Otters Club vs. DIT (E) (Bombay High Court)

DATE: January 12, 2017 (Date of pronouncement)
DATE: January 28, 2017 (Date of publication)
AY: 2009-10
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S. 254(1)/ Rule 34(5)(c): The Tribunal is mandated to pass orders within 90 days of the hearing. Delay is not justified on the ground that 'administrative clearance' was obtained. The aggrieved party is entitled to seek recall of such an order

The Tribunal passed an order dated 3rd February, 2016 beyond a period of 90 days after the hearing of the appeal was concluded on 22nd September, 2015. The assessee claimed that this was in breach of Rule 34(5)(c) of the Income Tax Appellate Tribunal Rules, 1963 (Tribunal Rules) as also of the binding decision of this Court in Shivsagar Veg. Restaurant v/s. ACIT 317 ITR 433. It was also claimed that the delay has also resulted in prejudice to the parties as binding decisions of the coordinate benches though referred to were ignored in the order dated 3rd February, 2016. HELD by the High Court upholding the plea:

(i) The order of the Tribunal while rejecting the rectification application does not dispute the fact that the order dated 3rd February, 2016 passed under Section 254(1) of the Act was passed beyond the period of 90 days from the date of conclusion of its hearing on 22nd September, 2015. However, it records that administrative clearance had been taken to pass such an order beyond the period of 90 days. We are at a loss to understand what is meant by ‘administrative clearance’ and the basis for the same. Besides when, how and from whom the administrative clearance was received, are all questions still at large. Mr. Suresh Kumar, the learned counsel who appears for all the respondents, including the Registry of the Tribunal is unable to shed any light on the same. Moreover, we are unable to comprehend the meaning of ‘Administrative clearance’ in the face of Rule 34 (5)(c) read with Rule 34(8) of the Tribunal Rules. It is clear that the above provisions mandate the Tribunal to pronounce its order at the very latest on or before the 90th day, after the conclusion of the hearing. In fact, this Court in Shivsagar Veg. Restaurant (supra) after referring to various decisions of the Apex Court directed the President of the Tribunal to frame guidelines to prevent delay in delivery of orders/judgments. It also directed all the revisional and appellate authorities (including Tribunal) under the Act to decide the matters heard by them within a period of three months from the date of the conclusion of the hearing. This is further compounded by the fact that the submission of the petitioner in respect of the entire issue being covered by orders of coordinate benches was according to the petitioner, lost sight of while passing the order dated 3rd February, 2016.

(ii) In the above view, the impugned order rejecting rectification application has not considered the aforesaid Rules and the binding decisions of this Court. Therefore on the aforesaid ground alone, the impugned order is not sustainable.

(iii) So far the second issue viz. rectification of the order passed under Section 254(1) of the Act on the basis of a subsequent decision of the jurisdictional High Court in DIT(E), Mumbai v/s. Maharashtra Housing and Area Development Authority (Income Tax Appeal No.2174/2013) is concerned, the impugned order does not deal with it in the impugned order. In any case, as on the first issue itself we are setting aside the impugned order and restoring the issue to the Tribunal to consider the rectification application as such, this issue would be considered by the Tribunal while disposing of the rectification application in the context of ACIT v/s. Saurashtra Kutch Stock Exchange Ltd. 305 ITR 227 which has approved the view of the Gujarat High Court in Suhrid Geigy v/s. Commissioner of Surtax 237 ITR 834.

Note: In order to circumvent Rule 34(5)(c) of the Tribunal Rules, some Benches follow the practice of placing the appeal for “clarifications” on the expiry of the prescribed period of 90 days so as to extend the time available to pass the order. This practice runs counter to the spirit with which the said Rule was enacted

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