TMI Blog1997 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... income as under : Name Date of filing Income declared Shri Lalit Suri 21-8-1992 ₹ 89,490--including salary from Bharat Hotels Ltd. (Rs. 1,13,400) Mrs. Jyotsna Suri 28-8-1992 ₹ 1,01,460 including salary from Bharat Hotels Ltd. (Rs. 1,15,200) Miss Divya Suri 28-8-1992 ₹ 91,993 including income from other sources (Rs. 98,993) Miss Deeksha Suri 28-8-1992 ₹ 80,778 including income from other sources (Rs. 87,777) The assessments were framed on March 28, 1995, under section 143(3) of the Act. There were additions made under section 68 of the Act, also keeping in view the provisions of section 69A. In their statements of income attached with the returns, the petitioners by way of note indicated the following amounts received and deposited in their accounts in the Hong Kong and Shanghai Banking Corporation Ltd., on November 22, 1991, under the Remittance of Foreign Exchange and Investment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner of Income-tax (Appeals) was that the amount involved did not represent income and the filing of a declaration was a formality, the provision being directory and not mandatory in nature. In appeal, the petitioners also moved an application under rule 46A of the Income-tax Rules, 1962, seeking admission by way of additional evidence of a set of documents mostly originating from the custody of the bank. The Commissioner of Income-tax (Appeals) rejected the application under rule 46A as also the appeals. He also formed an opinion that the requirements of rule 46A enabling admission of additional evidence in appeal were not satisfied. The petitioners preferred further appeal to the Income-tax Appellate Tribunal. One of the grounds taken, inter alia, before the Income-tax Appellate Tribunal was illegal rejection of the application under rule 46A by the Commissioner of Income-tax (Appeals). The petitioners also moved applications dated March 6, 1996 and May 10, 1996, both under rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking admission by way of additional evidence before the Income-tax Appellate Tribunal of the very same set of documents which formed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehearing the matter and render justice to the applicant. Amongst the four assessees, one is a lady and the other two are minor daughters and they cannot possibly have any source of income even on suspicion and so is the position of the male person who is carrying on his activities only in India. As already stated, in the above-said application dated February 4, 1997, filed on February 5, 1997, the petitioners do not specifically refer to the provision of law under which the application was made and the jurisdiction of the Tribunal which was sought to be invoked by moving this application. However, on April 2, 1997, the petitioners moved yet another application wherein they have referred to the application filed on February 5, 1997, having been made under section 254(2) of the Act. It was further stated that the earlier application was got drafted by the appellant without seeking any legal guidance and hence yet another application accompanying the application dated April 2, 1997, may be brought on record treating it as amending/modifying/substituting the previous application. The application accompanying is titled as one under section 254(2) of the Act read with section 151 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry carefully considered the arguments addressed by both learned counsel for the parties. A very careful and detailed perusal of our log books, which have been compared inter se, indicates that at the time of hearing of the appeals, counsel for the assessee had not addressed any arguments on the application under rule 29. All his arguments were related to admission of additional evidence under rule 46A before the Commissioner of Income-tax (Appeals). There was not a whisper about application under rule 29. This is now an admitted position. All the same, we did make an offer to learned counsel for the assessee for perusing our log books and satisfy himself of this position. This was declined. On the contrary the argument now is that because at an earlier hearing before a different combination of the Bench, it was pressed and an order made that the same be taken up first and even though the said application was not argued but because of the noting of the earlier combination, it was to be disposed of first, its pendency gives rise to a mistake apparent from record, as is canvassed by the applicants. The fact that no arguments were addressed is also admitted in the resume of arguments f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l clearly indicate that the then learned counsel has argued the case on merits. He not only argued but even replied to the counter of Shri Syali, learned advocate for the Revenue on merits by trying to distinguish the case of D. C. Rastogi as cited. To contend that no arguments were addressed is factually incorrect in view of the various recording of facts, arguments, replies and conclusion, as highlighted by Shri Syali and amounts to an unsuccessful effort on the part of the petitioner to find some issues to salvage their case. But for the bland statement signed by the assessees themselves who were not present in the court at the time of hearing of the appeals, there is no basis for the submission that arguments were not adduced on merits. In view of the above facts, the non-disposal of the application under rule 29 would indeed not be a mistake much less one apparent from the record. Our notes indicate beyond doubt that learned counsel was asked to and actually addressed us on the merits of the case para.5.6, he was replied to (para 6.5/6.5) and in rejoinder merits were again referred to (para.7) and dealt with by the Bench (paragraphs 10-10.2). 