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TMI Blog2006 (10) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of this case." The facts of the case span over more than four decades and some of the facts may be recounted briefly to appreciate the nature of controversy. In the course of assessment of the late Biju Patnaik for the assessment years 1962-63, 1963-64 and 1964-65, the Assessing Officer came to a finding that the funds invested in Kalinga Foundation Trust (hereinafter referred to as "the Trust") actually belonged to the assessee and the trust's income was added to the income of the assessee. On appeal, the Appellate Assistant Commissioner of Income-tax (the AAC) reversed the finding of the Assessing Officer, inter alia, on the ground that the Assessing Officer reached its findings on the basis of evidence collected behind the back of the assessee. As such direction was given to undertake the exercise of assessment once again after giving the assessee an opportunity to cross-examine the persons on whose statement the previous assessment was made. This was done by the Appellate Assistant Commissioner by his order dated April 1, 1968. However challenging the said order of the Appellate Assistant Commissioner, the appeals were filed before the Income-tax Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in 1949 logically followed from the materials on record or it was perverse in the sense that no reasonable man could come to it on the said materials? 3. Whether, on the facts and in the circumstances of the case, in arriving at the finding that the Kalinga Foundation Trust had acquired property from donations from the public, the Tribunal erred in law in not giving due consideration to the several matters relevant for determination of the points which had been considered by the Income-tax Officer in the assessment order? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income from dividend shown in the name of the Kalinga Foundation Trust, the interest on the loans advanced in the name of the Kalinga Foundation Trust and all investments, remittance, receipts and actual payments in the name of Kalinga Foundation Trust did not belong to the assessee and should therefore be deleted from the assessment of the assessee? 5. Whether, on the facts and in the circumstances of the case, there was any evidence in support of the Tribunal's finding that the assessee had collected donations from the public for the Kalinga Foundati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer with a direction to pass fresh order after allowing reasonable opportunity of being heard to the assessee on the lines of the direction of the honourable High Court." The Assessing Officer at Bhubaneswar on receipt of the case on transfer sent a notice to the assessee in respect of the aforesaid three assessment years and on receiving the said notice, the assessee filed in 1997 the writ petition before the hon'ble High Court challenging the provisions of section 153(2A) of the Income-tax Act which was introduced from April 1, 1971. However, on that writ petition, being OJC No. 420 of 1997, on March 17, 1997, a stay was granted by the hon'ble court on fresh assessment proceeding in respect of the concerned assessment years. Thereafter the writ petition was withdrawn from the High Court and its withdrawal was allowed by the High Court by its order dated September 26, 2003. In this matter a remand report was filed by the Assistant Commissioner of Income-tax, Circle-I(I), Bhubaneswar. In the said remand report, it was clearly mentioned that addition to the income of the assessee for the assessment years 1962-63, 1963-64 and 1964-65 was made and such assessments were complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee could not be given any chance to cross-examine the witnesses. As such the matter was dropped by the Income-tax Appellate Tribunal. Thereafter miscellaneous petitions were filed by the Revenue seeking modification of the orders of the Income-tax Appellate Tribunal dated February 22, 1994, and October 16, 2003. Those applications were also dismissed by the Income-tax Appellate Tribunal, Cuttack Bench, Cuttack, by an order dated December 19, 2003, on the ground of limitation and also on the merits. It was also mentioned in the said order that the Revenue did not mention any section under which those miscellaneous applications were filed. After those applications were dismissed by the Income-tax Appellate Tribunal, the instant miscellaneous cases have been filed before this court under section 151 of the Code of Civil Procedure with the prayer mentioned above. Now the question that falls for consideration before this court is whether, in the facts and circumstances of the case discussed above, the present miscellaneous cases, namely, Miscellaneous Cases Nos. 1 to 6 of 2004 are maintainable in law and on the facts. Learned counsel for the Revenue submits that the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party or its counsel may be prevented from appearing at the hearing of a reference for a variety of reasons. But subsequently if a party shows that there was sufficient reason for its non-appearance, in such cases the High Court has inherent power to recall its earlier order and dispose of the reference on the merits. The learned judges held that in an appropriate situation, the High Court has the power to recall the order made in the absence of a party and there is nothing in any of the provisions of the Income-tax Act which either expressly or by necessary implication stand in the way of the High Court from passing an order of disposal of a reference on the merits. It may be noted that while discussing such powers of the High Court, the hon'ble Supreme Court made no reference to section 151 of the Code. So this decision does not support the contention of the Revenue. Reliance was also placed by learned counsel for the petitioner on the judgment of the Supreme Court in the case of Jet Ply Wood P. Ltd. v. Madhukar Nowlakha reported in AIR 2006 SC 1260. In that case the questions which were decided by the Supreme Court were that an application was filed for withdrawal of a suit an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se law on the subject ruled clearly that apart from the court's incidental or ancillary power in dealing with a reference, the High Court does not have any inherent power under section 151 of the Code while dealing with a reference. The pertinent observations of the apex court on this point at pages 681-682 of the Report are set out: "Section 66 of the Income-tax Act of 1922 or section 256 of the Income-tax Act, 1961, is a special jurisdiction of a limited nature conferred not by the Code of Civil Procedure or by the Charters or by the special Acts constituting such High Courts but by the special provisions of the Income-tax Acts of 1922 or 1961 for the limited purpose of obtaining the High Court's opinion on questions of law. In giving that opinion properly, if any question of incidental or ancillary power arises such as giving an opportunity or restoring a reference dismissed without hearing or giving some additional time to file the paper book, such powers inhere to the jurisdiction conferred upon it." This point has been further clarified at page 682 of the Report as follows: "In our opinion, there the High Court was in error in exercising its jurisdiction by passing an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 131 of the Act; (e) the High Court further held that if the High Court answers the questions in the absence of reasonable opportunity being afforded to the assessee, such answers would be of "academic interest"; (f) a clear and conclusive finding binding on the parties can be given only after reasonable opportunity is given to the assessee as was the finding of the Income-tax Appellate Tribunal which finding has not been disturbed; (g) the High Court was also of the opinion that in its advisory jurisdiction, it was not desirable for the High Court to record findings of facts and, therefore, the High Court held that no answer should be given in exercise of its advisory jurisdiction which would finally decide the issue since a final finding can be arrived at only after giving reasonable opportunity to the assessee as the explanation given by the assessee would have a material bearing on the finding; and (h) therefore, the High Court thought that the Assessing Officer should give an opportunity to the assessee. On the basis of those findings of the High Court, the Income-tax Appellate Tribunal passed a consequential order by restoring the matter to the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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