ORDER
P.N. Parashar, J.M.
1. This miscellaneous application (MA) has been filed by the Revenue against the Order passed by the Tribunal on 22nd Sept., 2006 rendered in ITA No. 5301/Del/2003.
Shri Sandeep Bhandhu, senior Departmental Representative represented for the Revenue (appellant) and Shri M.K. Madaan, Authorised Representative represented for the assessee (respondent).
2. At the outset, we want to point out the certain facts leading to this MA as under:
This Department filed this M.A. on 1st March, 2007. In the note of Authorised Representative, dt. 9th May, 2007 it was intimated that so many Departmental M.As including present MA are pending before Tribunal for want of record of appeal files. On this note, the Hon’ble Vice President directed that all the MAs filed by the Department be fixed for hearing within 30 days of filing. This MA was therefore fixed for hearing although the appeal file record was not available.
3. Hence the facts as found from the copies of the Order of Tribunal rendered in the appeal i.e. ITA No. 5301/Del/2003 dt. 22nd Sept., 2006 and from MA of the Department being M.A. No. 97/Del/2002 are being culled out and narrated as below.
3.1 The assessee trust filed application in Form No. 10G for seeking renewal for approval under Section 80G of IT Act. The application was filed on 31st March, 2003.
3.2 The Director of IT (Exemption), after examining the facts and after conducting investigation into the matter, found that the basement of the building of the trust was utilized for multi-purposes by the assessee trust and the canteen on the 1st floor was used to provide food to the selected persons only. He also observed that the activities of trust were purely religious in nature. On the basis of these observations, the learned Director of IT (Exemption) rejected the application of the assessee vide his Order dt. 30th Sept., 2003.
3.3 As revealed out from the Order rendered in ITA No. 5301, the assessee filed appeal against the Order of Director of IT (Exemption) before Tribunal in the year 2003. The exact date of filing of the appeal cannot be ascertained in the absence of appeal file, which is not attached with the record of this MA by the office. Anyway, at least the year of the filing of the appeal can be easily determined from the details of the appeal as noted in the Order of the Tribunal.
3.4 At the time of hearing of the appeal, none appeared on behalf of the assessee. The Tribunal after hearing the learned Departmental Representative decided the appeal on merits on 22nd Sept., 2006. The relevant findings of the Tribunal are contained in paras 3.1, 4 and 5 which are as under:
3.1 On careful consideration we find that the Order of Director of IT (Exemption) is not reasoned and speaking. He had not cited any material to support the finding that the canteen provided food only to selected persons and that the activities of trust are purely religious in nature. Though it is true that exemption under Section 80G is allowable only in case of charitable institutions and as per Expln. 3 to Section 80G, charitable purpose does not include any purpose the whole or substantially whole of which is of religious nature however, Sub-section (5B) of Section 80G inserted w.e.f. 1st April, 2000 provides that an institution or fund which incurs expenditure during any previous year which is of religious in nature for an amount not exceeding 5 per cent of the total income in that previous year, it should be deemed to be an institution or fund to which provisions of this section are applied. This aspect has not been examined. The Director of IT (Exemption) had also not confronted the assessee with the adverse material gathered during the investigation before passing the Order. The Order rejecting the approval, therefore, cannot be sustained. The same is set aside and the matter is restored back to Director of IT (Exemption) for passing a fresh and speaking Order after allowing adequate opportunity to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
This decision is pronounced in the open Court on 22nd Sept., 2006.
4. The Revenue has challenged the Order of Tribunal by filing the present MA. In the MA, after making reference to the provisions contained under Section 253(1)(c) of the IT Act, it is submitted that the Tribunal had erred in entertaining the appeal filed by the assessee and therefore the Order passed may be rectified.
5. At the time of hearing of the appeal, learned Departmental Representative after making reference to the provision contained in Section 253(1) pointed out that amendment for providing the remedy of appeal against the Order passed under Section 80G of IT Act by the CIT/Director of IT (Exemption) is effective from 1st June, 2007 and prior to that date there was no right of appeal against such Order. According to him, therefore, the appeal before Tribunal against such Order was not maintainable. He further argued that the Order of Tribunal in entertaining the appeal and in granting relief to the assessee is illegal and bad in the eye of law and the same requires to be recalled and quashed.