13.5 The events from the filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 29 application if at all the same was desired to be pressed or argued. Admittedly not having done so it cannot now be attributed as a mistake apparent from record to the Tribunal. The Tribunal formed an opinion that the non-disposal of the application under rule 29 would indeed not be a mistake much less one apparent from the record. Vide para 14.7, the Tribunal concluded as under: 14.7 In the circumstances, the appellants having argued on merits, not having highlighted/argued petition under rule 29 and the Tribunal in its order having dealt with in extenso the letter dated February 21, 1995, there is no mistake apparent from record calling for rectification under section 254(2) of the Act and restricting the appellant to the material on record sans additional evidence, was in order and not a mistake apparent from record. We, therefore, find no merit in these applications and dismiss the same. Learned counsel for the petitioners has submitted that by order dated October 23, 1996, the Tribunal had categorically expressed its opinion that the application under rule 29 would be disposed of first. That order regulated the subsequent course of hearing, even jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bandoned ; it was no longer obligatory on the part of the Tribunal to have suo motu noticed the pendency of the application and then rendered decision thereon. This is without regard to the fact whether the constitution of the Bench hearing the appeals on December 2, 1996, was the same or not as was on October 23, 1996. On February 5, 1997, the petitioners moved an application under section 256(1) of the Act seeking reference to the High Court on several questions of law accompanied by a statement of case arising out of the order of the Tribunal dated January 3, 1997. On April 4, yet another application was filed on behalf of the petitioners wherein they have sought for leave of the Tribunal to amend the application dated February 5, 1997, so as to amend/modify/substitute proper questions of law on the basis of which reference was being sought to the High Court. A perusal of the questions which are suggested on behalf of the petitioners before the Tribunal goes to show that the merits of the plea raised by the petitioners touching the placing of the onus, acceptance of the explanation given by the assessee and the assessability as income under section 68/69A of the impugned s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide para. 7 of the said writ petition) : A. Whether the order of the Income-tax Appellate Tribunal dated January 3, 1997, which is passed in negation of the principles of natural justice is liable to be struck down straightaway ? B. Whether the order of the Income-tax Appellate Tribunal sustaining an addition of ₹ 51,55,968 to the total income of the petitioner is not liable to be quashed on merits where it has failed to dispose of first an application filed under rule 29 of the Income-tax (Appellate Tribunal) Rules, (whereby the petitioner-appellant sought to lead evidence before the Tribunal which went to the root of the controversy before the Tribunal) and still had proceeded to decide the appeal on merits ? C. Whether, on the facts and in the circumstances of the case, the Tribunal did not err in not holding that the first appellate authority acted illegally in not allowing the petitioner-appellant to lead evidence under rule 46-A of the Income-tax Rules ? The petition came up for hearing on the question of admission before the Division Bench of the High Court on March 21, 1997. Counsel for the respondent had also made appearance. The Division Bench held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding to dispose of the appeals on the merits. The order disposing of the appeal on the merits without first disposing of the application for admitting additional evidence is without jurisdiction, at least passed with material irregularity in exercise of jurisdiction and in any case cannot be called disposal of the appeals judicially and consciously. The Tribunal has also failed to exercise the jurisdiction vesting in it by not recalling the order dated January 3, 1997, and rejecting the applications dated February 5, 1997 and April 2, 1997, by order dated June 27, 1997. The impugned order dated June 27, 1997, deserves to be quashed followed by setting aside of the order dated January 3, 1997 as well. Learned counsel for the respondent has submitted that the petitions do not lie at all. The petitioners have an alternate efficacious remedy by filing an application under section 256(1) which now is the only remedy available to the petitioners in the light of the order dated September 12, 1997, even in C.W. P. No. 1255 of 1997 by this court and maintained by the Supreme Court. The impugned order was also defended on the merits. We may place on record that at the first blush ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of by the Tribunal by a common order dated January 3, 1997. Only Mrs. Jyotsna Suri, one out of the four assessees, filed C.W.P. No. 1255 of 1997 challenging the order dated January 3, 1997, in the writ jurisdiction of this court. It was a test case filed. If the petition had been entertained, presumably the other three assessees would have followed the path. Even if Mrs. Jyotsna Suri had succeeded in securing quashing of the order dated January 3, 1997, of the Tribunal, the benefit of the order would have accrued to all the three other assessees. She failed. All the pleas available to the petitioners on which challenge was laid or could have been laid to the order dated January 3, 1997, formed the subject-matter of C.W.P. No. 1255 of 1997. The petition has been dismissed as not maintainable on the ground of availability of alternate efficacious remedy. In our opinion, the order dated March 21, 1997, passed by the High Court in C.W.P. No. 1255 of 1997 filed by Mrs. Jyotsna Suri would bind all the four assessees not only as a precedent but also on the principle of propriety and consistency. The three assessees other than Mrs. Jyotsna Suri cannot be permitted to wriggle out of the ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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. Kashinath 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 Arjunsighji, AIR 1970 SC 1273 ; Manoharlal Verma v. State of MP, AIR 1970 MP 131 ; CIT v. ITAT [1994] 206 ITR 126 (AP). In the purported exercise of inherent power the Tribunal cannot rehear a case on its merits : CIT v. K. L. Bhatia [1990] 182 ITR 361 (Delhi). Shri G. C. Sharma, learned