ITO, CHENNAI V. S.D.Vimalchand Jain, CHENNAI

MA 73/CHNY/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 5656 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D ANAND
• Keywords: Rectification of order; Period of limitation
• Section: 12; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, CHENNAI ... , . , %& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER MISCELLANEOUS PETITION NO.73/MDS/2017 IN I.T.A.NO. 1207/MDS/2015 ( / ASSESSMENT YEAR : 2009-10) THE ITO, NON-CORPORATE WARD 6(3), CHENNAI VS SHRI S.D. VIMALCHAND JAIN, NO.55, NSC BOSE ROAD, CHENNAI 600 079. PAN: AAKHS9450E (PETITIONER) ( / RESPONDENT) APPLICANT BY : SHRI AR.V. SREENIVASAN, JCIT /RESPONDENT BY : SHRI D. ANAND, ADVOCATE /DATE OF HEARING : 12.01.2018 /DATE OF PRONOUNCEMENT : 12.01.2018 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER: THE MISCELLANEOUS PETITION IS FILED BY THE REVENUE PRAYING FOR RECTIFICATION OF MISTAKE APPARENT ON RECORD BY RECALLING THE ORDER OF THE TRIBUNAL PASSED IN I.T.A. NO. 1207/MDS/2015 DATED 01.01.2016 FOR THE ASSESSMENT YEAR 2009-10. 2. AT THE OUTSET THE LD.AR SUBMITTED THAT THE MISCE LLANEOUS PETITION FILED BY THE REVENUE IS BARRED BY LIMITATI ON BECAUSE THE DATE OF FILING OF THE MISCELLANEOUS PETITION BY THE REVENUE WAS ON 22.02.2017 AND THE ORDER OF THE TRIBUNAL WAS PASSED ON 2 MP NO.73/MDS/2017 01.01.2016 WHICH IS BEYOND THE PERIOD OF SIX MONTHS FROM THE DATE OF PASSING OF THE ORDER BY THE TRIBUNAL. HE FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 254(2) OF THE ACT WAS AME NDED BY THE FINANCE ACT, 2016 WHICH CAME INTO EFFECT FROM 01.06 .2016 AND THE REVENUE HAD FILED THE MISCELLANEOUS PETITION AFTER THAT DATE IE., ON 22.02.2017. THE LD.AR ALSO CITED THE DECISION OF TH E TRIBUNAL IN THE CASE SMT.PADMA K. BHAT IN MP NO.39/BANG/2017, V IDE ORDER DATED 28.04.217 WHEREIN IT WAS HELD AS FOLLOWS: 07. WE HAVE NO DOUBT IN OUR MIND THAT THERE IS AN APPARENT MISTAKE IN THE ORDER DATED 04.01.2016 AS THE TRIBUNAL HAS NOT DECI DED THE APPEALS OF THE ASSESSEE ON MERIT BUT DISMISSED THE SAME IN LIMINE FOR WANT OF PROSECUTION. HOWEVER, THE QUESTION OF RECTIFICATION OF MISTAKE C ANNOT BE ENTERTAINED UNTIL AND UNLESS THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS FOUND TO BE MAINTAINABLE. THE MISCELLANEOUS PETITION FILED BY T HE ASSESSEE IS BEYOND THE PERIOD OF 6 MONTHS FROM 04.01.2016 AND THEREFORE TH E SAME IS BARRED BY LIMITATION. IN THE ABSENCE OF ANY PROVISION TO COND ONE THE DELAY UNDER THE INCOME TAX ACT, IT MAY BE A CASE OF OMISSION IN THE PROVISION OF ACT WHICH CANNOT BE SUPPLIED BY US WHEN THERE IS NO AMBIGUITY IN THE PROVISIONS OF SECTION 254(2) OF THE ACT. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BHARAT PETROLEUM CORPORATION LTD., VS. ITAT AND OTH ERS 359 ITR 371, WHILE DEALING WITH AN IDENTICAL ISSUE HAS HELD IN PARAS 1 6 TO 18 AS UNDER: 16 IT WAS NEXT CONTENDED ON BEHALF OF THE PETITION ER THAT THE POWER OF THE TRIBUNAL UNDER SECTION 254(2) OF T HE ACT IS ONLY TO RECTIFY AN ERROR APPARENT FROM THE RECORD. IT DOES NOT EMPOWER THE TRIBUNAL TO RECALL ITS EARLIER ORDE R DATED DECEMBER 6, 2007, FOR WHICH THE MISCELLANEOUS APPLI CATION WAS FILED ON AUGUST 6, 2012. IT WAS SUBMITTED ON BE HALF OF THE PETITIONER THAT THE APPLICATION UNDER SECTION 2 54(1) OF THE ACT WOULD BE THE ONLY PROVISION UNDER WHICH AN APPLICATION COULD BE MADE FOR RECALL OF AN ORDER, A S UNDER SECTION 254(2) OF THE ACT ONLY THE ORDER CAN BE REC TIFIED BUT CANNOT BE RECALLED. WE FIND THAT THERE IS AN ERROR APPARENT ON RECORD AND THE MISCELLANEOUS APPLICATION IS TO C ORRECT THE ERROR APPARENT FROM THE RECORD. THE CONSEQUENCE OF SUCH RECTIFICATION APPLICATION BEING ALLOWED MAY LE AD TO A FRESH HEARING IN THE MATTER AFTER HAVING RECALLED T HE 3 MP NO.73/MDS/2017 ORIGINAL ORDER. HOWEVER, THE RECALL, IF ANY, IS ONL Y AS A CONSEQUENCE OF RECTIFYING THE ORIGINAL ORDER. IT IS PERTINENT TO NOTE THAT SECTION 254(2) OF THE ACT DOES NOT PRO HIBIT THE RECALL OF AN ORDER. IN FACT THE POWER/JURISDICTION OF THE TRIBUNAL TO RECALL AN ORDER ON RECTIFICATION APPLIC ATION MADE UNDER SECTION 254(2) OF THE ACT IS NO LONGER RES IN TEGRA. THE ISSUE STANDS COVERED BY THE DECISION OF THE APE X COURT IN ASST. CIT V. SAURASHTRA KUTCH STOCK EXCHANGE LTD . [2008] 305 ITR 227 (SC) WHICH HELD THAT THOUGH THE TRIBUNAL HAS NO POWER TO REVIEW ITS OWN ORDER, YET IT HAS JURISDICTION TO RECTIFY ANY MISTAKE APPARENT ON THE FACE OF THE RECORD AND AS A CONSEQUENCE, THEREFORE, THE TRI BUNAL CAN EVEN RECALL ITS ORDER. IN THE ABOVE CASE, BEFOR E THE APEX COURT ON OCTOBER 27, 2000, THE TRIBUNAL DISMIS SED THE APPEAL OF STOCK EXCHANGE HOLDING THAT IT WAS NOT EN TITLED TO EXEMPTION UNDER SECTION 11 READ WITH SECTION 12 OF THE ACT. ON NOVEMBER 13, 2000, THE STOCK EXCHANGE FILED A RECTIFICATION APPLICATION UNDER SECTION 254(2) OF T HE ACT BEFORE THE TRIBUNAL. THE TRIBUNAL BY ITS ORDER DATE D SEPTEMBER 5, 2001, ALLOWED THE APPLICATION AND HELD THAT THERE WAS A MISTAKE APPARENT ON THE RECORD WHICH RE QUIRED RECTIFICATION. ACCORDINGLY, THE TRIBUNAL RECALLED I TS ORDER DATED OCTOBER 27, 2000, FOR THE PURPOSE OF ENTERTAI NING THE APPEAL AFRESH. THE REVENUE FILED A WRIT PETITION IN THE GUJARAT HIGH COURT CHALLENGING THE ORDER DATED SEPT EMBER 5, 2001. THE ABOVE CHALLENGE BY THE REVENUE WAS TUR NED DOWN BY THE GUJARAT HIGH COURT. THE REVENUE CARRIED THE MATTER IN APPEAL TO THE APEX COURT WHICH ALSO DISMI SSED THE APPEAL OF THE REVENUE. THE APEX COURT OBSERVED THAT THE TRIBUNAL IN ITS ORIGINAL ORDER WHILE DISMISSING THE STOCK EXCHANGE (ASSESSEE'S) APPEAL OVERLOOKED THE BINDING DECISIONS OF THE JURISDICTIONAL HIGH COURT. THIS MI STAKE WAS CORRECTED BY THE TRIBUNAL UNDER SECTION 254(2) OF T HE ACT. THE SUPREME COURT HELD THAT THE