TMI Blog1991 (12) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... follows : One, Messrs. Premier Industries (hereinafter referred to as "the assessee") was assessed to income-tax by the Income-tax Officer, Special Survey Ward, Rourkela, for the assessment year 1980-81. Under the head "Salary and wages", the assessee claimed payment of Rs. 2,26,039. Since the assessee did not respond to letters dated October 14, 1981, October 19, 1981, and October 27, 1981, requiring it to furnish certain details, the Assessing Officer disallowed Rs. 78,500 out of the said claim. The primary ground for such disallowance was that no details were put forth in respect of the payment to temporary workers numbering thirty-four. Since there was no response to the notices requiring to furnish certain particulars, the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereabouts were not known. On these facts, the Commissioner of Income-tax (Appeals) held that the wages paid by the assessee could not at all be accepted as genuine ; but considering the increase in the turnover, the rates of wages, etc., the disallowance was restricted to Rs. 52,000. These conclusions were again reiterated by the Commissioner of Income-tax (Appeals) while dealing with the appeal against levy of penalty under section 271(1)(c). The Commissioner of Income-tax (Appeals) concluded that this was a case of disallowance of expenditure claimed by the assessee, since it was not in a position to produce the workers and/or corroborative evidence in support of the entries in the books of account. But he held that, really speaking, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y evidence was produced before the Assessing Officer, who failed to consider it. No answer was given by the representatives of the assessee. The Tribunal also noticed that the conclusion of the Commissioner of Income-tax (Appeals) that disallowance of expenditure as claimed by the assessee was made on the ground of non-production of workers was erroneous because what was required by the letter dated October 27, 1981, was production of the muster rolls and wage register of the casual labourers to establish its claim. It also noticed certain peculiar features like acceptance of grounds raised for the first time before the Commissioner of Income-tax (Appeals). There was no pleading of increased wages before the Assessing Officer at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and any change proposed would amount to a review. He also pointed out that the reference application of the assessee had been rejected. The Tribunal came to hold that the grounds of appeal before the Commissioner of Income-tax (Appeals) reflected that the ground regarding muster rolls was, taken and there was a mistake apparent from the record. The fact that the addition had been confirmed by the Tribunal in the quantum appeal was considered not to be material because the assessee could agitate the matter again in the penalty appeal. With these conclusions, the order of the Tribunal was recalled and the appeal was directed to be heard afresh. In support of the writ application, Mr. A. K. Ray, learned standing counsel for the Revenue, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. Coming to the question whether, on the facts of the case, the Tribunal was justified even otherwise in recalling its order, much has been made of the Tribunal's observation that documents were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to produce them. These observations clearly reinforce the conclusion that these were not produced by the assessee. At this stage, it would be relevant to refer to ground No. 8 before the Commissioner of Income-tax (Appeals) in the appeal against the order imposing penalty. Much stress has been laid by learned counsel for the assessee on this ground. According to him, this was the crucial ground and the Tribunal took note of it while dealing with the application under section 254(2). Since much emphasis has been laid on this, we quote the relevant portions of this particular ground : "For that in the original assessment the then Income-tax Officer, Special Survey Ward, has also verified the salary register and muster rolls, etc., along wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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