senior advocate, who appeared for the petitioners, did not also dispute the abovesaid proposition. Rightly he did not urge that the Tribunal could have reviewed its order. Eloquently and persuasively he put forth the following two propositions, pressing them alternatively and submitting that the interest of justice demanded the petitioners being allowed relief by the Tribunal by exercising either of the following two jurisdictions : (i) Section 254 of the Act obliges an Appellate Tribunal to dispose of an appeal ; an order purportedly disposing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raud or collusion in obtaining the judgment is a sufficient ground for opening or vacating it. A judgment secured in violation of an agreement not to enter judgment may be vacated on that ground. However, in general, a judgment will not be opened or vacated on grounds which could have been pleaded in the original action. A motion to vacate will not be entered when the proper remedy is by some other proceedings, such as by appeal. The right to vacation of a judgment may be lost by waiver or estoppel. Where a party injured acquiesces in the rendition of the judgment or submits to it, waiver or estoppel results. The law has been well stated by the Punjab High Court in Mangat Ram Kuthiala v. CIT [1960] 38 ITR 1 in the following terms : ... It was a settled rule that a judicial Tribunal could recall and quash its own order in exceptional cases when it was shown that it was obtained by fraud or by palpable mistake or was made in utter ignorance of a statutory provision and the like, and for the application of that rule the class of the Tribunal was not a material matter but what was of substance and material was the nature of the proceedings before it : if the proceedings were in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law, it necessarily follows from the statement of facts recorded by the Tribunal that the petitioners had acquiesced in the appeal being decided on the merits without insisting on the application under rule 29 being decided first. The principle of waiver and estoppel would exclude the right of the petitioner seeking a recall of the order assuming it would have been permissible to invoke the jurisdiction of the Tribunal to recall its order otherwise. The first contention of learned counsel for the petitioners, therefore, fails. 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 rect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or irregularity in exercise of jurisdiction committed by the Tribunal passing the order dated January 3, 1997, nor such a failure to exercise the jurisdiction in rejecting the applications dated February 5, 1997, and April 2, 1997, by order dated June 27, 1997, as to warrant exercise of writ jurisdiction of the High Court. While meeting the preliminary objection raised by counsel for the respondent as to the availability of efficacious alternative remedy to the petitioners, Shri G. C. Sharma, learned senior counsel for the petitioner, had submitted that remedy under section 256 is not available against an order rejecting an application under section 254(2). He had invited the attention of the court to a number of decisions out of which it would suffice to mention a few : Popular Engineering Co. v. CIT [1983] 140 ITR 398 (MP), CIT v. ITAT [1994] 206 ITR 126 (AP) and Asst. CIT v. Dr. Ved Prakash [1994] 209 ITR 448 (AP). We have carefully considered all the decisions cited by learned counsel for the petitioners. There appears to be a divergence of opinion amongst other High Courts, but so far as the Delhi High Court is concerned, the law is settled by at least three decisions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeking exclusion of time lost in the proceedings before this court. Such prayer for condonation of delay may be considered by the Tribunal sympathetically. We cannot resist observing that the petitioners are attempting at riding two horses at a time. They are parallely pursuing the remedy under section 256 of the Income-tax Act before the Tribunal and under article 226/227 of the Constitution before the High Court, agitating the very same issues before two different fora simultaneously. They must thank themselves for creating a proverbial situation of riding two horses at a time and the proverbial result has to follow---they must fall. We are constitutionally obliged to deny indulgence in writ jurisdiction to the petitioners on the ground of availability of efficacious alternative remedy to them. By way of abundant caution we place on record that the finding on various questions of law recorded by us in this judgment are for the purpose of holding that the petitioners have an alternative efficacious remedy available under section 256 of the Act. We do not intend to pre-empt the jurisdiction of the Tribunal to hear and dispose of the petitioner's application under section 256 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yali that under rule 46A, the documents could be placed and taken on record by the appellate authority. For the reasons to be stated, it is nobody's case that the documents were not relevant or material and necessary for rendering the judgment properly. However, for the reasons already noticed above by my learned brother, the documents were not taken on record and the indulgence in this behalf by the appellate authority was declined by being obsessed with extraneous and procedural considerations. In reply to another question, Mr. Syali did not dispute the genuineness of the documents produced. He also conceded that in the penalty proceedings, which have since been initiated, the assessee can bring on record these documents and the authority concerned will look into those and the benefit thereof, if available, would be available to the assessee in his defence of penalty proceedings and that the Assessing Officer will not be bound by the impugned decisions. I may further add that the authorities below have not to forget that the rules of procedure are meant to promote the cause of justice and not vice versa. The procedural rules are the handmaiden of justice which is the mistress ..... X X X X Extracts X X X X X X X X Extracts X X X X
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