6. The learned Authorised Representative, on the other hand submitted that amendment is only procedural and does not involve substantive rights. According to him, the amendment has to be treated as retrospective in nature and was applicable to the pending proceedings.
7. We want to state certain relevant events and the undisputed facts which are as under:
(1) The application for claiming the benefit of Section 80G of IT Act was filed on 31st March, 2003.
(2) The CIT passed Order rejecting the application on 30th Sept., 2003.
(3) Against the Order of CIT the assessee filed appeal in the year 2003.
(4) The Tribunal decided the appeal on 22nd Sept., 2006.
(5) The amendment giving right of appeal against the Order of CIT passed under Section 80G of IT Act, became effective on 1st July, 2007.
8. In the setting of above factual background, we proceed to consider the issue involved in this MA. However, before recording our findings, we consider it proper to reproduce the unlamented provisions of Section 253(1)(c) and the provisions as amended since 1st June, 2007.
The relevant portion of the unamended provision applicable before 1st June. 2007 of Section 253 is as under:
253. Appeals to the Tribunal (1) Any assessee aggrieved by any of the following Orders may appeal to the Tribunal against such Order:
(a) an Order passed by a Dy. CIT(A) before the 1st day of October, 1998 or, as the case may be, a CIT(A) under Section 154, Section 250, Section 271, Section 271A or Section 272A; or
(b) an Order passed by an AO under Clause (c) of Section 158BC, in respect of search initiated under Section 132 or books of account, other documents or any assets requisitioned under Section 132A, after the 30th day of June, 1995, but before the 1st day of January, 1997; or
(ba) an Order passed by an AO under Sub-section (1) of Section 115 VZC; or
(c) an Order passed by a CIT under Section 12AA or under Section 263 or under Section 271 or under Section 271A or an Order passed by him under Section 154 amending his Order under Section 263 or an Order passed by a Chief CIT or a Director General or a Director under Section 272A.
(2) The CIT may, if he objects to any Order passed by a Dy. CIT(A) before the 1st day of October, 1998 or, as the case may be, a CIT(A) under Section 154 or Section 250, direct the AO to appeal to the Tribunal against the Order.
9. The amended provisions as applicable w.e.f. 1st June, 2007 are as under:
253. (1) Any assessee aggrieved by any of the following Orders may appeal to the Tribunal against such Order-
(c) an Order passed by a CIT under Section 12AA or under Clause (vi) of Sub-section (5) of Section 80G or under Section 263 or under Section 271 or under Section 272A(***) or an Order passed by him under Section 154 amending his Order under Section 263 or an Order passed by a Chief CIT or a Director General or a Director under Section 272A.
10. On perusal of the above amendment, it is clear that the amendment has not been made with retrospective effect. Hence the right of appeal will be covered by this amendment prospectively. All the events narrated in above para took place before the amended provision came into existence. Even the Order of the Tribunal was passed on 22nd Sept., 2006 i.e. prior to the amendment. Hence neither at the time of filing the appeal by the assessee nor at the time of passing the Order by the Tribunal, the amended provision existed on the statute.
11. The contention raised on behalf of the assessee (respondent) for opposing the M.A. are as under:
(a) That the Revenue did not point out that Order under Section 80G (5)(VI) was not appealable and did not oppose the admission of the appeal.
(b) That since the law has been amended and the specific provision has been made, the Order as per the amendment is appealable.
(c) Since the issue involved is arguable issue on which a difference of opinion may exist, therefore, such issue cannot be a subject-matter of adjudication under Section 254(2).
