2007 (5) TMI 603 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Income-tax Appellate Tribunal acted arbitrarily and illegally.
2. Whether the Tribunal was justified in passing contrary orders for different assessment years.
3. Whether the Tribunal exceeded its jurisdiction.

Summary:

Issue 1: Arbitrary and Illegal Action by Tribunal

The petitioner sought a review of the order dated 1.4.2004, which disposed of the appeal without addressing the framed questions. The assessment for the year 1993-94 included an amount of &8377; 53,82,059 collected as Central Sales Tax but not paid to the State Exchequer. The Assessing Officer included this amount in the petitioner's income, disallowing the deduction u/s 43B of the Income Tax Act. The Commissioner of Income Tax (Appeals) deleted this amount, but the Appellate Tribunal reversed this decision, treating the amount as part of the trading receipt.

Issue 2: Justification of Contrary Orders

The petitioner argued that the Tribunal acted contrary to the High Court's previous judgment for the assessment year 1984-85, where it was held that Section 43B could not be invoked if no deduction was claimed. The petitioner cited similar decisions for subsequent years, which were not considered by the Tribunal. The High Court had previously ruled that the question of unpaid sales tax forming part of the trading receipt was not before it.

Issue 3: Exceeding Jurisdiction

The petitioner contended that the Tribunal exceeded its jurisdiction by addressing issues not arising from the Commissioner's order. The Revenue argued that the amount was part of the trading receipt and taxable, regardless of the deduction claim. The Court acknowledged that it lacked the power of review u/s 260A of the Act but could exercise inherent power to correct fundamental errors.

Judgment

The Court recognized its inherent power to recall orders that overlooked fundamental judicial principles or previous decisions. It noted that the order dated 1.4.2004 overlooked earlier decisions of the Court and addressed a question not before it. Consequently, the Court exercised its inherent power to recall the order dated 1.4.2004, allowing the review application and directing the appeal to be re-heard.