2015 (10) TMI 14 - AT - Income Tax

Recall the orders after expiry of four years by tribunal either on its own or on the application filed by the Revenue - Held that - Tribunal on its own passed an order after referring to the latter judgment of the Apex Court in Electronics Corporation of India Ltd. 2011 (2) TMI 3 - Supreme Court recalling its earlier order and restored the appeals on file. We find from the records that the Revenue filed applications on 15.1.2013 praying for the recall of the Tribunal orders on the ground that COD clearance is no longer required in view of the judgment of the Apex Court in M/s Electronics Corporation of India vs UOI. After receiving the applications from the Revenue the same was not numbered and even taken on file. The Tribunal suddenly passed an order dated 18.4.2013 recalling all the earlier orders on its own. The immediate provocation of the Tribunal may be the applications filed by the Revenue to recall its earlier orders. Whatever may be the reason, four years period as provided u/s 254(2) for rectification has expired even on the date of filing of applications by the Revenue. In all fairness, this Tribunal ought to have issued notice to the assessee after taking the applications filed by the Revenue on record. It is unfortunate that the Tribunal has not issued any notice and suddenly passed the order. This Tribunal is of the considered opinion that when the applications filed by the Revenue were not taken on file and the Tribunal has passed the order suo motu, it cannot be considered to be a second miscellaneous petition. For all practical purposes, this is the first application filed by the assessee, therefore, the judgment of the Madras High Court in Panchu Arunachalam (supra) is not applicable to the facts of the case. Since the order was passed ex-parte without hearing either the assessee or the Revenue, this Tribunal is of the considered opinion that proviso to Rule 24 and proviso to Rule 25 of the Income Tax (Appellate Tribunal) Rules, 1963 would come into operation. One may say that Rules 24 and 25 are applicable only to appeals and not to the miscellaneous petitions, the fact remains that the order was passed by the Tribunal suo motu recalling its earlier orders therefore, for all practical purposes the order is passed without giving any opportunity to the assessee. Therefore, this Tribunal is of the considered opinion that there is gross violation of principles of natural justice. Therefore, in exercise of the powers of this Tribunal under proviso to Rule 24 and proviso to Rule 25 of Income Tax (Appellate Tribunal) Rules, the order of this Tribunal dated 18.4.2013 is recalled and the orders of this Tribunal dated 20.8.2007 and 21.1.2008 are restored. - Decided in favour of assessee.

Summary

Issues:
1. Tribunal's power to recall orders after four years.
2. Violation of principles of natural justice in recalling orders without notice.

Issue 1: Tribunal's power to recall orders after four years:
The assessee filed petitions seeking to recall the Tribunal's order dated 18.4.2013. The representative argued that the Tribunal lacked the authority to recall orders after four years without the Revenue's application and without giving the assessee an opportunity. Citing various judgments, the representative contended that once the COD approval was denied, the order could not be recalled. The Tribunal recalled its orders based on the Apex Court's judgment that COD clearance was not necessary for appeals. The Tribunal's decision to recall the orders after four years without notice was challenged, asserting that the principles of natural justice were violated. The Tribunal found that the applications filed by the Revenue were not numbered or taken on record before the order was passed, indicating a lack of due process. Despite arguments from the Revenue representative, the Tribunal held that the order was passed without giving the assessee a chance to be heard, leading to a violation of natural justice. Therefore, the Tribunal recalled its earlier orders and restored them.

Issue 2: Violation of principles of natural justice in recalling orders without notice:
The Tribunal's decision to recall its orders without issuing notice to the assessee was a key point of contention. The representative for the Revenue argued that the Tribunal's action was justified based on the subsequent Apex Court judgment regarding COD clearance. However, the Tribunal acknowledged that it should have issued notice to the assessee before passing the order. The Tribunal noted that the applications filed by the Revenue were not formally processed before the order was issued, indicating a lack of procedural fairness. Despite the Revenue's arguments, the Tribunal emphasized the importance of adhering to principles of natural justice. The Tribunal invoked Rule 24 and Rule 25 of the Income Tax (Appellate Tribunal) Rules, 1963, to rectify the situation and recalled its earlier orders, emphasizing the need for fairness and due process. The Tribunal concluded that the order was passed without affording the necessary opportunity to the parties involved, resulting in a violation of natural justice principles.

In conclusion, the Tribunal's judgment in this case addressed the issues surrounding its power to recall orders after an extended period and the importance of upholding principles of natural justice in legal proceedings. The decision highlighted the need for procedural fairness and adherence to rules governing such matters, ultimately leading to the recall of the Tribunal's earlier orders.