IN THE HIGH COURT OF JUDICATURE AT BOMBAY
\nORDINARY ORIGINAL CIVIL JURISDICTION
\nWRIT PETITION NO.2858 OF 2019
\nThe Pr. Commissioner of Income Tax-7 \u2026 Petitioner
\nV\/s.
\nIncome tax Appellate Tribunal
\nBench \u201cB\u201d and anr. \u2026 Respondents
\n—
\nMr.Nirmal Chandra Mohanty, Advocate for the Petitioner.
\nMs.Shilpa Kapil, Advocate for Respondent No.1.
\n—
\nCORAM : UJJAL BHUYAN &
\nMILIND N. JADHAV, JJ.
\nDATE : JANUARY 24, 2020
\nP.C.:-
\n1. Heard Mr.N.C.Mohanty, learned standing counsel,
\nRevenue for the petitioner; and Mrs.Shilpa Kapil, learned
\ncounsel for respondent No.1.
\n2. This petition has been filed under Article 226 of the
\nConstitution of India by the Principal Commissioner of
\nIncome Tax-7, Mumbai assailing the legality and
\ncorrectness of order dated 1st February, 2019 passed by
\nthe Income Tax Appellate Tribunal, Bench “B” , Mumbai
\n(briefly “the Tribunal” hereinafter) in MA No.483\/M\/2018
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\nfor the assessment year 2006-07, whereby the earlier
\norder of the Tribunal dated 10th January, 2018 passed in
\nIncome Tax Appeal No.3910\/Mum\/2010 has been recalled
\nand the appeal has been directed to be placed for hearing
\nafresh.
\n3. It may be mentioned that respondent No.2 i.e. the
\nassessee had preferred Income Tax Appeal No.
\n3910\/Mum\/2010 for the assessment year 2006-07 before
\nthe Tribunal against the order passed by the
\nCommissioner of Income Tax (Appeals)-13, Mumbai
\ndated 6th January, 2010. By order dated 10th January,
\n2018, Tribunal dismissed the appeal.
\n4. From a perusal of the order dated 10th January, 2018
\nit is seen that there was no representation on behalf of
\nrespondent No.2 i.e. the assessee and Tribunal decided
\nthe appeal on merit in the absence of the assessee after
\nhearing the Departmental Representative.
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\n5. Respondent No.2 thereafter filed an application for
\nrecall of the aforesaid order dated 10th January, 2018 and
\nfor hearing the appeal afresh. The said application was
\nregistered as MA No.483\/M\/2018. After hearing learned
\ncounsel for respondent No.2 as well as the Departmental
\nRepresentative, Tribunal passed the impugned order
\ndated 1st February, 2019 recalling the earlier order
\ndated 10th January, 2018 and fixing the appeal for
\nhearing afresh on merit.
\n6. Mr.Mohanty, learned standing counsel submits that
\nthe impugned order was passed under Section 254(2) of
\nthe Act. Referring to the said provision he submits that a
\ntime limit of six months from the end of the month in
\nwhich the Tribunal had passed the order is provided to
\nrectify any mistake in the order which is apparent from
\nthe record. In the instant case, though the miscellaneous
\napplication was filed by the assessee on 9th July, 2018
\nwithin the aforesaid period of six months, Tribunal did not
\ndispose of the same within the prescribed limitation
\nperiod. Infact, much later on 1st February, 2019.
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\nTherefore, the said order cannot be sustained. He
\nsubmits that there is no provision under Section 254
\nextending the period of limitation. Further submission of
\nMr.Mohanty is that in exercise of the power conferred
\nunder sub-section (5) of Section 255 of the Act, Income
\nTax (Appellate Tribunal) Rules, 1963 (briefly \u201cthe Rules\u201d
\nhereinafter) have been framed. Rule 24 of the said
\nRules provides that in case of an ex-parte order if the
\nappellant appears otherwise and satisfies the Tribunal
\nthat there was sufficient cause for his non-appearance
\nwhen the appeal was called for hearing, the Tribunal
\nshall make an order setting aside the ex-parte order
\nand restore the appeal. However, his contention is that
\nthough time limit is not provided under Rule 24, the
\ntime limit prescribed under Section 254 (2) has to be
\nstrictly adhered to as the Rules cannot contravene or
\noperate beyond the parent Act. In support of his
\nsubmissions, Mr.Mohanty has placed reliance on a
\ndecision of the supreme Court in Assam Company Ltd.
