2023 (3) TMI 672 - HC - Income Tax

Rectification of mistake u/s 254 - Ex-parte order - assessee had asserted that it had not received notice of the date when the concerned appeals were fixed for hearing - Tribunal went on to hold that it was a well-settled principle of law that opportunity of hearing should be accorded to the disputants and that no disputant should be condemned unheard. Accordingly, the Tribunal, in the interest of justice, recalled its ex parte order which had been passed on merits - HELD THAT - As noted hereinabove, there was certainly a mistake in recording the appearances in the matter. Besides this, even if, for the moment, we were to agree with Mr Kumar that the order could not have been recalled by the Tribunal by taking recourse to Section 254(2) of the Act, we are, certainly, of the view that this was an incidental and ancillary power available to the Tribunal. See Income Tax Officer, Cannanore v M.K. Mohammed Kunhi AIR 1968 (9) TMI 5 - SUPREME COURT Under Section 254(2) of the Act, the Tribunal has the power to rectify an error which emanated from a mistake committed by it. The mistake can arise from an act of omission or commission. In this case, the Tribunal failed to notice that the respondent/assessee did not have information concerning the date fixed for hearing in the appeal. Given this position, contrary to what Mr Sanjay Kumar has contended, the Tribunal could have corrected its mistake, to do right by the party who was inadvertently wronged. See Honda Siel Power Products Ltd. 2007 (11) TMI 8 - SUPREME COURT As is evident from the discussion above, sufficient cause having been provided, the Tribunal felt impelled to recall its order dated 26.10.2018. It is more than well-established that even if a judicial or a quasi-judicial authority does not refer to the source of its power in support of its action, as long as the power is otherwise available, no fault can be found with the exercise of the power. This is one such instance. We find no merit in the above-captioned appeals. The appeals are, accordingly, dismissed.

Summary

Issues:
1. Condonation of delay in re-filing appeals.
2. Tribunal's authority to recall an order passed on merits.
3. Interpretation of Section 254(2) of the Income Tax Act, 1961.
4. Application of Rule 25 of the Income Tax Appellate Tribunal Rules, 1963.

Condonation of Delay:
The appellant/revenue sought condonation of a 100-day delay in re-filing appeals. The delay was acknowledged, and based on reasons provided, the delay was condoned by the court. The applications were disposed of accordingly.

Tribunal's Authority to Recall Order:
The appeals were against an order passed by the Income Tax Appellate Tribunal (Tribunal) concerning two different assessment years. The appellant/revenue contested the Tribunal's decision to recall its earlier order passed on merits. The Tribunal recalled the order as the respondent/assessee claimed non-receipt of the hearing notice, supported by an affidavit. The Tribunal held that no material was presented to refute the respondent's claim, emphasizing the principle of providing an opportunity of hearing to both parties. The Tribunal's decision to recall the order was deemed justified in the interest of justice.

Interpretation of Section 254(2):
The court analyzed Section 254(2) of the Income Tax Act, 1961, which empowers the Tribunal to rectify errors arising from mistakes committed. The court highlighted that the Tribunal's power to rectify such errors is incidental and ancillary. It was emphasized that the Tribunal acted within its authority to correct the mistake and ensure justice for the party wronged inadvertently. The court also referred to a previous judgment to support this interpretation.

Application of Rule 25 of 1963 Rules:
The court discussed Rule 25 of the Income Tax Appellate Tribunal Rules, 1963, which allows the Tribunal to recall orders in situations where the respondent fails to appear, subject to sufficient cause being provided later. The court noted that the Tribunal, having found sufficient cause, appropriately recalled its ex parte order. The court emphasized that as long as the power is available, the Tribunal's exercise of such power is valid, even if the specific legal provision is not explicitly cited.

In conclusion, the court dismissed the appeals, finding no merit in the appellant's arguments. The judgment underscored the importance of rectifying mistakes to prevent prejudice to any party appearing before the Tribunal and upheld the principle of providing a fair hearing to all disputants.