1989 (8) TMI 43 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Tribunal considered all material facts in its order.
2. Whether there was a mistake apparent from the record in the Tribunal's order.
3. Whether the Tribunal failed to consider specific material facts.
4. Whether the Tribunal was correct in recalling its order u/s 254(2).
5. Whether the Tribunal had recourse to u/s 254(2) in recalling its order.

Summary:

Issue 1: Consideration of Material Facts
The court examined whether the Income-tax Appellate Tribunal (ITAT) correctly held that the material facts pointed out by the assessee in his miscellaneous application were not considered by the Tribunal. The ITAT had initially concluded that the property in question belonged to the respondent and not his wife, which was later contested by the assessee.

Issue 2: Mistake Apparent from the Record
The court evaluated if the ITAT was correct in holding that there was a mistake in its order dated June 27, 1985. The Tribunal had accepted an application u/s 254(2) stating that a mistake had been committed and recalled its earlier order.

Issue 3: Failure to Consider Specific Facts
The court reviewed whether the ITAT failed to consider the repayment of a loan by Smt. Prem Lata Bhatia and the income-tax and wealth-tax returns filed by her. The Tribunal had initially found that these facts were considered in their order dated June 27, 1985.

Issue 4: Recalling the Order u/s 254(2)
The court deliberated on whether the ITAT was correct in recalling its order dated June 27, 1985, u/s 254(2) of the Income-tax Act, 1961. The Tribunal had noted a mistake in its order and recalled it, which was contested by the petitioner.

Issue 5: Recourse to u/s 254(2)
The court assessed whether the ITAT had the authority to recall its own order u/s 254(2). The Tribunal had exercised its jurisdiction under this section, which was challenged by the petitioner.

Preliminary Objection:
A preliminary objection was raised that the order dated January 30, 1986, was not passed under the provisions of the Act, and therefore, an application u/s 256 was not maintainable. The court found no merit in this contention, stating that the Tribunal had exercised its jurisdiction u/s 254.

Legal Precedents:
The court referred to various decisions, including Mangat Ram Kuthiala v. CIT, CIT v. Arunachalam Chettiar, and others, to determine the scope of the Tribunal's powers. It concluded that the Tribunal, being a creation of the statute, has no inherent power to review its order on merits but can exercise incidental or ancillary powers.

Conclusion:
The court directed the Tribunal to state the case and refer the following questions of law:
1. Whether the ITAT was correct in law and on facts in holding that there was a mistake in its order dated June 27, 1985.
2. Whether the ITAT was correct in law and on facts in having recourse to u/s 254(2) in recalling its own order dated June 27, 1985.

The petition was disposed of with no order as to costs.