TMI Blog1988 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... alore Bench, made a reference under section 256(1) of the Income-tax Act, 1961, referring the following question of law for the opinion of this court : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the applicant is not entitled to deduction under section 35B in respect of the commission of ₹ 90,851 paid by it to the agents in India ? The said reference was disposed of by this court by order dated July 17, 1986 ( [1988] 174 ITR 623). This court answered the question in the affirmative and against the assessee. Thereafter, the present application has been made invoking the inherent power of this court for reviewing the said order on the ground that the order had resulted in manifest injustice to the assessee and that the order also suffers from a patent error of law. Learned counsel for the Revenue has raised a preliminary objection. He submitted that the prayer made in the application amounts to seeking review of the order made in reference jurisdiction of this court under section 256 of the Income-tax Act, 1961 ( the Act for short), and no such application was maintainable. In support of the above contention, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure Code, and even that provision was inapplicable to a reference under section 256 of the Act. In support of his submission, he relied on a judgment of the Allahabad High Court in Roop Narain Ramchandra (P.) Ltd. v. CIT [1972] 84 ITR 181. The said case arose out of an application made for recalling an order made by the Allahabad High Court returning a reference unanswered on the ground of non-prosecution. An objection was raised by the Revenue to the effect that the application was not maintainable. The Division Bench of the Allahabad High Court held that the court had no inherent power to recall an order made in a reference under section 256 of the Act and the provisions of section 151, Civil Procedure Code, were not applicable. Learned counsel for the applicant submitted that a similar question, viz., as to whether the High Court had the power to restore a reference which it had declined to answer on the ground of non-prosecution and to dispose of the same on merits, in exercise of its inherent power came up for consideration before the Supreme Court in Jaipur Mineral Development Syndicate v. CIT [1977] 106 ITR 653. The facts of the said case were that the assessee who had so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to it because of the absence of the person who meets with an accident. To hold that in such a case the High Court cannot recall the said order and pass an order for the disposal of the reference on merits, even though full facts are brought to the notice of the High Court, would result in obvious miscarriage of justice. It is to meet such situations that courts can exercise, in appropriate cases, its inherent power. In exercising inherent power, the courts cannot override the express provisions of law. Where, however, as in the present case, there is no express or implied prohibition to recalling an earlier order made because of the absence of the party and to directing the disposal of the reference on merits, the courts, in our opinion, should not be loath to exercise such power provided the party concerned approaches the court with due diligence and shows sufficient cause for its non-appearance on the date of hearing. (Underlining by us). As can be seen from the above portion of the judgment, the Supreme Court held that there was nothing in the provisions of the Act which expressly or by necessary implication prevents the High Court from exercising its inherent power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in ignorance of a fact, viz., the existence of a subsequent notification, I passed an invalid order. This order has done a manifest injustice to the State Government and its agents. I am now asked to review and correct it. There is no statutory bar to my doing so ; nevertheless I cannot make the necessary correction unless authorised to do so by some law. The Constitution itself is not such a law, nor are our rules of court. But in passing the order I exercised my civil jurisdiction. Consequently, the proceedings before me must be governed by the Civil Procedure Code. My wrong order can prima facie be reviewed under section 114 and Order XLVII, rule 1, but the majority decision in Abhilakhi v. Sada Nand, ILR 53 All 535 ; AIR 1931 All 244 [FB], stands in the way of my doing so. But although those provisions cannot be called in aid, I have not only the power under section 151 to undo the injustice but I am bound to do so. No doubt the State Government could have sought relief from the court of appeal, nevertheless it is equally entitled to approach me under section 151, and it becomes my duty to do that real and substantial justice for the administration of which alone my court e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by it. From the above pronouncement of the Supreme Court it is clear that whatever be the jurisdiction vested in the High Court, the High Court does not become functus officio if it passes a final order for, being a court of plenary jurisdiction, it has inherent power to prevent miscarriage of justice or to correct grave and palpable errors committed by it and to pass appropriate orders on an application presented to it by an aggreived party. Learned counsel for the Revenue, however, places strong reliance on the judgment of the Supreme Court in CIT v. Bansi Dhar and Sons [1986] 157 ITR 665. The question for consideration before the Supreme Court in the said case was whether the High Court had the power to pass an interim order staying the recovery of tax or grant an order of injunction when a reference made under section 256(1) or 256(2) of the Act was pending before the High Court. The Supreme Court held that the nature of the jurisdiction conferred under section 256 of the Act was purely advisory and, therefore, it had no jurisdiction to grant stay of realisation of tax or to grant injunction. The Supreme Court held that such power was not incidental to the power to answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pably erroneous or has resulted in miscarriage of justice and set aside the order if it is found to be so and to pass a fresh order in accordance with law. Now, coming to the merits of the application, learned counsel for the assessee submitted that the Income-tax Appellate Tribunal had given a factual finding to the effect that a sum of ₹ 90,851 had been paid by the assessee in connection with obtaining information regarding its export business, but had declined to grant weighted deduction on the ground that the payment was made within India and not outside India. The submission was that section 35B of the Act does not require that payment should be made outside, India. He submitted that even if the payment was made within India, as the payment so made was in respect of the commission for securing information regarding markets outside India in connection with its export business, the weighted deduction was admissible. The relevant portion of the judgment in which the contention of the assessee was rejected is at paras 5 and 6 of the order which read (at p. 623 of 174 ITR) : 5. The contention may be good, but we have no sufficient material in the statement of facts mu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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