2017 (8) TMI 1454 - HC - Income Tax

Power of ITAT to recall and re-hear the case by way of rectification order u/s 254(2) - Misc. application filed by assessee - Applications were heard on 13th May, 2016, but the Tribunal pronounced the order on these Miscellaneous Applications after six months and more on 18th November, 2016, accepting the error pointed out by the assessee - The result is that the initial order dated 6th September, 2013, is recalled and set aside and all appeals which were decided by the said order would have to be re-heard and re-decided. This petition of the Revenue seeks to challenge such an order. Held that - We are surprised that the initial order is passed on 6th September, 2013. Aggrieved and dissatisfied with that order, the assessee had brought the appeals to this Court. In the meanwhile, they had also filed applications for rectification of the mistakes under section 254(2) of the Income Tax Act, 1961. Those applications were pending and were decided during the course of the appeals. The assessees having succeeded therein, withdrew their substantive appeals before this Court. We have seen a good number of years, namely four years, going by and neither sub-serving the larger interest of the public or the Revenue. In the light of the above, we dismiss these petitions. We clarify that the appeals of the Revenue which stand restored to file of the Tribunal shall be heard as expeditiously as possible and should be disposed of within a period of six months from the date of receipt of a copy of this order. Decided against the revenue.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal under Article 226 of the Constitution of India regarding rectification of mistakes in initial order dated 6th September, 2013.

Analysis:
1. The Revenue challenged the order of the Income Tax Appellate Tribunal dated 18th November, 2016, under Article 226 of the Constitution of India. The Tribunal had before it several Miscellaneous Applications seeking rectification of mistakes in the initial order dated 6th September, 2013, related to Reliance Communications Limited and others.

2. The Tribunal allowed the Miscellaneous Applications, recalling and setting aside the initial order dated 6th September, 2013, leading to the need for re-hearing and re-decision of all appeals decided by the said order. The Revenue contended that the Tribunal exceeded its jurisdiction by re-hearing the appeals on merits instead of correcting only apparent mistakes on the record as per section 254(2) of the Income Tax Act, 1961.

3. The Revenue argued that the Tribunal's order was erroneous, illegal, and beyond jurisdiction as it allowed re-hearing of the appeals on merits under the guise of rectification applications. The Revenue also contended that the applications did not merit approval, and the reliance on the Delhi High Court's judgment by the assessee was misplaced, citing a judgment by the Karnataka High Court for support.

4. The High Court held that the Tribunal's decision to recall the initial order and re-hear the appeals was within its jurisdiction under section 254(2) of the Income Tax Act, 1961. The Court found that the Tribunal's actions did not warrant interference in writ jurisdiction as the objections raised by the Revenue did not go to the root of the case regarding the maintainability of the rectification applications.

5. The Court noted that the Revenue extensively argued the merits of the case during the proceedings before the Tribunal, delving into detailed submissions and justifications. It emphasized that the Tribunal's decision to allow re-hearing of the appeals was a plausible view in the interest of justice to grant the assessee a fair opportunity to contest the appeals fully on merits.

6. The High Court dismissed the petitions challenging the Tribunal's order, emphasizing the need for expeditious disposal of the restored appeals before the Tribunal within six months. It directed that all contentions of the parties should be considered afresh, without being influenced by the previous orders, to ensure a fair and unbiased hearing in subsequent appeals.