\nVs. State of Assam, 248 ITR 567.
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\n7. On the other hand, learned counsel for respondent
\nNo.1 submits that though the impugned order has been
\npurportedly passed under Section 254 (2) of the Act, the
\nsame infact is an order by the Tribunal invoking its
\ninherent power of procedural review. She submits that
\nsuch a power inheres in every Tribunal and this has been
\nacknowledged by the Supreme Court in Srei
\nInfrastructure Finance Limited Vs. Tuff Drilling
\nPrivate Limited, (2018)11 SCC 470.
\n8. In his reply Mr.Mohanty fairly submits that the
\nlimitation of six months from the end of the month in
\nwhich the order was passed was substituted in subsection
\n(2) of Section 254 by the Finance Act, 2016 with
\neffect from 1st June, 2016. Prior to that the limitation was
\nfour years from the date of the order. In Sree Ayyanar
\nSpinning and Weaving Mills Limited Vs.
\nCommissioner of Income Tax, 301 ITR 434 SC,
\nSupreme Court had upheld order passed by the Tribunal
\nbeyond the limitation of four years.
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\n9. Submissions made by learned counsel for the
\nparties have been considered.
\n10. Facts are not in dispute. However, a brief recital of
\nthe facts is considered necessary. The initial order passed
\nby the Tribunal on 10th January, 2018 was an ex-parte
\none. The assessment year under consideration is 2006-
\n07. The limitation of six months as noticed above was
\nsubstituted by the Finance Act, 2016 with effect from 1st
\nJune, 2016. Therefore, for the assessment year under
\nconsideration the limitation period may be construed to
\nbe four years from the date of the order. Even otherwise,
\nif a view is taken that since the impugned order was
\npassed by the Tribunal on 1st February, 2019, the
\nsubstituted limitation period of six months would be
\napplicable, then also it is seen that the said period of
\nsix months was available to respondent No.2 till 31st July,
\n2018. Respondent No.2 had filed the application for
\nrecall of the ex-parte order on 9th July, 2018 within the
\nlimitation period of six months. However, Tribunal
\npassed the impugned order only on 1st February, 2019.
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\n11. At this stage, we may advert to Section 254(2) of
\nthe Act, relevant portion of which reads as under:-
\n\u201c254(1)\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026..
\n(2) The Appellate Tribun al may, at any time
\nwithin six months from the end of the month
\nin which the order was passed, with a view to
\nrectifying any mistake apparent from the
\nrecord, amend any order passed by it under
\nsub-section (1) and shall make such
\namendment if the mistake is brought to its
\nnotice by the assessee or the Assessing
\nOfficer:
\n\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026…\u201d
\n12. From a careful reading of the provision, it is seen
\nthat Tribunal is vested with the power to rectify any
\nmistake apparent from the record to amend any order
\npassed by it under sub-section (1) of Section 254 at any
\ntime within six months from the end of the month in
\nwhich the order was passed, provided the mistake is
\nbrought to its notice by the assessee or by the Assessing
\nOfficer.
\n13. The use of the expression \u201cmay\u201d in the aforesaid
\nprovision is clearly indicative of the legislative intent
\nthat the limitation period of six months from the end of
\nthe month in which the order was passed is not to be
\nconstrued in such a manner that there can not be any
\nextension of time beyond the said period of six months.
\nThis is so because the assessee or the Assessing Officer
\ncan only bring the mistake to the notice of the Tribunal.
\nThe assessee or the Assessing Officer has no control
\nover the Tribunal. For one reason or the other, the
\nTribunal may not be in a position to pass the order under
\nSection 254(2). For the inability of the Tribunal to pass
\nsuch an order within the period provided, neither the
\nassessee nor the revenue should suffer. What therefore
\nbecomes relevant is that the assessee or the Assessing
\nOfficer should bring the mistake to the notice of the
\nTribunal within the limitation period.
