2012 (3) TMI 603 - AT - Income Tax

Summary

Issues Involved:
1. Whether the Tribunal should recall its ex parte order dated 8th October 2010.
2. The applicability of Rule 25 and Section 254(2) of the IT Act, 1961.
3. The principles of natural justice and the necessity to hear both parties.

Summary:

Issue 1: Recall of Ex Parte Order

The assessee filed a miscellaneous application for the recall of the Tribunal's ex parte order dated 8th October 2010, citing a bona fide mistake in noting the hearing date. The Tribunal found substance in the assessee's argument, supported by an affidavit and diary entries, and decided to recall the order to give the assessee an opportunity for a hearing. The Tribunal directed the Registry to fix a new hearing date and inform the parties.

Issue 2: Applicability of Rule 25 and Section 254(2)

The Accountant Member (AM) disagreed with the Judicial Member (JM), arguing that the application should be considered under Section 254(2) of the IT Act, which allows rectification of mistakes apparent from the record. The AM emphasized that the Tribunal's power under Section 254(2) is limited and does not extend to reviewing its order. However, the Third Member (TM) concluded that the application was under Rule 25 of the ITAT Rules, 1963, which allows the Tribunal to recall an ex parte order if the respondent shows sufficient cause for non-appearance. The TM found the assessee's explanation credible and justified recalling the order.

Issue 3: Principles of Natural Justice

The AM contended that the Tribunal need not hear the respondent if no new evidence or arguments are presented by the appellant. The TM disagreed, stating that hearing both parties is fundamental to natural justice. The TM clarified that Rule 23 of the ITAT Rules, 1963, does not negate the necessity of hearing the respondent unless the Tribunal decides to dismiss the appeal outright. Since the Tribunal set aside the CIT(A)'s order, effectively deciding against the assessee, the respondent should have been heard.

Conclusion:

The Third Member resolved the difference in favor of recalling the ex parte order dated 8th October 2010, thereby upholding the principles of natural justice and the proper application of Rule 25 of the ITAT Rules, 1963.

Reference:

REFERENCE UNDER S. 255(4) OF THE IT ACT, 1961

28th Sept., 2011

"Whether on facts and in the circumstances of the case, it will be appropriate in law to recall order dt. 8th Oct., 2010 passed in ITA No. 1063/Del/2010."

2. Hon'ble President is requested to refer the above point of difference to be decided by one or more of the other Members of the Tribunal as per provisions of s. 255(4) of IT Act, 1961.