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TMI Blog2010 (12) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 293 ITR 365 (Delhi) and Perfetti Van Melle India P. Ltd. v. Commissioner of Income-Tax, [2008] 296 ITR 595 (Delhi) wherein the view has been expressed that the Income Tax Appellate Tribunal (for short „the tribunal‟) has no power to recall an order in exercise of power under Section 254(2) of the Income Tax Act, 1961 (for brevity „the Act‟), in view of the enunciation of law in Honda Siel Power Products Ltd. v. Commissioner of Income-Tax, [2007] 295 ITR 466 (SC), a Division Bench felt that the said decisions required reconsideration by a larger Bench. Thus, these writ petitions have been placed before us only for the purpose of consideration of the issue whether the tribunal has the power to recall the order in entirety under Section 254(2) of the Act. Be it noted, apart from the said issue, nothing need be adverted to by this Bench inasmuch as all other ancillary issues relating to restriction or constriction of exercise of that power are to be adverted to by the Division Bench in case circumstances so warrant. Thus, we shall dwell upon and delve into the aforesaid singular issue. 2. The factual score which is required to be depicted for the purpose of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) and Hindustan Coca-Cola Beverages (P) Ltd. v. Commissioner of Income-Tax, [2007] 293 ITR 226 (SC) and, hence, is not a precedent for the proposition that the tribunal has the power of recall. 4. Mr.Deepak Chopra, learned standing counsel for the revenue, submitted that Honda Siel Power Products Ltd. (supra) is the authority for the proposition that the tribunal has the power to recall and what should be the conditions precedent or circumstances would be a matter of adjudication. The learned counsel submitted that one is the question of jurisdiction and the other is the exercise of jurisdiction and both should be put into two separate compartments and should never be intertwined. It is his further submission that some of the High Courts have taken the view that the tribunal has the power to recall. In this regard, he has invited our attention to the decisions in Champa Lal Chopra v. State of Rajasthan, [2002] 257 ITR 74 (Rajasthan), Commissioner of Income-Tax v. U.P. Shoe Industries, [1999] 235 ITR 663 (Allahabad) and Commissioner of Income-Tax v. Mithalal Ashok Kumar, [1986] 158 ITR 755 (MP). It is further proponed by Mr. Chopra that the decisions wherein Honda Siel Power Produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d: Provided also that if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, in any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee. (2B) The cost of any appeal to the Appellate Tribunal shall be at the discretion of that Tribunal." 6. The Division Bench in K.L. Bhatia (supra), while dealing with the power of the tribunal under Section 254(2) of the Act, has scanned the anatomy of the provision and held thus: "The Income-tax Act is a self-contained code. The Income-tax Appellate Tribunal is a creation of the statute and its powers are circumscribed by the provisions of the Act. Appeals are filed before it under section 253 of the Act. Section 254(1) contemplates disposal of the said appeal after giving an opportunity to both the parties of being heard. Sub-section (2) of section 254 enables the Tribunal to rectify any mistake apparent from the record. Sub-section (4) of section 254 specifies that save as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is final. This decision is final not only for the assessee but also final as far as the Tribunal itself is concerned. We have, therefore, no hesitation in coming to the conclusion that the Tribunal can only exercise its jurisdiction under section 254 of the Act in the manner indicated above and, de hors the provisions in the Act, it has no jurisdiction to recall its order on merits." [Emphasis added] 7. In Deeksha Suri (supra), another Division Bench has held as follows: "At the very outset, let us make it clear that the legality or propriety or otherwise of the order dated January 3, 1997, could not have been considered by the Tribunal by way of review. The Income-tax Appellate Tribunal is a creature of the statute. It has not been vested with the review jurisdiction by the statute creating it. The Tribunal does not have any power to review its own judgment or orders. [See Dr. Kashnath G. Jalmi v. The Speaker, AIR 1993 SC 1873; [1993] 3 JT 594 (SC); Dr. Smt. Kuntesh Gupta v. Management of Hindu Kanya Mahavidyalaya, AIR 1987 SC 2186; Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, AIR 1970 SC 1273; Manoharlal Verma v. State of MP, AIR 1970 MP 131; CIT v. ITAT, [1994] 206 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by an irregularity of procedure or an illegality. Such an order cannot be "recalled". The aggrieved party must have remedy provided by law to get rid of the order." X X X X "Could any relief have been allowed to the petitioners in exercise of jurisdiction conferred by section 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." [Emphasis added] 9. In Karan and Co. (supra), a Division Bench of this Court, after referring to the decisions in Master Construction Co. (P) Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 254 is limited. Such power of amendment is confined to rectification of mistake apparent from the record. The power of review, as is well known, must be conferred expressly or by necessary implication upon the statutory or quasi-judicial authorities. The Tribunal has no inherent power of review. It is thus axiomatic that while exercising its jurisdiction to amend its order on the ground of rectification of mistake it cannot recall its order passed on the merits." 