IT : Where Tribunal proceeded to decide certain issues on merits without giving an opportunity of being heard to assessee, order so passed by Tribunal suffered from an error apparent on face of record which was to be rectified in exercise of power under section 254(2)
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[2013] 33 taxmann.com 518 (Gujarat)
HIGH COURT OF GUJARAT
Deputy Commissioner of Income-tax
v.
Rajendra M. Vyas*
AKIL KURESHI AND MS. SONIA GOKANI, JJ.
SPECIAL CIVIL APPLICATION NO. 1158 OF 2013
FEBRUARY 12, 2013
Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of [Power of rectification] - Whether where Tribunal proceeded to decide certain issues on merits without giving an opportunity of being heard to assessee, order so passed by Tribunal suffered from an error apparent on face of record which was to be rectified in exercise of power under section 254(2) - Held, yes [In favour of assessee]
CASES REFERRED TO
Neesa Leisure Ltd. v. Union of India [2011] 338 ITR 460/[2012] 204 Taxman 86/[2011] 16 taxmann.com 163 (Guj.) (para 4) and Dy. CIT v. Manu P. Vyas [2013] 32 taxmann.com 176/214 Taxman 86 (Guj.) (para 6).
Mrs. Mauna M. Bhatt for the Petitioner.
ORDER
Ms. Sonia Gokani, J. - This petition is preferred challenging the order of the Income Tax Appellate Tribunal ("the Tribunal" for short) dated 23.7.2012 challenging the validity of the order of the Tribunal in MA No.88/Ahd/2012, whereby the Tribunal exercised the powers under Section 254(2) of the Income Tax Act ("the Act" for short).
2. The respondent assessee preferred appeal before CIT(Appeals), which was partly allowed on 25.1.2006, whereby it confirmed various additions by virtue of such order. Aggrieved by the same, both the sides challenged the order of CIT(Appeals) before the Tribunal. Challenge was made for the entire block period of 1.4.1995 to 26.2.2002. The Tribunal, after an elaborate discussion, passed an exhaustive order on 30.3.2012 and dismissed the appeal of the Revenue.
3. Miscellaneous Application was preferred by respondent under Section 254(2) of the Act and the Tribunal allowed such an application on 23.7.2012, recalling its own order on 30.3.2012 and fixed rehearing of the appeal.
4. It is contended before us by the Revenue that it is not open for the Tribunal to examine validity of search proceedings in view of the decision of this Court rendered in the case of Neesa Leisure Ltd. v. Union of India [2011] 338 ITR 460/[2012] 204 Taxman 86/16 taxmann.com 163 (Guj.). It is urged that when by a detailed judgment, the Tribunal has adjudicated the dispute by and between the parties, the Tribunal's order suffers from the vice and requires to be quashed and set aside. It it also urged that it is wholly impermissible for the Tribunal to hear the appeal afresh as it has no power of review. It emerges from the record the Tribunal, after detailed hearing, it adjudicated the controversy in favour of the Revenue and against the assessee respondent. The Tribunal also gave its final findings examining various additions made by CIT(Appeals) in Miscellaneous Civil Application for rectification moved by the assessee respondent. The stand taken by the assessee respondent is that the only question that was required to be examined by the Tribunal was in respect of its jurisdiction to consider the assessee's challenge to the validity of the search itself. The Tribunal was not to adjudicate the case on merits.
5. The Tribunal, after noting rival contentions of the parties, concluded in MA No.88/2012 that the assessee, since was prevented from arguing the matter on merits, at the time of hearing, it was essential for the Tribunal to recall its own order dated 30.3.2012 and place the matter for hearing afresh. This has perturbed the Revenue, and therefore, present petition has been preferred.
6. Identical question arose in Special Civil Application No.1159 of 2013, where also we had called for the record from the learned advocate for the Revenue as our initial impression was that no arguments on the merits had taken place before the Tribunal. After considering the material placed before us on record, we have dismissed the petition and the present petition also needs to meet the same fate. Instead of giving fresh reasonings in respect of this petition, the issue being identical, it shall have to be accorded the same treatment. It will be appropriate to reproduce the relevant observations made in the case of Dy. CIT v. Manu P. Vyas [2013] 32 taxmann.com 176/214 Taxman 86 (Guj.)
"5. From the original order passed by the Tribunal on 30.03.2012, we had gathered a strong prima facie impression that the assessee was correct in contending before the Tribunal that no arguments on merits beyond the question of applicability of the decision of this Court in case of Neesa Leisure Ltd and anr v. Union of India Through Secretary and ors. (supra) were made. Further, since the Tribunal itself had, in its rectification order, gone on record to suggest that the assessee was correct in making such a statement we had also inquired with the counsel for the revenue whether there was anything on record to suggest that the impression carried by the assessee and as confirmed by the Tribunal in its rectification order could be stated to be erroneous and there was any material to enquire further, particularly, when we find that the Tribunal was a best judge to record what had transpired during oral hearing before the said forum, the above question became more relevant.
6. Learned counsel Mr. Bhatt for the revenue placed on record a communication dated 08.02.2012 from one Mr. S.K. Gupta, who had appeared before the Tribunal on behalf of the revenue during the said proceedings before the Tribunal, in his letter to the Commissioner of Income Tax, he has stated as under:
"2.2 However, with respect to the arguments and merits, I do not recall whether such arguments were made or not because it is a very old matter being more than one year old. Every day we were arguing 15 to 20 appeals and therefore, being one year old, I do not have any memory with respect to the query made by Shri Manish Bhatt, Advocate as to whether the arguments were advanced on merits or not."
7. From the record therefore, it clearly emerges that the impression carried by the assessee as confirmed by the Tribunal, is not rebutted from any further evidence on record. We would, therefore, proceed to accept the Tribunal's recollection of what transpired during the oral hearing before it true and accurate.
8. In the result, we do not find any merits in the petition in which the principal stand of the department is that the Tribunal could not have recalled its order which was rendered on merits after by-partite hearing. When we find that the Tribunal proceeded to decide certain issues on merits without giving full opportunity to the aggrieved party to make submissions thereon, the order did certainly suffer from an error apparent on the record. Tribunal, therefore, committed no error in exercising power of rectification. We may, however, clarify that by recalling the said order, the Tribunal cannot seem to have recalled its earlier conclusions. With respect to the applicability of the decision of this Court in case of Neesa Leisure Ltd. v.Union of India Through Secretary (Supra). We may hasten to add however that with respect to such an issue as far as we are concerned, we have expressed no opinion."
7. This Petition also is being disposed of with the same clarifications as has been done in the above referred matter. Petition is dismissed.
SUNIL*In favour of assessee.
Regards
Prarthana Jalan
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