2014 (11) TMI 147 - HC - Income Tax

Scope of term Power to review - Whether the Tribunal erred in law in granting the CIT (A) the power of review when none is provided by the legislature Held that - The Tribunal was justified in holding that the CIT (A) who had dismissed the appeal for want of prosecution had inherent powers ex debito justitiae to recall that order and restore the appeal for hearing on merits - This is not equivalent to the power of review - The CIT (A) has not exercised the power of review but has only exercised the inherent power in the interests of justice of restoring the appeal which had been dismissed for want of prosecution - That order of restoration was not contrary to law and the CIT (A) was, hence, found by the Tribunal to have erred in subsequently recalling his order of restoration thus, no substantial question of law arises for consideration Decided against revenue.

Summary

Issues:
1. Whether the ITAT erred in granting the CIT (A) the power of review?
2. Whether the CIT (A) had the power to recall his own order?

Analysis:
1. The appeal under Section 260-A of the Income Tax Act, 1961 was against an order of the Income Tax Appellate Tribunal dated 21 March 2014 for the assessment year 2003-04. The main question raised was whether the ITAT erred in granting the CIT (A) the power of review, which is not explicitly provided by the legislature. The CIT (A) had dismissed the appeal initially due to the assessee's non-appearance, but later recalled the order for a fresh decision. The Tribunal held that the CIT (A) had the inherent power to recall the order for the sake of justice and to hear the appeal on merits, ensuring the principles of natural justice were followed.

2. The CIT (A) recalled his earlier order dismissing the appeal based on the assessee's reasons for non-compliance, such as the absence of the CIT (A) on hearing dates. Subsequently, the CIT (A) intimated that the order recalling the dismissal was contrary to law, relying on a Tribunal decision. The Tribunal, however, found that the CIT (A) had the power to adjudicate and recall the order without prejudicing the Revenue, ensuring a fair hearing for the assessee. The Tribunal emphasized the importance of the right to be heard and concluded that the CIT (A) acted within his inherent powers, not exceeding the scope of review. The Tribunal allowed the appeal, stating that both sides would be heard before any final decision.

In conclusion, the High Court dismissed the appeal, finding no substantial questions of law. The Court agreed with the Tribunal's decision that the CIT (A) had the inherent power to recall the order and restore the appeal for a fair hearing on merits. The Court drew parallels with a Supreme Court case to support the view that tribunals have ancillary powers to ensure justice. The judgment emphasized that the CIT (A) did not exercise a power of review but acted in the interest of justice by restoring the appeal, thereby upholding the principles of natural justice.