12. Now we propose to take up these points as under:
12.1 It is settled legal position that lack of jurisdiction or defect in the exercise of jurisdiction can be pointed out at any stage. Hence, even if the Revenue did not point out jurisdictional defect relating to maintainability of the appeal at the time of hearing of the appeal, and if such defect has been pointed out in MA then the plea of lack of jurisdiction or the plea relating to non-maintainability of the appeal cannot be rejected on that ground because there is no estoppel against law. On the contrary, if the jurisdictional defect is brought to the notice of any Court or Tribunal, then the same is to be considered and cured as per relevant provisions of law. An Order passed without jurisdiction is null and void and is non est. Hence the plea that Revenue had acquired (sic-acquiesced) in the proceedings or waived its right to challenge the illegality in passing the Order, cannot be accepted. An illegal or non est Order is liable to be quashed whenever the illegality in the assumption of jurisdiction is brought to the notice of the concerned judicial authority. Hence an illegal Order cannot be allowed to survive after its invalidity is pointed out. The concerned Court or Tribunal should therefore undertake prompt and effective steps to remove from the record the illegal Order passed without jurisdiction by quashing or recalling it without any further delay.
12.2 The amendment introduced under Section 253(l)(c) is prospective in nature. The right to appeal is a substantive right. As the amendment relating to right of appeal is included in the substantive rights, therefore it cannot apply to pending proceeding.
12.3 The amendment has not been made with retrospective effect. No such condition or direction is laid down in the amended provision.
13. In view of plain language of the unamended provision which was applicable at the time when the Order was passed by the CIT no appeal against the Order of CIT was maintainable. Even when the appeal was filed before Tribunal by the assessee i.e. in the year 2003, there was no right to appeal available to the assessee against the Order passed under Section 80G. The same remained the position upto the date of Order of Tribunal. Hence the issue relating to the assumption of jurisdiction is to be decided on the basis of existing legal provision, which was specific and unambiguous. There cannot be any debate as to whether in view of the subsequent amendments, the right to appeal relating to Orders passed earlier can be availed under a subsequent amendment providing such a right or remedy. Since there was no right to appeal at the time when the appeal was filed, the Tribunal had no jurisdiction to entertain the appeal. Thus the illegality of jurisdiction or error in the exercise of the jurisdiction cannot be protected by taking recourse to subsequently amended provision. The intention of legislature definitely was not to make the amendment as applicable to pending proceedings as no such specific provision was made. In my most humble opinion, therefore, the issue cannot be treated to be arguable or debatable.
14. So far as principle of retrospective operation of the statute is concerned, the legislature can legislate prospectively as well as retrospectively. By retrospective, legislation, the legislature may make a law which is operative for limited period prior to the date of its coming into force. However for doing so, the legislature has to specifically provide for the same. In the absence of such specific provision, the amendments made in law are deemed to be prospective unless the intention of the legislature appears to be otherwise or the object of the legislature so warrants. Hence it is a cardinal principle of construction of a statutory provision that every statute is prima facie prospective unless it is expressly or by necessary implication is made to have retrospective operation. It is also settled principle of interpretation of statutes that where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations, the amendment will be deemed to be prospective only. In the words of Lord Blanesburg as expressed in the case of Delhi Cloth Mills & General Co. Ltd. v. CIT , provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment.
15. In view of the above legal position it is clear that an amending act is not retrospective merely because it applies also to those to whom preamended Act was applicable. It was so held in the case of Bishan Narain Miusra v. State of UP . In view of this authority also, the amended law cannot be applied to pending proceedings. The statute dealing with that substantive rights and those dealing with merely matters of procedure are to be distinguished as stated by Lord Denning. He was observed as under: ‘The Rule that an Act of Parliament is not to be given retrospective effect applies only to statutes which affect vested rights. It does not apply to statues which only alter the form of procedure or the admissibility of evidence, or the effect which the Courts give to evidence.
Thus if the new Act affects matters of procedure only then, prima facie, it applies to all actions pending as well as future as held in the case of K. Eapin Chako v. Provident Fund Investment Co. (P) Ltd. AIR 1976 SC 2610.