11. Similar view has been taken in the decisions which we have referred to hereinbefore and the consistent view of this Court is that the tribunal has no power to recall its own order. 12. On a careful reading of the aforesaid authorities, it is discernible that the principles which constitute the edifice and bedrock of the conclusion arrived at therein can broadly be put into the following compartments: (i) The tribunal has no inherent power of review and, hence, while exercising its jurisdiction to amend its order on the ground of rectification of mistake, it cannot recall its order passed on merits. (ii) Recalling the entire order would mean passing of a fresh order which is not permissible as Section 254(2) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from the language of Section 254(2) of the Act or of the decisions of this Court in the numerous cases noticed hereinabove." Thereafter, the Division Bench proceeded to state as follows: - "In conclusion, we are of the view that the impugned order of the Tribunal dated September 10, 2003, by which it recalled and reversed its earlier decision dated April 2, 2002, on grounds No. 2 and 3, is impermissible and unsustainable in law. We reiterate that in the facts of the present case it makes no difference whether the entire order is sought to be recalled or the order passed by the Tribunal on individual grounds is sought to be recalled in its entirety. Neither is permissible under the garb of rectification." 14. The aforesaid decision was assailed before the Apex Court by the assessee and their Lordships, while dealing with the power of the tribunal under Section 254(2) of the Act, have expressed thus: - "As stated above, in this case we are concerned with the application under section 254(2) of the 1961 Act. As stated above, the expression "rectification of mistake from the record" occurs in section 154. It also finds place in section 254(2). The purpose behind the enactment of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt and restored the order of the tribunal allowing the rectification application filed by the assessee. 16. It is worth noting, Mr. Mehta, learned counsel appearing for the petitioner, has submitted that the decision in Honda Siel Power Products Ltd., (supra) is not a precedent for the proposition that the tribunal has the power to recall its own order after it has finally disposed of the appeal. Before addressing to the aspect whether the said decision is a precedent for the proposition that the tribunal can recall its order or not or the view taken by this Court on earlier occasions can still hold the field, we think it appropriate to refer to certain citations relating to precedents. 17. In Prakash Amichand Shah v. State of Gujarat and others, AIR 1986 SC 468, the Constitution Bench has held thus: "26. ...A decision ordinarily is a decision on the case before the Court while the principle underlying the decision would be binding as a precedent in a case which comes up for decision subsequently. Hence while applying the decision to a later case, the Court which is dealing with it should carefully try to ascertain the true principle laid down by the previous decision. A decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld, therefore, extend to all observations of points raised and decided by the Court in a given case. So far as constitutional matters are concerned, it is a practice of the Court not to make any pronouncement on points not directly raised for its decision. The decision in a judgment of the Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the Court (See AIR 1970 SC 1002 and AIR 1973 SC 794)..." 20. In The Divisional Controller, K.S.R.T.C. v. Mahadeva Shetty and another, AIR 2003 SC 4172, it has been held that a mere casual expression carries no weight at all and every passing expression of a Judge cannot be treated as an ex cathedra statement having the weight of authority. 21. In Bharat Petroleum Corpn. Ltd. and another v. N.R. Vairamani and another, (2004) 8 SCC 579, a two-Judge Bench of the Apex Court has held thus: "9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another case is not at all decisive." Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it." 22. In State of Orissa and others v. Md. Illiyas, AIR 2006 SC 258, it has been held thus: "13. ...Reliance on the decision without looking into the factual background of the case before it is clearly impermissible. A decision is a precedent on its own facts. Each case presents its own features. It is not everything said by a Judge while giving judgment that constitutes a precedent. The only thing in a Judge's decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. According to the well-settled theory of precedents, every decision contains three basic postulates - (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct, or perceptible facts; (ii) statements of the princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expand the principle to include what has not been stated therein. 26. It has also been pronounced that the decision is only an authority for what it actually decides and it is the duty to ascertain the real concrete or ratio decidendi which has the binding effect. While dealing with the principle of precedent, it is to be borne in mind that a judgment is neither to be read as Euclid's Theorem nor is to be read out of context. Mechanical application of a decision treating as a precedent without appreciating the underlying principle is not allowable. In Honda Siel Power Products Ltd., (supra), the Division Bench of this Court considered the stance of the counsel that the decision in K.L. Bhatia (supra) and the other decisions that have followed it, forbids recall of the tribunal‟s entire decision on the basis that in the garb of rectification, the order cannot be recalled. When the matter travelled to the Apex Court, their Lordships, as is evident from the paragraphs quoted hereinbefore, took note of the fact that the application for rectification was filed as the tribunal had not taken note of a binding precedent though the same was cited before the tribunal. In that factual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Appellate Tribunal Rules, 1963 as regards the exercise of power which cannot be exercised directly or exercised indirectly and that even if there is any irregularity caused, that would not clothe the tribunal with the power of review as it may ultimately result in rehearing of the appeal. Thus, the entire stream of decisions has gone by the concepts which are fundamentally founded on the power of review, rehearing and the limited concept of recall. But what has been stated by the Apex Court in Honda Siel Power Products Ltd., (supra) is based on the doctrine of prejudice. Their Lordships have clarified that they were not proceeding on the doctrine or concept of inherent power. Analyzed from this perspective, there can be no trace or shadow of doubt that the said decision is an authority for the proposition that the tribunal in certain circumstances can recall its own order and Section 254(2) of the Act does not totally prohibit so. 27. In this context, we may refer with profit to the decision in Assistant Commissioner of Income-Tax v. Saurashtra Kutch Stock Exchange Ltd., [2003] 262 ITR 146 wherein a Division Bench of the Gujarat High Court was dealing with a wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e record"? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a "mistake apparent from the record" which could be rectified under section 254(2)." [Emphasis supplied] Thereafter, their Lordships proceeded to state as follows: "Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and to disturb the finality. In S. Nagaraj v. State of Karnataka [1993] Supp 4 SCC 595, 618, Sahai J. stated: "Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the court should not be prejudicial to anyone. Rule of stare decisis is adhered for consistency but it is not as inflexible in Administrative Law as in Public Law. Even the law bends before justice. Entire concept of writ jurisdiction exercised by the higher courts is founded on equity and fairness. If the court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts own order and there is no absolute prohibition. (B) In view of the law laid down in Honda Siel Power Products Ltd., (supra) by the Apex Court, the decisions rendered by this Court in K.L. Bhatia (supra), Deeksha Suri (supra), Karan and Co. (supra), J.N. Sahni (supra) and Smt. Baljeet Jolly (supra) which lay down the principle that the tribunal under no circumstances can recall its order in entirety do not lay down the correct statement of law. (C) Any other decision or authority which has been rendered by pressing reliance on K.L. Bhatia (supra) and the said line of decisions are also to be treated as not laying down the correct proposition of law that the tribunal has no power to recall an order passed by it in exercise of power under Section 254(2) of the Act. (D) The tribunal, while exercising the power of rectification under Section 254(2) of the Act, can recall its order in entirety if it is satisfied that prejudice has resulted to the party which is attributable to the tribunal‟s mistake, error or omission and which error is a manifest error and it has nothing to do with the doctrine or concept of inherent power of review. (E) When the justification of an order p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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