2016 (7) TMI 428 - SC - Income Tax

Validity of ex parte order passed by the high court - Availability of jurisdiction under Order XLI rule 21 of the CPC - Held that - Not only the said order dated 27th August, 2013 is not an ex parte order as contemplted by the provisions of the Code of Civil Procedure, 1908, the final order dated 27th August, 2013 passed by the High Court clearly contains findings (extracted above) which is to the contrary. In these circumstances, we are of the view that the High Court did not have the jurisdiction under Order XLI rule 21 CPC to recall the final order dated 27th August, 2013 passed in the Income Tax Appeals. The power available under Order XLI rule 21 is hedged by certain pre-conditions and unless the pre-conditions are satisfied the power thereunder cannot be exercised. We set aside the order of the High Court 2014 (2) TMI 1036 - ALLAHABAD HIGH COURT allow the appeals filed by the Revenue leaving the assessee(s) with the liberty to challenge the final order dated 27th August, 2013 in accordance with law, if he is so advised and so inclined.

Summary

Issues:
Challenge to the order recalling the final order dated 27th August, 2013 passed in Income Tax Appeal Nos.59/2006, 57/2006, 58/2006, 60/2006, 61/2006, and 62/2006 under Section 260A(7) of the Income Tax Act, 1961 read with Order XLI rule 21 of the Code of Civil Procedure, 1908.

Analysis:
The Supreme Court addressed the challenge against the common order dated 21st February, 2014, where the High Court of Allahabad had recalled the final order dated 27th August, 2013 in a group of Income Tax Appeals. The Court noted that the final order of 2013 was not an ex parte order, as the assessee had actively participated in the proceedings. The Court examined the arguments presented during the appeals, emphasizing the validity of the assessee's claims based on legal precedents and factual justifications. The Court highlighted that the High Court lacked jurisdiction under Order XLI rule 21 of the CPC to recall the final order of 2013. The judgment emphasized that the power under this rule is subject to specific pre-conditions, which were not met in this case. Consequently, the Supreme Court set aside the High Court's order of 21st February, 2014, and allowed the appeals filed by the Revenue, granting the assessee(s) the liberty to challenge the final order of 27th August, 2013 if desired.

This case underscores the importance of procedural requirements and jurisdictional limitations in the context of recalling final orders in legal proceedings. The judgment clarifies the significance of active participation in hearings and adherence to legal standards when challenging previous decisions. It also highlights the need for courts to operate within the bounds of their prescribed powers and follow established procedures to ensure fair and just outcomes in legal matters.