\n14. Rule 24 of the Income Tax (Appellate Tribunal)
\nRules, 1963 (Rules) is relevant. Rule 24 reads as under :-
\n\u201c24. Where, on the day fixed for hearing or on
\nany other date to which the hearing may be
\nadjourned, the appellant does not appear in
\nperson or through an authorized
\nrepresentative when the appeal is called on
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\nfor hearing, the Tribunal may dispose of the
\nappeal on merits after hearing the respondent:
\nProvided that where an appeal has
\nbeen disposed of as provided above
\nand the appellant appears afterwards
\nand satisfies the Tribunal that there
\nwas sufficient cause for his nonappearance,
\nwhen the appeal was
\ncalled on for hearing the Tribunal shall
\nmake an order setting aside the exparte
\norder and restoring the appeal.\u201d
\n15. From a reading of Rule 24 as extracted above, it is
\nseen that Tribunal is vested with the power to recall an
\nex-parte order. Requirement of the proviso is that
\nTribunal must be satisfied that there was sufficient
\ncause for non-appearance of the appellant. No time limit
\nis prescribed in Rule 24.
\n16. On a conjoint reading of the two provisions, there
\nappears to be no contradiction between Section 254(2)
\nof the Act and Rule 24 of the Rules as extracted above.
\nBoth the provisions can be and should be read
\nharmoniously to advance the objective that a decision
\non merit should be avoided in the absence of the
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\naggrieved litigant. It is an established principle of
\nnatural justice that a litigant should be heard before a
\ndecision is taken.
\n17. In Srei Infrastructure Finance Limited (supra)
\nSupreme Court referred to its earlier decisions in the
\ncase of Grindlays Bank Ltd. Vs. Central Government
\nIndustrial Tribunal, 1980 Supp SCC 420 and Kapra
\nMazdoor Ekta Union Vs. Birla Cotton Spinning and
\nWeaving Mills Limited, (2005) 13 SCC 777 and
\ndistinguished between a procedural review and a review
\non merit. Supreme Court held that a Tribunal or a quasijudicial
\nbody is always endowed with such ancillary or
\nincidental powers as are necessary to discharge its
\nfunctions effectively for the purpose of doing justice
\nbetween the parties. Such a power inheres in every
\nTribunal.
\n18. As candidly pointed out by Mr.Mohanty, with regard
\nto the pre-amended provision of Section 254(2),
\nSupreme Court in Sree Ayyanar Spinning and
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\nWeaving Mills Limited (supra), had accepted the
\nposition that such an order can be recalled beyond the
\nthen prescribed period of four weeks, provided the
\napplication is made within the limitation period. In fact,
\nRajasthan High Court in Harshavardhan Chemicals
\nand Minerals Limited Vs. Union of India, 256 ITR
\n767 took the view that if the assessee had moved the
\napplication within four years from the date of the order,
\nthe Tribunal was bound to decide the application on its
\nmerit and not on the ground of limitation. Supreme Court
\nagreed with the view expressed by the Rajasthan High
\nCourt and in the facts of that case held that the
\napplication for rectification was made within four years.
\nTribunal took its own time to dispose of the application.
\nTherefore, Madras High Court erred in holding that the
\napplication could not have been entertained by the
\nTribunal beyond four years.
\n19. We may now advert to the impugned order. By the
\nsaid order Tribunal has recalled the ex-parte order and
\nfixed the appeal for hearing afresh, which has been filed
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\nby none else than the assessee. Ultimately, what the
\nTribunal has done is only to provide an opportunity of
\nhearing to the assessee. No prejudice has been caused
\nto the revenue by such order of the Tribunal.
\n20. Thus, having regard to the discussions made
\nabove and on due consideration, we are of the view that
\nthe challenge made by the revenue in this writ petition is
\nmisconceived. Consequently we find no merit in the writ
\npetition.
\n21. Writ petition is accordingly dismissed, but without
\nany order as to costs.
\n(MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.)
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The use of the expression \u201cmay\u201d in the aforesaid provision is clearly indicative of the legislative intent that the limitation period of six months from the end of the month in which the order was passed is not to be construed in such a manner that there can not be any extension of time beyond the said period of six months. This is so because the assessee or the Assessing Officer can only bring the mistake to the notice of the Tribunal. The assessee or the Assessing Officer has no control over the Tribunal. For one reason or the other, the Tribunal may not be in a position to pass the order under Section 254(2). For the inability of the Tribunal to pass such an order within the period provided, neither the assessee nor the revenue should suffer. What therefore becomes relevant is that the assessee or the Assessing Officer should bring the mistake to the notice of the Tribunal within the limitation period<\/p>\n