duly considered and hence no apparent mistake in relation to fact and law is found in the order of the ITAT. It may be pointed out that after narrating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Income-tax Act. Thus, what it could not do directly, could not be allowed to be done indirectly." 10.1 The decision in the case of Vichtra Construction (P) Ltd. has been further followed by the Hon'ble Jurisdictional High Court in the case of CIT v. Mayur Recreational Development Ltd. [IT Appeal Nos. 491 and 662 of 2004 vide order dated 16-11-2004]. In the aforesaid case, the Hon'ble High Court has observed as under: "3. We heard learned counsel appearing for the parties. In the case of Commissioner of Income-tax v. Vichtra Construction (P) Ltd. [2004] 269 ITR 371, this Court had examined an identical question in detail. This Court is of the opinion that the power conferred under section 254 of the Act does not contemplate rehearing which would have the effect of rewriting 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 permissible under the statute cannot be indirectly done by recourse to section 254(2) of the Act. Statute deliberately confers the power to rectify the order and does not authorize to review the order. The answer is required to be given in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that merely because the assessee did not file cross objections, he cannot be deprived of his right to challenge the addition particularly when he did challenge the additions on merits before the learned CIT(A). It was pointed out that after the appeal having been decided in his favour by the learned CIT(A), who annulled the assessment order, the assessee might have remained under the impression that he is not required to agitate the issue on merits before the Tribunal. 15. The learned DR on the other hand submitted that there is no mistake, much less a mistake apparent on the face of record in the order of ITAT and, therefore, the application should be rejected. He further submitted that since the assessee did not file any cross-objection or cross appeal before the ITAT, he cannot claim that further opportunity should be provided to do so or that learned CIT(A) be directed to adjudicate the grounds not considered by him. 16. On going through the entire material, we find force in this contention of the learned counsel for the assessee. The assessee had taken following grounds before the learned CIT(A): "1. The Income-tax Officer had erred in making an addition of Rs. 1,60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such orders thereon as it thinks fit", require interpretation in the context of legislative intention behind introducing these words, which was to clothe the Tribunal with broad power and not to restrict its power to the matters raised or complained by the assessee but to consider all matters arising out of the proceedings which may have been considered and determined by the Assessing Officer in the course of the assessment, although such matters may not have been raised before him by the assessee. The power of the Tribunal has been examined with reference to the above terms in the following cases: 19.1 In the case of Ramgopal Ganpatrai Sons v. CEPT [1953] 24 ITR 362 (Born.), while considering the scope of analogous provision in section 17 of the Excess Profits Tax Act, Hon'ble Chief Justice Shri Chagla, speaking for the Bench observed as under: "It must be borne in mind that when a statute confers a right of appeal and permits an order of a trial court to be challenged, the appellate court has full jurisdiction to reverse or modify that order on any ground which is open to it in law. The appellate court may even reverse or modify the order on a point of law taken by itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of any statutory provision, the appellate authority is rested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer." 19.5 In the case of Kerala Chemicals Proteins Ltd. v. CIT [1999] 235 ITR 467 (Ker.), the assessment was completed on a total income of Rs. 19,94,620 and demanding a total sum of Rs. 11,18,460 towards income tax and interest etc. The learned CIT(A) granted certain relief in appeal and consequently the advance tax paid by the assessee was found to be in excess of the advance tax paid by the assessee which resulted in a refund. Consequently, the assessee became entitled to interest in terms of section 214(1A). However, the Assessing Officer did not allow interest under section 214A. On appeal, the CIT(A) directed the Assessing Officer to grant interest under section 214. On appeal by the Revenue, the Tribunal held that the interest under section 214A is payable only up to the date of first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Parekh Brothers v. CIT [1984] 150 ITR 105. In the result, the question referred to us for decision is answered in the affirmative, that is to say, in favour of the assessee and against the Revenue." 20. On the basis of the observations made in the aforesaid decision, it may be concluded that the powers of the Tribunal are co-extensive with the powers of the Assessing Officer and that of the first appellate authority and are, in fact, wider powers than those authorities, subject to the limitation that the Tribunal does not have the power to enhance the assessment which power has been specifically conferred upon the CIT(A) under section 251(1)(a) of the Income-tax Act and which power has been specifically denied to ITAT under proviso to section 254, which is as under: "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 assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard." 20.1 Thus, as the limitation on the jurisdiction of the ITAT h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT Rules. 23.1. In the case of CIT v. Edward Kelventer (Successors) (P.) Ltd. [1980] 123 ITR 200 (Delhi), it was held that the subject-matter of an appeal should be understood not in a narrow and unrealistic manner but should be so comprehended as to encompass the entire controversy between the parties which is sought to be got adjudicated upon by the Tribunal. 