We have also to consider the concept of finality of Orders. An Order which on the date it is made, is final and gives rise to vested rights and a subsequent change in law giving rights to new right of appeal or revision is presumed not to affect the finality of Orders. This principle was settled in the case of Delhi Cloth Mills & General Co. Ltd. v. CIT (supra). On the same principle, conferment of a wider jurisdiction on the High Court to interfere in revision by a Amending Act was held not merely to be a matter of procedure but relating to substantive rights. In the case of Keshavlal Jethalal Shah v. Mohanlal , Hon’ble Supreme Court held that the wider jurisdiction cannot be invoked against an Order made before the commencement of the Amending Act. In the case of United Provinces v. Mst. Atiqa Begum it was held that a retrospective statute which affects the rights in existence is not rightly construed to affect adjudication of pending cases. In that case it was observed that “Courts have undoubtedly leaned very strongly against applying a new Act to a pending action when the language of the statute does not compel them to do so”. In the words of S.R. Das, Chief Justice as expressed in the case of Garikapati v. N. Subbiah Choudhry AIR 1957 P. 540 Hon’ble Supreme Court observed that “The golden Rule of construction is that, in the absence of anything in the enactment to show that it is to have retrospective operation, it cannot be so construed as to have the effect of altering the law applicable to a claim in litigation at the time when the Act was passed”.
16. So far as nature of the Order passed in the absence of jurisdictional authority is concerned, it is a settled legal position that an Order or decision, which is a nullity or void, cannot be treated to be an Order or decision under the Act. In the case of Ujjam Bai v. State of Uttar Pradesh AIR 1962 SC 1621 the Hon’ble Supreme Court has laid down the following propositions to hold that an adjudication by a Tribunal of limited jurisdiction is void.
17. If action is taken under an ultra vires statute; (2) If the subject-matter of adjudication is beyond its competence or the Order passed is such which it has no authority to pass; (3) If the adjudication is procedurally ultra vires being in violation of fundamental principles of judicial procedure; and (4) If jurisdiction is assumed by wrongly deciding jurisdictional questions of law or fact. The Hon’ble Court has also observed that “it has already been seen that violation of fundamental provisions of the Act under which the Tribunal functions and fundamental principles of judicial procedure make the Tribunal’s Order void.
18. In the case of Anismmic v. Foreign Compensation etc., Lord Reid while dealing with the question as to when an Order of a Tribunal is a nullity observed as under:
It has sometimes been said that it is only where a Tribunal acts without jurisdiction that its decision is a nullity.
19. In the Commentary of Principles of Statutory Interpretation by Justice G.P. Singh in sixth edition p. 475, after considering various authorities following conclusions have been drawn:
(1) An exclusionary clause using the formula ‘an Order of the Tribunal under this Act shall not be called in question in any Court’ is ineffective to prevent the calling in question of an Order of the Tribunal if the Order is really not an Order under the Act but a nullity.
(2) Cases of nullity may arise when there is lack of jurisdiction at the stage of commencement of enquiry e.g., when (a) authority is assumed under an ultra vires statute; (b) the Tribunal is not properly constituted, or is disqualified to act; (c) the subject-matter or the parties are such over which the Tribunal has no authority to inquire; and (d) there is want of essential preliminaries prescribed by the law for commencement of the inquiry.
(3) Cases of nullity may also arise during the course or at the conclusion of the inquiry. These cases are also cases of want of jurisdiction if the word jurisdiction’ is understood in a wide sense. Some examples of these cases are: (a) when the Tribunal has wrongly determined a jurisdictional question of fact or law; (b) when it has failed to follow the fundamental principles of judicial procedure, e.g., it has passed the Order without giving an opportunity of hearing to the party affected; (c) when it has violated the fundamental provisions of the Act. e.g., when it fails to take into account matters which it is required to take into account or when it takes into account extraneous and irrelevant matter; (d) when it has acted in bad faith; and (e) when it grants a relief or makes an Order which it has no authority to grant or make; as also (f) when by misapplication of the law it has asked itself the wrong question.
20. Hon’ble Justice Paripoornan, J. in the case of Mafatlal Industries v. Union of India has adopted the above conclusions by observing as under:
I would adopt the above statement of the law as my own.
21. Thus in view of the above authorities, the decision passed by the Tribunal being without jurisdiction has to be treated and considered as a patently erroneous decision in the eye of law and consequently it is to be held that there is apparently glaring and grave error of law in the Order of the Tribunal.