RECTIFICATION OF AN ORDER STANDS ON THE FUNDAMENTAL PRINCIPLE THAT JUSTICE IS ABOVE ALL AND UPHELD THE EXERCISE OF POWER UNDER SECTION 254( 2) OF THE ACT BY THE TRIBUNAL IN RECALLING ITS EARLIER OR DER DATED OCTOBER 27, 2000. THUS, RECALL OF AN ORDER IS NOT B ARRED ON RECTIFICATION APPLICATION BEING MADE BY ONE OF THE PARTIES. IN THESE CIRCUMSTANCES, THE APPLICATION WOULD BE AN APPLICATION FOR RECTIFICATION OF THE ORDER DATED DE CEMBER 6, 2007, AND WOULD STAND GOVERNED BY SECTION 254(2) OF THE ACT. 17 IN THE FACTS OF THE PRESENT CASE THERE CAN BE NO DENIAL THAT THE ORDER DATED DECEMBER 6, 2007, SUFFERS FROM AN 4 MP NO.73/MDS/2017 ERROR APPARENT FROM THE RECORD. THE ERROR IS IN HAV ING IGNORED THE MANDATE OF RULE 24 OF THE TRIBUNAL RULE S WHICH REQUIRED THE TRIBUNAL TO DISPOSE OF THE MATTER ON T HE MERITS AFTER HEARING THE RESPONDENTS. IN THESE CIRCUMSTANC ES, AN APPLICATION FOR RECTIFICATION WOULD HE UNDER SECTIO N 254(2) OF THE ACT. THE RECALL OF AN ORDER WOULD WELL BE A CONSEQUENCE OF RECTIFYING AN ORDER UNDER SECTION 25 4(2) OF THE ACT. IN THESE CIRCUMSTANCES, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE TRIBUNAL HOLDING TH AT THE MISCELLANEOUS APPLICATION FILED BY THE APPELLANT IS BARRED BY LIMITATION UNDER SECTION 254(2) OF THE ACT AS I WAS FILED BEYOND A PERIOD OF FOUR YEARS FROM THE ORDER SOUGHT TO BE RECTIFIED. 18 BEFORE CONCLUDING, WE WOULD LIKE TO MAKE IT CLEA R THAT AN ORDER PASSED IN BREACH OF RULE 24 OF THE TRIBUNA L RULES, IS AN IRREGULAR ORDER AND NOT A VOID ORDER. HOWEVER , EVEN IF IT IS ASSUMED THAT THE ORDER IN BREACH OF RULE 24 O F THE TRIBUNAL RULES IS AN VOID ORDER, YET THE SAME WOULD CONTINUE TO BE BINDING TILL IT IS SET ASIDE BY A CO MPETENT TRIBUNAL. IN FACT, THE APEX COURT IN THE SULTAN SAD IK V. SANJAY RAJ SUBBA REPORTED IN [2004] 2 SCC 377 H OBS ERVED AS UNDER: 'PATENT AND LATENT INVALIDITY IN A WELL K NOWN PASSAGE LORD RADCLIFFE SAID: 'AN ORDER, EVEN IF NOT MADE IN GOOD FAITH, IS STILL AN ACT CAPABLE AT LEGAL CONSEQ UENCES. IT BEARS NO BRAND OF INVALIDITY UPON ITS FOREHEAD.. UN LESS THE NECESSARY PROCEEDINGS ARE TAKEN AT LAW TO ESTABLISH THE CAUSE OF INVALIDITY AND TO GET IT QUASHED OR OTHERW ISE UPSET, IT WILL REMAIN AS EFFECTIVE FOR ITS OSTENSIBLE PURP OSE AS THE MOST IMPECCABLE OF ORDERS.' THIS MUST BE EQUALLY TR UE EVEN WHERE THE 'BRAND OF INVALIDITY' IS PLAINLY VISIBLE : FOR THERE ALSO THE ORDER CAN EFFECTIVELY BE RESISTED IN LAW O NLY BY OBTAINING A DECISION OF THE COURT.' FURTHER, THE SU PREME COURT IN SNEH GUPTA V. DEVI SARUP [200916 SCC 194 H AS OBSERVED: 'WE ARE CONCERNED HEREIN WITH THE QUESTIO N OF LIMITATION. THE COMPROMISE DECREE, AS INDICATED HER EIN BEFORE, EVEN IF VOID WAS REQUIRED TO BE SET ASIDE. A CONSENT DECREE AS IS WELL KNOWN, IS AS GOOD AS A CONTESTED DECREE. SUCH A DECREE MUST BE SET ASIDE IF IT HAS BEEN PASS ED IN VIOLATION OF LAW. FOR