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| DATE: | December 30, 2010 (Date of publication) |
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| Click here to download the judgement (lachman_das_mistake_recall.pdf) |
U/s 254(2) Tribunal entitled to recall order in entirety to rectify apparent mistake
The Tribunal passed an order u/s 254 (2) by which it took the view that as there was a mistake apparent from the record, the order deserved to be recalled and the appeal heard afresh. The assessee challenged the order by a Writ Petition and argued that while the Tribunal had the jurisdiction to rectify a mistake it could not recall the order in the entirety. As a doubt was expressed as to the correctness of the earlier decisions of the High Court (in K.L. Bhatia 182 ITR 361 (Del), J.N. Sahni 257 ITR 16 (Del) etc) on the matter owing to the later judgement of the Supreme Court in Honda Siel Power Products vs. CIT 295 ITR 466 (SC), the issue was referred to a Full Bench of the Delhi High Court. Held by the Full Bench.
(i) In the earlier judgements of the Delhi High Court, it was held that as the Tribunal has no inherent power of review it could not recall its order passed on merits. It was held that recalling the entire order would mean passing of a fresh order which is not permissible as s. 254(2) has no existence de hors the order u/s 254(1) inasmuch as when an order is passed u/s 254(2) either allowing amendment or refusing to amend, the same gets merged with the original order passed and becomes an order u/s 254(1) which is not the legislative intent;
(ii) This view is now not tenable in view of the judgements of the Supreme Court in Honda Siel Power Products 295 ITR 466 and Saurashtra Kutch Stock Exchange 262 ITR 146 where it was held that the power of rectification has been conferred on the tribunal to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record. It was held that atonement to the wronged party by the court or the tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. The Supreme Court clearly stated that it was the fundamental principle is that no party appearing before the tribunal should suffer on account of any mistake committed by the Tribunal and no prejudice should be caused to either of the parties before the Tribunal which is attributable to the Tribunal’s mistake, omission or commission and if the error is a manifest error, then the Tribunal would be justified to recall.
(iii) Consequently, the Tribunal does have the jurisdiction u/s 254(2) to recall its own order in entirety and there is no absolute prohibition. The earlier judgements of the High Court on the issue do not lay down the correct statement of law.
The full bench judgement of Delhi High Court in the case of Lachhman Dass Hingwala is a welcome order in the field of jurisprudence of natural justice and equity in taxation matters and would enable the courts to recall its order in the event of mistake, error or omission in appropriate cases.