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TMI Blog2016 (3) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... been held that this provision has been inserted in the statute by way of abundant caution to give certain right to a person who is aggrieved by an order passed, and if being aggrieved by certain order passed the statute gives a power to the aggrieved person to file an application, a presumption has to be drawn that the statute correspondingly gives a right to that person for an opportunity of hearing with regard to acceptance or otherwise of the application filed by virtue of the right which accrues to the person on account of the statutory provision. In the case of Punjab National Bank & Ors. Vs. Kunj Behari Mishra, [1998 (8) TMI 594 - Supreme Court of India], it has been held by the Supreme Court that even if a statutory rule does not provide for an opportunity of hearing if the order impugned has the effect of affecting the rights of person adversely then the requirement of the principles of natural justice has to be read into the Rules. The requirement of grant of opportunity of hearing or following the principles of natural justice before rejecting an application under section 54(1), has to be read into the rules and in dismissing the application on the grounds as indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been ordered without issuance of notice as is required, the action is unsustainable. He also invited out attention to Section 254(1) of the Income Tax Act and argued that under this provision, also rectification of mistake in the matter of assessment of Income Tax is contemplated and the procedure and the statutory rules for rectification of mistake by the Appellant Tribunal as is contemplated under Section 254(2) is identical to the provisions of Section 54 of the M.P. VAT Act. Shri Nema submits that while interpreting the provisions of Section 254(2) of Income Tax Act. A Full Bench of the Delhi High Court in the case of Smart P. Ltd Vs. Income Tax Appellate Tribunal reported in I.T.R 182 page 384 has held that the principles of natural justice has to be read into the Rules of rectification contemplated under Section 254(2) and if the aforesaid principles is applied in the present case also, the order impugned passed without notice to the petitioner is unsustainable. 4. Shri Deepak Awasthy, Government Advocate for the Revenue submitted that under the Provisions contemplated for rectification i.e. 54(1) 54(2), an application for rectification or a procedure for rectifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer and has allowed a dealer a reasonable opportunity of being heard. The prescribed procedure is contemplated under Rule 65 of the M.P. Vat Rules 1966 and it says that the notice required for rectification under Section 54(1) shall be issued in Form No. - 45. Section 254 of the Income Tax Act also provides for orders to be passed by the Income Tax Appellate Tribunal and Sub-Section II of this Section contemplates a similar provision as is provided for under Section 54 of the Vat Act in the matter of correction and rectification of mistake. Except for the fact that under the Income Tax, the period during which the rectification is permissible is four years from the date of passing of the order whereas in the Vat Act the period is one year, there is no other difference. Both the Acts are para materia with each other and the proviso to sub-section 254 (2) also mandates that before effecting any enhancement or change in assessment or reducing the refund or before increasing the liability of the assessee, notice has to be issued. According to Shri Deepak Awasthy notice of hearing is to be issued only if the order proposed to be passed by the Commissioner has the effect of reducin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercised by the Tribunal either suo motu or at the instance of either of the parties before it. In the present case, we are not concerned with the circumstances under which an order under section 254(2) can be passed. No arguments have been addressed on the question as to what is the meaning of the words rectifying any mistake apparent from the record occurring in section 254(2) and, therefore, we do not propose to go into this question. All that we have to consider is whether the proviso to section 254(2) limits the hearing to be provided only to a case which has the effect of enhancing an assessment or reducing a refund or increasing the liability of the assessee. An assessee or an Income-tax Officer can require the Tribunal to pass orders under section 254(2). Ordinarily, this would be done when either of the parties, or in a particular case, even both of them, move applications before the Tribunal. When an application is filed by an assessed for rectification of a mistake, the said application may either be dismissed or allowed. If the application is dismissed, it would mean no modification is made by the Tribunal in its order passed under section 254(1) . On the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, after analyzing the various eventualities as are indicated hereinabove i.e. the effect of an application filed by the assessee; the effect of the application filed by the revenue; and the effect of suo motu action being initiated by the Tribunal, the learned Full Bench has come to a conclusion that principles of natural justice have to be read into the provisions of section 254(2) and it has been held that this provision has been inserted in the statute by way of abundant caution to give certain right to a person who is aggrieved by an order passed, and if being aggrieved by certain order passed the statute gives a power to the aggrieved person to file an application, a presumption has to be drawn that the statute correspondingly gives a right to that person for an opportunity of hearing with regard to acceptance or otherwise of the application filed by virtue of the right which accrues to the person on account of the statutory provision. When a statutory provision contemplates a provision for moving an application for the purpose of challenging an order passed or even for the purpose of bringing to the notice of the authorities, who passed the order, some mistake or erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which he wants the rectification to be ordered, it would be nothing but negating and nullifying the statutory provision and destroying the effect of the statute itself. The very purpose of giving a right to a dealer to file an application as contemplated under section 54(1) would also mean that he has a right to point out to the statutory authority the mistake if any, said to have been committed or the justification for seeking correction of the mistake and if he is not given an opportunity of hearing and if his application is rejected without hearing him, behind his back, it would be a case where the requirement of principles of natural justice are violated and, therefore, we have no hesitation in holding that the requirement of grant of opportunity of hearing or following the principles of natural justice before rejecting an application under section 54(1), has to be read into the rules and in dismissing the application on the grounds as indicated in the impugned orders dated 13.05.2015, without hearing the petitioners, an error has been committed by the department. Accordingly, we allow both the petitions; quash the orders; and, remand the matter back to the Assistant Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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