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2020 (12) TMI 260 - AT - Income TaxRectification u/s 254 - Assessment proceedings u/s 158BC - jurisdiction questioned by the assessee with reference to Section 158BD - period of limitation - adjudication of grounds remaining undecided at the time of disposal of the substantive appeal - HELD THAT - Admittedly, limitation period when reckoned from the date of Tribunal order stands time barred. The assessee, however, insists that starting point of limitation for the purpose of rectification of Tribunal order should be reckoned from the date when a bonafide cause of action arose non- disposal of grounds of substantial nature regardless of the date of order of the Tribunal. Facts of case confronts a peculiar and rare situation indeed. In the instant case, the doctrine of merger of the order of ITAT with that of Hon ble High Court would apply only to the extent, the subject matter of the order of ITAT and that of Hon ble High Court is the same. The order of ITAT in respect of legal point thus stands merged with the appellate order of the Hon ble High Court passed under S. 260A and as a consequence, no rectification of the existing order of the Tribunal rendered only on point of jurisdiction is permissible. However, the doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject matter of challenge as extensively dealt with by Hon ble Supreme Court in the case of Kunhayammed vs. State of Kerala 2000 (7) TMI 67 - SUPREME COURT - Thus, doctrine of merger would not extend to issues on merits remaining undecided by the Tribunal or by the Hon ble High Court. There appears to be no bar exercising its inherent and statutory powers of Tribunal in revisiting its earlier action with a limited purpose of adjudication of grounds which remained undecided. In the instant case, it is the Tribunal which has committed error in restricting itself to legal ground and in not addressing itself on certain other grounds of substantial nature without any fault attributable to the assessee. In such a situation, the cause of substantial justice deserves to be preferred over the technical considerations pitted against it by way of limitation, to shun an apparent miscarriage of justice. Rectification application in the instant case has been filed promptly with reference to the judgment of Hon ble Gujarat High Court and thus there can be no presumption that delay is occasioned deliberately in the instant case. No culpable neglizance or malafide can be presumed in the peculiar facts. It is an admitted position that mistake is apparent and has been committed by the Tribunal. It is manifest that the denial to rectify the own mistake of ITAT on the grounds of limitation would cause grave miscarriage of justice. Thus, befittingly, it is the obligation of the Tribunal to set right the injustice by recalling earlier order with a view to pass order on remaining points. Remedy sought by the assessee can not be frustrated on the grounds of bar of limitation without weighing the circumstances of the case. An incomplete order wholly attributable to the Tribunal itself should not ordinarily cause miscarriage of justice. Fair play is one of the most essential facets of any judicial process. When the principles laid down by Hon ble Supreme Court in S. Nagraj 1993 (8) TMI 292 - SUPREME COURT and other precedents are applied, in our thoughtful consideration, the obligation is cast upon the Tribunal to set right and remove the error of an incomplete disposal in conformity with judicial functions endowed upon it. The Tribunal, in our view, is competent to do so. Miscellaneous application of the assessee is allowed and the order of the Tribunal is recalled for the limited purpose of adjudication of grounds remaining undecided at the time of disposal of the substantive appeal.
Issues Involved:
1. Validity of the Tribunal's earlier order under Section 254(2) of the Income Tax Act. 2. The impact of the High Court and Supreme Court judgments on the Tribunal's decision. 3. The Tribunal's power to rectify its own mistakes and the applicability of the limitation period. 4. The inherent powers of the Tribunal to provide justice beyond statutory limitations. Issue-wise Detailed Analysis: 1. Validity of the Tribunal's Earlier Order under Section 254(2) of the Income Tax Act: The assessee filed a Miscellaneous Application (MA) under Section 254(2) on 19.07.2017, seeking recall of the Tribunal's earlier order dated 15.05.2009. The Tribunal had annulled the block assessment based on jurisdictional grounds under Section 158BD, leaving the merits of the additions un-adjudicated. The Tribunal stated, "Since, we have already annulled the assessment, therefore, the adjudication of other grounds taken by the assessee will be merely academic and accordingly do not proceed with other grounds." 2. Impact of the High Court and Supreme Court Judgments: The Revenue challenged the Tribunal's decision, and the Gujarat High Court reversed the Tribunal's order on 27.02.2017, validating the jurisdiction of the revenue authorities. The Supreme Court dismissed the Special Leave Petition (SLP) filed by the assessee on 14.07.2017. Consequently, the Tribunal's annulment of the block assessment was overturned, and the legitimacy of the block assessment was restored. 3. Tribunal's Power to Rectify Its Own Mistakes and Applicability of the Limitation Period: The assessee argued that the MA was filed within six months from the date of the High Court judgment, despite being beyond the four-year limitation period from the Tribunal's original order. The Tribunal considered whether it could condone the delay in such peculiar circumstances where the Tribunal itself had omitted to adjudicate on substantive grounds. The Tribunal referenced the Supreme Court's decision in S. Nagraj vs. State of Karnataka, emphasizing that "justice is a virtue which transcends all barriers" and that "the Tribunal should not allow the assessee to suffer for the mistake committed by the Tribunal." 4. Inherent Powers of the Tribunal to Provide Justice Beyond Statutory Limitations: The Tribunal acknowledged its inherent power to rectify mistakes and emphasized that the "denial to rectify the own mistake of ITAT on the grounds of limitation would cause grave miscarriage of justice." The Tribunal cited various judicial precedents, including the Supreme Court's decision in Honda Siel Power Products Ltd. vs. CIT, which stated that "no party appearing before the Tribunal should suffer on account of any mistake committed by the Tribunal." The Tribunal also noted that the "powers conferred by Section 254 of the Act on the Appellate Tribunal for disposal of appeals before it is of widest possible amplitude." Conclusion: The Tribunal concluded that the MA filed by the assessee could not be deemed time-barred due to the peculiar circumstances and inherent powers of the Tribunal to ensure justice. The Tribunal allowed the MA and recalled its earlier order for the limited purpose of adjudicating the grounds that remained undecided. The Tribunal emphasized that "an incomplete order wholly attributable to the Tribunal itself should not ordinarily cause miscarriage of justice." Order Pronounced: The Tribunal allowed the miscellaneous application of the assessee and recalled the order in IT(SS)A No. 18/Ahd/2000 for adjudication of the undecided grounds. The registry was directed to list the date of hearing on 17/12/2020, with no separate intimation required to the parties. The order was pronounced in open court on 02/12/2020.
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