In view of the above, since there was no right of appeal at the time the Director of IT (Exemption) passed the impugned Order, the Order became final and was not appealable. Merely because the assessee had invoked a wrong jurisdiction by filing appeal before the Tribunal which did not have any jurisdiction to entertain such appeal, and further merely because the Revenue did not raise any objection against such wrong invoking of jurisdiction by the aforesaid appellant and lastly, merely because this application was pending when the subsequent amendment was introduced, the amending provision cannot give jurisdiction to the Tribunal when the same was not available to it at the time of filing of the appeal or even at the time of deciding the appeal.
22. Thus on a careful consideration of the relevant provisions and Authorities referred to above, it is clear that the Order passed by the Tribunal dt. 22nd Sept., 2006 was absolutely without jurisdiction. Such an Order is to be treated as null and void and as having been passed without any authority of law. As the Revenue has brought out the jurisdictional defect to the notice of the Tribunal by filing present M.A., the patent legal error committed by Tribunal has to be rectified under the provisions of Section 254(2), which enables Tribunal to rectify any mistake apparent from the record. The provision contained under Section 254(2) is as under:
254. Orders of Appellate Tribunal–{I) The Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such Orders thereon as it thinks fit.
(1A)[***]
(2) The Tribunal may, at any time within four years from the date of the Order, with a view to rectifying any mistake apparent from the record, amend any Order passed by it under Sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the AO.
23. In view of the above provision therefore it is mandatory on the part of the Tribunal to quash the illegal Order passed by it. Since the Revenue had brought out the mistake in the exercise of the jurisdiction, in my view the prayer of the Revenue for recalling/rectifying the Order deserves to be allowed. This view is fully fortified by the ratio of the latest decision of Hon’ble Supreme Court of India in the case of Honda Siel Power Products Ltd. v. CIT, Civil Appeal No. 5412 of 2007 dt. 26th Nov., 2007 reported in (2007) 213 CTR (SC) 425Ed. In that case, the Hon’ble Supreme Court has made following observations regarding the scope of Section 254(2) of IT Act:
12. As stated above, in this case we are concerned with the application under Section 254(2) of the 1961 Act. As stated above, the expression ‘rectification of mistake from the record’ occurs in Section 154. It also finds place in Section 254(2). The purpose behind enactment of Section 254(2) is based on the fundamental principle that no party appearing before the Tribunal, be it an assessee or the Department, should suffer on account of any mistake committed by the Tribunal. This fundamental principle has nothing to do with the inherent powers of the Tribunal. In the present case, the Tribunal in its Order dt. 10th Sept., 2003 allowing the rectification application has given a finding that Samtel Color Ltd. (supra) was cited before it by the assessee but through oversight it had missed out the said judgment while dismissing the appeal filed by the assessee on the question of admissibility/allow ability of the claim of the assessee for enhanced depreciation under Section 43A. One of the important reasons for giving the power of rectification to the Tribunal is 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.
13. ‘Rule of precedent’ is an important aspect of legal certainty in Rule of law. That principle is not obliterated by Section 254(2) of the IT Act 1961. When prejudice results from an Order attributable to the Tribunal’s mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the Court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power, to review. In the present case, the Tribunal was justified in exercising its powers under Section 254(2) when it was pointed out to the Tribunal that the judgment of the Co-ordinate Bench was placed before the Tribunal when the original Order came to be passed but it had committed a mistake in not considering the material, which was already on record. The Tribunal has acknowledged its mistake; it has accordingly rectified its Order. In our view, the High Court was not justified in interfering with the said Order. We are not going by the doctrine or concept of inherent power. We are simply proceeding on the basis that if prejudice had resulted to the party, which prejudice is attributable to the Tribunal’s mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake, which had been done in the present case.
24. From, the above observations of the Hon’ble apex Court also, it is clear that the duty of the Tribunal is to See that no prejudice is caused to either of the parties appearing before it by its decision based on legal mistake apparent from the record. In the instant case since the error has been committed by the Tribunal in entertaining the appeal, this mistake or error has to be rectified. The Order of Tribunal is to be recalled and quashed.
In the result, the present MA stands allowed.