1989 (5) TMI 108 - AT - Income Tax

Issues Involved:
1. Whether the order passed by the Tribunal without giving an opportunity of personal hearing to the assessee is non est in law.
2. Whether the principles of natural justice were violated by the Tribunal.
3. Interpretation of Section 254(2) of the Income-tax Act concerning the requirement of personal hearing.

Issue-wise Detailed Analysis:

1. Whether the order passed by the Tribunal without giving an opportunity of personal hearing to the assessee is non est in law:

The assessee moved an application dated 20-3-1989, praying that the order dated 1-3-1989 be recalled because it was passed without giving an opportunity of hearing to the assessee petitioner. The Tribunal examined whether the order deciding the miscellaneous application under sec. 254(2) of the Income-tax Act without giving an opportunity of personal hearing is non est in law. The Tribunal referred to the Delhi High Court's decision in Amrit Narain, where it was held that an order passed without giving an opportunity of hearing is violative of principles of natural justice and liable to be quashed.

2. Whether the principles of natural justice were violated by the Tribunal:

The Tribunal analyzed the principles of natural justice, citing various judgments. It noted that rules of natural justice are not embodied rules and vary with the constitution of statutory bodies and the rules prescribed by the Act under which they function (Nagendra Nath Bora v. Commissioner of Hills Division AIR 1958 SC 398). The Tribunal emphasized that fairness shown by the decision-maker suffices, and an unnatural expansion of natural justice without reference to administrative realities can be exasperating (Chairman, Board of Mining Examination v. Ramjee AIR 1977 SC 965). The Tribunal concluded that there is no rule of natural justice that entitles a person to a personal hearing at every stage of the proceedings (F.N. Roy v. Collector of Customs AIR 1957 SC 648) and that natural justice must be inferred from the nature of the Tribunal, the scope of its enquiry, and the statutory rules of procedure (I. Venugopala Reddi v. Amora Venkata Narasimhulu AIR 1962 AP 863).

3. Interpretation of Section 254(2) of the Income-tax Act concerning the requirement of personal hearing:

The Tribunal examined Section 254(2) of the Income-tax Act, which allows the Tribunal to rectify any mistake apparent from the record. It noted that sub-section (2) does not mandate a hearing unless the amendment adversely affects the assessee's financial position. The Tribunal emphasized that the Legislature has excluded personal hearings in applications under sec. 254(2) unless the Tribunal proposes to amend the order in a manner prejudicial to the assessee. The Tribunal referenced the Supreme Court's observation in T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 that a mistake apparent on record must be an obvious and patent mistake. The Tribunal further noted that a written representation suffices for a hearing, as detailed submissions can be made in writing (Natural Justice by G.A. Flick).

Conclusion:

The Tribunal concluded that there is no statutory rule or rule of natural justice entitling an applicant under sec. 254(2) to a personal hearing unless an order prejudicial to the assessee is proposed. The Tribunal held that in the present case, no rule of natural justice had been violated as the assessee had been heard through a detailed written application, which was carefully considered. The Tribunal rejected the assessee's application to recall the order dated 1-3-1989, emphasizing the need to conserve judicial time and avoid giving a second opportunity of hearing that is not warranted by law.

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