2013 (10) TMI 309 - HC - Income Tax

Power of tribunal to rectify its order and to recall it Held that - Tribunal proceeded to decide certain issues on merits without giving full opportunity to the aggrieved party to make submissions thereon, the order did certainly suffer from an error apparent on the record - Tribunal, therefore, committed no error in exercising power of rectification - By recalling the said order, the Tribunal cannot seem to have recalled its earlier conclusions Reliance has been placed upon the judgment in the case of 2011 (3) TMI 706 - Gujarat High Court - Decided against the Revenue.

Issues:
Challenge to validity of search proceedings, Tribunal's power to examine search proceedings, Tribunal's consideration of additions on merits, Rectification of Tribunal's order, Tribunal's decision to recall its order, Impression regarding arguments on merits, Tribunal's recollection of oral hearing, Merits of the petition challenging Tribunal's order recall.

1. Challenge to Validity of Search Proceedings:
The petitioner-revenue challenged an order passed by the Income Tax Appellate Tribunal (Tribunal) regarding the validity of search proceedings. The revenue contended that the Tribunal should not have examined the validity of the search proceedings based on a previous court decision. However, the respondent-assessee argued that the Tribunal was not inhibited from examining the validity of the search proceedings. The Tribunal ruled in favor of the respondent and proceeded to consider various issues raised by the assessee regarding additions retained by the CIT(Appeals.

2. Tribunal's Power to Examine Search Proceedings and Consideration of Additions on Merits:
The Tribunal, in a detailed judgment, ruled in favor of the respondent regarding the examination of the validity of the search proceedings. Subsequently, the Tribunal also considered and gave final findings on the various issues raised by the assessee regarding additions retained by the CIT(Appeals. The respondent-assessee then moved a civil application for rectification of the Tribunal's order, stating that only the validity of the search proceedings was discussed during oral submissions, and the Tribunal would not consider the issues of additions on merits.

3. Rectification of Tribunal's Order and Decision to Recall:
The Tribunal, in the impugned order, accepted the assessee's stand that the case was not argued on merits during the previous hearing. The Tribunal recalled its earlier order for hearing the case afresh, acknowledging that the assessee was prevented from arguing the case on merits. The Tribunal's decision to recall the order was based on the fact that the bench had passed the order on merits without considering the full arguments presented by the parties.

4. Impression Regarding Arguments on Merits and Tribunal's Recollection:
Upon reviewing the original order passed by the Tribunal, it was noted that no arguments on merits were made beyond the question of the applicability of a specific court decision. The Tribunal's recollection of the oral hearing supported the assessee's claim that arguments on merits were not fully presented. The counsel for the revenue provided a communication indicating a lack of memory regarding the arguments made on merits during the proceedings.

5. Merits of the Petition and Tribunal's Decision:
The High Court found no merit in the petition challenging the Tribunal's decision to recall its order. The Court held that the Tribunal had the authority to rectify its order, especially when certain issues were decided on merits without giving the aggrieved party a full opportunity to present submissions. The Court clarified that the recall of the order did not affect the earlier conclusions and expressed no opinion on the applicability of the court decision in question.

In conclusion, the High Court upheld the Tribunal's decision to recall the order for a fresh hearing, emphasizing the importance of allowing both parties a fair opportunity to present arguments on merits without any hindrance.

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