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TMI Blog2009 (5) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... -block period April 1, 1988, to March 23, 1999, to be heard by the Income-tax Appellate Tribunal, Mumbai Bench, Mumbai, in terms of order dated April 4, 2005, (Annexure 3) of the President, Income-tax Appellate Tribunal, Mumbai (respondent No. 4). 2. The basic issue raised herein is as to whether, on the facts and in the circumstances of the case, the Tribunal has erred in law and in facts in recalling its final order passed under section 254(1) with a view to rectify the same in exercise of powers under section 254(2) of the Act. 3. Shorn of all details, only the relevant facts necessary for purposes of the issue raised herein are summarised. It appears that on January 21, 1999, the Revenue initially conducted a search operation under section 132 of the Act at the office and residential premises of one Shri Mayur M. Thakkar of Mumbai wherein certain cash and documents were seized and in the course of search of his bank accounts, the name of the petitioner-company (M/s. Apex Metchem P. Ltd., 193A, Industrial Area, Jhotwara, Jaipur) was found having debit and credit statements. Proceedings for the block period (April 1, 1988, to March 23, 1999) were initiated against M. Thakkar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suo motu issued a show-cause notice to the parties as to why the order dated March 29, 2006, (Annexure 1) be not recalled under section 254(2) of the Act and to get the matters heard and decided by the Mumbai Bench, Mumbai, as per the orders of the President, Income-tax Appellate Tribunal, Mumbai, dated April 4, 2005, (Annexure 3). After the show-cause notice (supra) was sewed, the petitioner-company and the Revenue both appeared where the petitioner raised several objections including authority of the Income-tax Appellate Tribunal to question the final order passed under section 254(1) and also tried to c1ari that reasons referred to in the show-cause notice issued, vide order dated December 15, 2007, (Annexure 2) with respect to appeal being transferred from Jaipur to Mumbai Bench were not related to appeals having been decided by the Income-tax Appellate Tribunal, Jaipur Bench, vide the final order dated March 29, 2006, (Annexure 1) ; as such reasons assigned in the notice (Annexure 2) were not legally sustainable. 8. However, the Income-tax Appellate Tribunal, Jaipur, vide the order impugned dated March 31, 2008 (Annexure 4) recalled its final order dated March 29, 2006, (An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also been averred that counsel for the petitioner was relative of one of the members of the Income-tax Appellate Tribunal, Jaipur Bench, and the original order (Annexure 1) was obtained by the petitioner; and when it came to the notice of the Mumbai Bench, Mumbai, the petitioner made an attempt to withdraw the appeal which was transferred to the Income-tax Appellate Tribunal, Mumbai Bench, vide the order of the President, Income-tax Appellate Tribunal, Mumbai, dated April 4, 2005, (Annexure 3). 11. At the same time, the assessing authority (respondents Nos. 2 and 3) ii have also filed their separate reply raising self-same preliminary objection about availability of remedy of appeal under section 260A of the Act against order impugned but nothing substantial has been averred by them in their reply. 12. It is relevant to mention that after passing of the order impugned, recalling final order dated March 29, 2006, (Annexure 1) passed in exercise of powers under section 254(2) of the Act, the President, Income-tax Appellate Tribunal, Mumbai, has passed a further order dated August 20, 2008, in pursuance of rule 4 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the President in exercise of powers under rule 4 of the Income-tax (Appellate Tribunal) Rules, 1963. 17. At the same time, the assessment order was passed by the assessing authority in the case of the petitioner at Jaipur under section 158BD of the Act on July 30, 2004, and the appeal preferred before the Commissioner of Income-tax (Appeals) was decided on December 14, 2004; and since both the parties were aggrieved, cross-appeals (IT(SS) A-105/JP/04 of the petitioner-company and IT(SS) A No. 35/Jp/05 of the Revenue) were filed before the Income-tax Appellate Tribunal, Jaipur Bench, and were decided vide common order dated March 29, 2006, (Annexure 1). 18. It is relevant to mention that the order dated April 4, 2005, (Ann.3) passed by the President in exercise of rule 4 of the Income-tax (Appellate Tribunal) Rules, 1963, transferring the appeal of the petitioner to Mumbai Bench was confined to appeal (lT(SS)A No. 97/JpIO4) which indeed was transferred to Mumbai Bench; and consolidated to appeal (No.553/M103) preferred by Mayur M.Thakkar and was pending before the Income-tax Appellate Tribunal, Mumbai Bench; at the same lime after cross appeals were decided by the Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication for hearing if it prima facie appears to be a petition for review. (4) An order disposing of an application, under sub-rule (3), shall be in writing giving reasons in support of its decision." 23. In the instant case, the Tribunal suo motu issued notice to the parties purporting in exercise of powers under section 254(2) and recalled its final order passed under section 254(1) of the Act on the premise that there was a mistake apparent from the record in order dated March 29, 2006, (Annexure 1). 24. The question arises as to whether on the facts, the Tribunal was justified, vide the order impugned dated March 31, 2008 (Annexure 4) to recall its final order passed under section 254(1) for reconsideration. In other words, the question is as to whether the Tribunal committed an error of law in recalling its final order, which was appealable under section 260A of the Act, despite there being limited scope to rectify/amend the order only in case of mistake apparent from the record. 25. A bare perusal of section 254(2) of the Act shows that the section gives power to rectify any mistake apparent from the record; and to amend any order passed by it and to make such amendment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncillary powers which can be exercised by it. But such power cannot be invoked to rehear a case on the merits. The Tribunal can, after disposing of the appeal under section 254(1), rehear the matter on the merits only within the purview of section 254(2). The Supreme Court has held in Patel Narshi Thakershi v. Pradyuman-singhji 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 the 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 corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any mistake committed by the Tribunal. This fundamental principle has nothing to do with the inherent powers of the Tribunal. In the present case, the Tribunal in its order dated September 10, 2003, allowing the rectification application has given a finding that Samtel Color Ltd. was cited before it by the assessee but through oversight it had missed out the said judgment while dismissing the appeal filed by the assessee on the question of admissibility /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. (emphasis added) 33. From the judgments cited (supra), it is clear that the Tribunal is vested with powers to rectify mistake apparent from the record suo moto or at the behest of either party to dispute; and if there is a mistake apparent from the record, the Tribunal is bound to carry out the amendment in the original order to correct particular mistake as is evident from a latter portion of the proviso, as per which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal (Annexure 4), the President, Income-tax Appellate Tribunal, Mumbai, also issued an order dated August 20, 2008, in pursuance of rule 4 of the Income-tax (Appellate Tribunal) Rules, 1963, transferring both the appeals (supra) which were decided by the Tribunal, Jaipur Bench, to be consolidated and heard by the Mumbai Bench. Since there was no prior order of consolidation of two appeals being passed by the President under rule 4 of the Income-tax (Appellate Tribunal) Rules, certainly there cannot be said to be any mistake apparent from the record while deciding the two appeals, vide order (Annexure 1) in exercise of powers under section 254(1) of the Act. 37. The objection raised by the respondents that the petitioners have an alternative remedy of appeal under section 260A of the Act in the facts of the instant case is of no substance for the reason that the appeal lies against the order passed under section 254(1) of the Act and any amendment made later on by the Tribunal under section 254(2) certainly merged into final order passed which is certainly appealable under section 260A. If final order under section 254(1) of the Act is recalled and the matter is to be re-heard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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