TMI Blog2010 (12) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of law. 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. When the justification of an order passed by the tribunal recalling its own order is assailed in a writ petition, it is required to be tested on the anvil of law laid down by the Apex Court in Honda Siel Power Products Ltd., (2007 -TMI - 40390 - SUPREME Court) and Saurashtra Kutch Stock Exchange Ltd. (2008 -TMI - 30682 - SUPREME COURT ) - Appeal is dismissed - WP (C) Nos. 6460/2010, 6461/2010, 6462/2010, 6463 - - - Dated:- 24-12-2010 - MR. JUSTICE A.K. SIKRI , MANMOHAN DIPAK MISRA, JJ Petitioner Through: Mr. R.M. Mehta, Respondent Through: Mr.Deepak Chopra, JUDGEMENT Expressing doubt with regard to the precedential value of the decisions rendered in Commissioner of Income Tax v. K.L. Bhatia, [1990] 182 ITR 361 (Delhi), Deeksha Suri v. Income-tax Appellate Tribunal and others, [1998] 232 ITR 395 (Delhi), Karan an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n exercise of power under Section 254(2) of the Act and, secondly, assuming the tribunal has the power to recall, the facts and circumstances of the case at hand do not warrant a recall. We have already indicated that only the first issue is required to be delved into by this Bench and hence, we shall confine ourselves to the said aspect. Mr.Mehta, learned counsel for the petitioner, has pressed into service the decisions rendered in K.L. Bhatia (supra), Deeksha Suri (supra), Karan and Co. (supra), J.N. Sahni (supra), Vichtra Construction P. Ltd., (supra), Om Prakash Bhola (supra), Honda Siel Power Products Ltd., (supra), Ras Bihari Bansal (supra) and Perfetti Van Melle India P. Ltd. (supra) in support of his submission. It is also contended by Mr. Mehta that the decision rendered in Honda Siel Power Products Ltd. (supra) by the Apex Court is not an authority for the proposition that the tribunal has the power of total recall inasmuch as the said issue was neither raised nor argued at the Bar. To bolster the said facet of submission, he has commended us to the decision rendered in Y.S.C. Babu and A.V.S. Raghavan v. Chairman and Managing Director, Syndicate Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise 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: [Provided further that any application filed by the assessee in this sub-section on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees.] (2A) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub-section (1) or sub-section (2) of section 253: Provided that the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order: Provided further that where such appeal is not so disposed of within the said period of stay as specified in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which can be exercised by it. But such power cannot be invoked to rehear a case on merits. The Tribunal can, after disposing of the appeal under section 254(1), rehear the matter on merits only within the purview of section 254(2). The Supreme Court has held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, AIR 1970 SC 1273, that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. It does not stand to reason that, if the power of review is not present with the Tribunal, it, nevertheless, can exercise such power indirectly when it cannot do so directly. If the contention of learned counsel for the respondent is correct, then it could mean that, even on merits, the Tribunal can recall its earlier order and then hear the case afresh and pass a different order. If this is so, it would amount to the Tribunal exercising power of review when it does not have any such power. To give an example, under the provisions of the Code of Civil Procedure, Order 47 provides the circumstances in which a judgment may be reviewed. If the contention of learned counsel for the respondent is correct, then, applying the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 so as to relieve an aggrieved party from the consequences flowing from its own mistake or failure. Such a power to recall is distinct from the power to review; (ii) Disposal of an appeal without dealing with a pending application for admission of additional evidence and overlooking an earlier order of the Tribunal forming an opinion that the application for admission of additional evidence shall be dealt with first, amounts to a "mistake apparent from the record" which should have been rectified by the Tribunal in exercise of the jurisdiction conferred by sub-section (2) of section 254 of the Act." Thereafter, the Bench referred to the decisions in A.R. Antulay v. R.S. Nayak , AIR 1988 SC 1531 and Mangat Ram Kuthiala v. CIT , [1960] 38 ITR 1 (Punjab) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r obviously would mean passing of a fresh order. That does not appear to be the legislative intent. The order passed by the Tribunal under section 254(1) is the effective order so far as the appeal is concerned. Any order passed under section 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining unamended is the effective order for all practical purposes. The same continues to be an order under section 254(1). That is the final order in the appeal. An order under section 254(2) does not have existence de hors the order under section 254(1). Recalling of the order is not permissible under section 254(2). Recalling of an order automatically necessitates rehearing and readjudication of the entire subject-matter of appeal. The dispute no longer remains restricted to any mistake sought to be rectified. 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 was decided ex parte . This position was highlighted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if a tribunal renders a judgment without dealing with a specific fact situation, it may be an irregularity of procedure but that would not clothe the tribunal with the jurisdiction to recall the order as the aggrieved party must seek his remedy in appeal. (vi) The power conferred under the statute does not contemplate a rehearing which would have the effect of rewriting an order affecting the merits of the case and, therefore, there is a deliberate omission by the legislature to confer the power of review on the appellate authority under Section 254(2) of the Act. 13. In Honda Siel Power Products Ltd. (supra), a Division Bench of this Court, after referring to the earlier decisions in the field, held thus: - "Turning to the facts of the present case, we are of the considered view that 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 entirety. In other words, if the Tribunal has given its decision on say grounds Nos. 3 and 4 in a particular way in its first order while dealing with ten separate grounds and pursuant to a rectification application, it recalls its dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty/allowability of the claim of the assessee for enhanced depreciation under section 43A. One of the important reasons for giving the