23.2 In view of the above authorities, the word "thereon" is to be taken so as to refer to the subject-matter of the appeal and as held in the case of Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351 (Born.) (FB), the subject-matter of appeal is the entire tax proceedings of the assessee which is before the Tribunal for consideration and this will cover the proceedings before the Assessing Officer, before the first appellate authority as well as before the Tribunal, including the grounds raised before the Tribunal, any additional grounds which may be allowed to be raised before the Tribunal as also cross-objections, if any, before the Tribunal. In view of the said decision it is clear that the view that Tribunal is confined only to issues arising out of the appeal before the first appellate authority is a narr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority and further appeal to the Tribunal are parts of an integrated process. It was further held that the Tribunal has to consider the orders passed by the authorities below in the light of law application to those authorities. 23.7 The extent and scope of the powers of the Tribunal as well as the legal obligation cast upon it, has been elucidated in clear and categorical terms by the Hon'ble Madras High Court in the case of CIT v. Rayala Corpn. (p.) Ltd. [1995] 215 ITR 883. TheHon'ble Courthas observed as under: "The Appellate Tribunal is not a court. Its powers, however, are expressed in the widest possible terms under section 254 of the Income-tax Act, 1961. Its powers are almost similar to the powers of an appellate court under the Code of Civil Procedure. A wide power, however, is not such that it can be exercised in any manner. The Tribunal can interfere with the orders of the lower authorities, but can do so only on judicial considerations and on the basis of the reasons that suggest clearly that the lower authorities had committed an error of law or such facts that had vitiated its considerations. Its primary task is not to go into the return of the assessee and deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction should be issued to the CIT(A) for deciding such issues, as such directions are essentially incidental to the subject-matter and mistake on the part of the Tribunal in not restoring the matter to the CIT(A) can be rectified by amending its earlier order. The power to amend being different to the power of review, can definitely be exercised in such a case. 26. A similar issue came up before the Hon'ble Gujarat High Court in the recent judgment in the case of Sheth Construction Co. v. ITO [2005] 274 ITR 304. In that case in the assessment for assessment year 1994-95 the Assessing Officer made addition on account of bad debts of Rs. 70,025 and on account of disallowance of interest payment of Rs. 6,580. The assessee challenged these additions before the CIT(A). A preliminary objection was also raised by the assessee on the ground that the assessment was not valid as it was not signed by the Assessing Officer. This plea was accepted by the learned CIT(A) who set aside the assessment order. However, the learned CIT(A) did not adjudicate the original grounds of appeal which challenged the two additions referred to above. On appeal, the Tribunal found that there was a valid as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory duty, it has got all powers which are reasonably necessary for the accomplishment of the object intended to be secured. Hence, whereas the Tribunal has no power to recall and review its orders, in view of the decisions of Jurisdictional High Court in the cases of Vichtra Construction (P.) Ltd. and Mayur Recreational Development Ltd, it has got power to amend the order if the proper adjudication of the subject-matter so warrants. Thus, in a given situation, like the one before us, the order may not be recalled but at the same time it may require amendment by making additions. Such an amendment or addition being different from review of the order, is very much permissible within the scope of powers under section 254(2) of the Income-tax Act, 1961. 26.4 Thus, on proper examination of section 254(2) of the Income-tax Act, reproduced in para 18 of this order, it is clear that the Tribunal is under legal obligation to amend its order, passed by it under sub-section (1) of section 254, if any mistake pointed out or is found apparent from the record. If the Tribunal has failed to issue directions or failed to pass such orders, as are required to be passed under section 254(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351 (Born.) (FB). (6) The subject-matter of appeal is the relief sought by the appellant and objected to by the respondent. It is not proper to circumscribe the subject-matter of appeal by taking into account the rival submissions or the reasons or grounds which are put forward by the parties - CIT v. Sundaram Co. (P.) Ltd. [1963] 50 ITR 35 (Mad.) (Sh. N). (7) While exercising its rectificatory powers under section 254(2) of the Income-tax Act, the Tribunal has no power to review its earlier order [see proviso to Rule 34A of Appellate Tribunal Rules, 1963 and decision of Hon'ble Delhi High Court in the case of CIT v. Vichtra Construction (P.) Ltd. [2004] 269 ITR 371 (Delhi)]. (8) The Tribunal can recall its order passed ex parte [See Rule 24 of Appellate Tribunal Rules, 1963 and decision of Hon'ble M.P. High Court in the case of Estate of Late Tukoji Rao Holkar v. CWT [1997] 223 ITR 480]. (9) The power to rectify mistake can be exercised suo motu by Tribunal or on the notice of parties. (10) It is a mistake apparent on record, if the Tribunal has omitted to consider a ground of appeal taken before it or if it has fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the order of learned CIT(A) on the point of validity of notice under section 148, should have also directed the learned CIT(A) to decide the other grounds on merits. The omission to do so i.e., not restoring the matter to the file of CIT(A) and not issuing direction for adjudicating the grounds on merit, therefore, amounted to be a mistake on the part of the Tribunal. 30. In view of the aforesaid obligation and duty of the Tribunal, we have to consider the remedies sought in two parts of this miscellaneous application. On part 'A', in view of the decision of the Hon'ble Delhi High Court in the cases of Vichtra construction (P.) Ltd.; and Mayur Recreational Development Ltd., we are of the considered opinion that the Tribunal has no power to, rehear, reconsider, recall and review its order under section 254(1) of the Income-tax Act. However, so far as part 'B' is concerned, after considering the scope under section 254(2), relating to power available to the ITAT for rectifying its mistakes, we have to hold that the Tribunal has not only power but legal obligation to amend its order, so as to rectify and cure the mistake found on its part in not restoring the matter to learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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