2019 (1) TMI 1137 - HC - Income Tax

Tribunal power to recall an order passed by it in violation of the principles of natural justice if so established - application of the assessee for recall of an order by which the appeal was decided exparte - Hearing of appeal ex parte for default by the respondent - Held that - The power of procedural review to recall an order is inherent in every authority which exercises quasi judicial jurisdiction. Therefore, even if there is no specific power of review vested in the Tribunal, it has inherent power to consider the application for recall of an order passed by it if it is established that it has been passed in violation of the principles of natural justice or by playing fraud upon it. Rule 25 of the Income Tax (Appellate Tribunal) Rules, 1963 provides for the hearing of the appeal exparte for default of the respondents. It lays down that in an appeal where the appellant appears and the respondents does not appear when the appeal is taken up for hearing, the Tribunal may dispose of the appeal on merits after hearing the appellants. It further provides that where the appeal has been disposed of in the above manner and the respondents appears afterwards and satisfies the Tribunal that there was sufficient cause for his non appearance, the Tribunal shall set aside the order and restore the appeal for hearing on merits. Thus it is implicit that the Tribunal has statutory power to recall its order if it is satisfied that the respondent has failed to appear before it for sufficient cause, at the time of hearing and to restore the appeal. It cannot be said that the Tribunal has no authority of law to consider the application of the assessee for recall of an order by which the appeal was decided exparte. Tribunal is not justified in rejecting the applications of the appellant-assessee on the ground that it has no power to review the order already passed by it. Accordingly, we answer the above question in favour of the appellant-assessee.

Summary

Issues involved:
Appeal against tribunal orders for recall rejection; Violation of principles of natural justice; Tribunal's power to recall orders; Distinction between rectification and review; Tribunal's inherent power for procedural review; Rule 25 of Income Tax (Appellate Tribunal) Rules, 1963; Statutory power of Tribunal to recall orders; Remand for reconsideration of recall applications.

The judgment by the Allahabad High Court involved two appeals arising from a common dispute, both against the tribunal's orders rejecting applications for the recall of an earlier order dated 23.10.2017. The dispute stemmed from appeals filed by the Revenue against the Commissioner of Income Tax (Appeals) orders for assessment years 2005-06 & 2011-12. The appellant contended that their applications for adjournment on personal grounds were not considered before the judgment was delivered, thus violating the principles of natural justice.

The primary issue raised for consideration was whether the Tribunal, despite lacking a specific power of review, could recall an order passed in violation of natural justice. The judgment emphasized the distinction between the power of rectification and substantive review, asserting that the power to recall an order is inherent in authorities exercising quasi-judicial functions. It highlighted Rule 25 of the Income Tax (Appellate Tribunal) Rules, 1963, which allows for the exparte disposal of appeals in case of respondent default, with provisions for setting aside such orders upon sufficient cause shown.

The Court held that the Tribunal possesses statutory authority to recall its orders if satisfied with the respondent's non-appearance for sufficient cause, as per Rule 25. It concluded that the Tribunal's rejection of the appellant's recall applications on the grounds of lacking review power was unjustified. The judgment favored the appellant, asserting the Tribunal's inherent power for procedural review and remanded the matters for reconsideration of the recall applications, correcting the rule citation error from Rule 234-A to Rule 25.

In light of the above, the High Court set aside the impugned orders for the assessment years 2005-06 and 2011-12, remanding the matters to the Tribunal for fresh consideration of the recall applications. The Court directed the Tribunal to also assess any adjournment applications submitted by the appellant before the final order pronouncement. Ultimately, the appeals were allowed with no order as to costs, emphasizing the Tribunal's inherent power for procedural review and the statutory framework under Rule 25 for order recall.