THE SAID PURPOSE, THE PROVISI ONS CONTAINED IN THE LIMITATION ACT, 1963, WOULD BE APP LICABLE. IT IS NOT THE LAW THAT WHERE THE DECREE IS VOID, NO PERIOD OF LIMITATION SHALL BE ATTRACTED AT ALL.' THEREFORE, I N THIS CASE ALSO THE PERIOD OF FOUR YEARS FROM THE DATE OF ORDE R SOUGHT TO BE RECTIFIED/RECALLED WILL APPLY AS PROVIDED IN SECTION 254(2) OF THE ACT. THIS IS SO EVEN IF IT IS ASSUMED THAT THE 5 MP NO.73/MDS/2017 ORDER DATED DECEMBER 6, 2006, IS A VOID ORDER. 19 W E SHALL NOW ANSWER THE QUESTIONS ARISING IN THIS CASE AS RA ISED BY US IN PARAGRAPH 4 ABOVE AS UNDER : QUESTION (A) : NO. THE TRIBUNAL HAS NO POWER IN TER MS OF RULE 24 OF THE TRIBUNAL RULES TO DISMISS AN APPEAL BEFORE IT FOR NON-PROSECUTION. QUESTION (B) : THE MISCELLANEOUS APPLICATION FOR RE CALL OF AN ORDER FALLS UNDER SECTION 254(2) OF THE ACT AND NOT UNDER SECTION 254(1) OF THE ACT. QUESTION (C) : DOES NOT ARISE IN VIEW OF OUR RESPON SE TO QUERY (B) ABOVE. 20. IN VIEW OF THE REASONS GIVEN HEREINABOVE, WE FI ND THE TRIBUNAL WAS CORRECT IN DISMISSING THE MISCELLANEOU S APPLICATION BY ITS ORDER DATED APRIL 10, 2013, AS B EING BEYOND THE PERIOD OF FOUR YEARS AS PROVIDED UNDER S ECTION 254(2) OF THE ACT. 21. ACCORDINGLY, THE PETITION IS DISMISSED WITH NO ORDER AS TO COSTS. 08. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE AS WELL AS THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BHA RAT PETROLEUM CORPORATION LTD., VS. ITAT AND OTHERS (SUPRA), WE H OLD THAT THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE ARE BE YOND THE PERIOD OF LIMITATION AS PROVIDED UNDER SECTION 254(2) AND ARE NOT MAINTAINABLE. ACCORDINGLY THE SAME IS DISMISSED BEING BARRED BY L IMITATION 2.1 WITH THE ABOVE SUBMISSION THE LD.AR PLEADED THA T THE MISCELLANEOUS PETITION FILED BY THE REVENUE MAY BE DISMISSED. THE LD.DR COULD NOT CONTROVERT TO THE SUBMISSION OF THE LD.AR. 3. AFTER HEARING BOTH SIDES, WE FIND MERIT IN THE S UBMISSION OF THE LD.AR. AS SUBMITTED BY THE LD.AR THE MISCELLAN EOUS PETITION FILED BY THE REVENUE WAS FILED ON 22.02.2017 WHICH IS BEYOND THE PERIOD OF SIX MONTHS FROM THE DATE OF PASSING OF TH E ORDER BY THE TRIBUNAL WHICH WAS ON 01.01.2016. FURTHER BY VIRTUE OF FINANCE 6 MP NO.73/MDS/2017 ACT, 2016 WITH EFFECT FROM 01.06.2016, ANY MISCELLA NEOUS PETITION FOR RECTIFYING MISTAKE THAT IS APPARENT ON RECORD C AN BE FILED ONLY WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE M ONTH IN WHICH THE ORDER IS PASSED. FURTHER RELYING ON THE DECISIO N CITED BY THE LD.AR HEREIN ABOVE, WE HEREBY DISMISS THE MISCELLAN EOUS FILED BY THE REVENUE. 4. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY, 2018 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) /ACCOUNTANT MEMBER /CHENNAI, ! /DATED 12 TH JANUARY, 2018 RSR . $%&' ()& /COPY TO: 1. APPLICANT 2. RESPONDENT 3. * ( ('% )/CIT(A) 4. * /CIT 5. &,- . /DR 6. -/ % /GF.