1996 (3) TMI 55 - HC - Income Tax

Summary

Issues:
- Application under section 256(2) of the Income-tax Act, 1961 seeking direction to the Income-tax Appellate Tribunal.
- Questions of law arising out of the Tribunal's common order dated November 30, 1990.
- Power of the Tribunal to review its own order.
- Justification of invoking section 254(2) by the Tribunal.
- Perversity of the Tribunal's order.

Analysis:
The judgment pertains to an application under section 256(2) of the Income-tax Act, 1961, where the Department sought a direction to the Income-tax Appellate Tribunal to refer questions of law arising from its order dated November 30, 1990. The Tribunal had recalled its earlier order based on factual errors. The Department questioned the Tribunal's power to review its own order and the justification of invoking section 254(2) without any apparent mistake. The Tribunal had allowed rectification applications and directed a rehearing of the appeals. The Department moved a reference application under section 256(1) which was rejected by the Tribunal, leading to the present application before the High Court.

The assessment year in question was 1977-78, where the income of the assessee was initially returned at Rs. 1,130 but finally assessed at Rs. 74,484, resulting in a penalty imposition due to default under section 271(1)(c). The Tribunal, in its order dated September 4, 1990, confirmed the penalty after considering various appeals and applications for rectification under section 254(2). The Tribunal, in its subsequent order dated November 30, 1990, recalled its earlier decision citing factual errors and directed a fresh hearing of the appeals.

The High Court, after hearing the Department's counsel, concluded that the Tribunal's decision to recall its order was based on factual appreciation and did not raise any referable question of law. The Court noted that no adverse final order was passed against the Department, as the Tribunal only directed a rehearing of the appeals. The order imposing the penalty still stood, allowing the Department to support it before the Tribunal and seek further recourse if necessary. Therefore, the High Court dismissed the application, emphasizing that no referable question of law arose from the Tribunal's decision.

In summary, the High Court's judgment focused on the Tribunal's authority to review its order, the justification for invoking specific sections, and the absence of any perversity in the Tribunal's decision. The Court upheld the Tribunal's action of recalling its order based on factual errors and clarified that no referable question of law arose from the Tribunal's decision, ultimately dismissing the Department's application.