power of rectification to the Tribunal is to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record. "Rule of precedent" is an important aspect of legal certainty in rule of law. That principle is not obliterated by section 254(2) of the Income-tax Act, 1961. When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. In the present case, the Tribunal was justified in exercising its powers under section 254(2) when it was pointed out to the Tribunal that the judgment of the coordinate bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material which was already on record. The Tribunal has acknowledged its mistake, it has accordingly rectified its order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is only an authority for what it actually decides. What is of the essence is decision is its ratio and not every observation found therein nor what logically follows from the various observations made in the judgment. Every judgment must be read as applicable to the particular facts provided, or assumed to be proved, since the generality of the expressions which may be found there is not intended to be exposition of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. It would, therefore, be not profitable to extract a sentence here and there from the judgment and to build upon it because the essence of the decision is its ratio and not every observation found therein. The enunciation of the reason or principle on which a question before a court has been decided is alone binding as a precedent " 19. In Director of Settlements, A.P. and others v. M.R. Apparao and another , AIR 2002 SC 1598, it has been held thus: "7. A judgment of the Court has to be rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c Dermott observed: "The matter cannot, of course, be settled merely by treating the ipsissima verba of Willes, J., as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge,.." 10. In Home Office v. Dorset Yacht Co. (1970) 2 All ER 294 Lord Reid said, "Lord Atkin's speech ... is not to be treated as if it were a statutory definition. It will require qualification in new circumstances". Megarry, J. in Shepherd Homes Ltd. v. Sandham (No.2) (1971) 1 WLR 1062 observed: "One must not, of course, construe even a reserved judgment of Russell L.J. as if it were an Act of Parliament." And, in Herrington v. British Railways Board (1972) 2 WLR 537 Lord Morris said: "There is always peril in treating the words of a speech or a judgment as though they were words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case." 11. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanwanti Devi and Ors., (1996) 6 SCC 44) " [Emphasis added] 23. In Deepak Bajaj v. State of Maharashtra Anr. , AIR 2009 SC 628, the Apex Court has held thus: "7. It is well settled that a judgment of a Court is not to be read mechanically as a Euclid's Theorem nor as if it was a statute. 8. On the subject of precedents Lord Halsbury, L.C., said in Quinn v. Leathem 1901 AC 495 : "Now before discussing the case of Allen v. Flood (1898) AC 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but are governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical Code, wherea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the tribunal acknowledged its mistake and accordingly rectified its order. It is worth noting that their Lordships have clearly stated that they are not going by the doctrine or concept of inherent power but on the basis that if prejudice has resulted to the party, which is attributable to the tribunal‟s mistake, error or omission and which error is a manifest error, then the tribunal would be justified in rectifying its mistake, which had been done in the said case by recalling the original order. Applying the principles which we have enumerated hereinabove to understand the concept of precedent, it can safely be stated that the Apex Court was dealing with a case which travelled from this Court wherein it had been held that the tribunal had no power of recall of its own order in entirety; that the court was not going by the doctrine or concept of inherent power; that the "rule of precedent" which is an important part of legal certainty in rule of law is not obliterated by Section 254(2) of the Act; that if prejudice has resulted to the party due to the mistake, error or omission which is attributable to the tribunal and it is manifest from the record, the mistake can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 254(2) of the Act; (b) An order on appeal would consist of an order made under section 254(1) of the Act or it could be an order made under sub-section (1) as amended by an order under sub-section (2) of section 254 of the Act; (c) The power of rectification is to be exercised to remove an error or correct a mistake and not for disturbing finality, the fundamental principle being, that power of rectification is for justice and fair play; (d) That power of rectification can be exercised even if a mistake is committed by the Tribunal or even if a mistake has occurred at the instance of party to the appeal; (e) A mistake apparent from record should be self-evident, should not be a debatable issue, but this test might break down, because judicial opinions differ, and what is a mistake apparent from the record cannot be defined precisely and must be left to be determined judicially on the facts of each case; (f) Non-consideration of a judgment of the jurisdictional High Court would always constitute a mistake apparent from the record, regardless of the judgment being rendered prior to or subsequent to the order proposed to be rectified; (g) After the mistake is corrected, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to set it right by recalling its order." In the present case, according to the assessee, the Tribunal decided the matter on October 27, 2000. Hiralal Bhagwati, [2000] 246 ITR 188 (Guj) was decided a few months prior to that decision, but it was not brought to the attention of the Tribunal. In our opinion, in the circumstances, the Tribunal has not committed any error of law or of jurisdiction in exercising power under sub-section (2) of section 254 of the Act and in rectifying the "mistake apparent from the record". Since no error was committed by the Tribunal in rectifying the mistake, the High Court was not wrong in confirming the said order. Both the orders, therefore, in our opinion, are strictly in consonance with law and no interference is called for." [Underlining is ours] 28. We will be failing in our duty if we do not address to the submission canvassed by Mr. Mehta that the said decision in Honda Siel Power Products Ltd., (supra) has been distinguished by many High Courts as well as by the Apex Court in Saurashtra Kutch Stock Exchange Ltd . (supra) and Hindustan Coca-Cola Beverages (P) Ltd. (supra). We have carefully perused the decisions rendered by the High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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