ORDERS OF TRIBUNAL–Ex parte order without giving opportunity of being heard
Ratio:
Where ex-parte order was passed by the Tribunal after serving the notice of hearing on person not authorised by the assessee, order of the Tribunal had to be set aside as opportunity of hearing was not given to the assessee.
Held:
The assessee’s case is entirely covered by the proviso to rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 as the assessee has proved by adducing documentary evidence that notice of hearing was not received either by it or by any authorised person on behalf of the assessee and, therefore, there was sufficient cause for non-appearance of the assessee when the appeal was called on for hearing. The provisions under sub-section (1) of section 254 in its true spirit had not been complied with in passing the ex parte order and, therefore, the power to set aside its ex parte order in the interest of justice is inherent in the Tribunal and could be traced to sub-section (1) of section 254. According to the provisions of section 254(1), giving a reasonable opportunity of being heard is essentially part of the jurisdiction of the Tribunal and in the assessee’s case, that the ex parte order happened to be passed without giving a reasonable opportunity of being heard to the assessee. Therefore, the Tribunal has power to make available reasonable opportunity of being heard to the assessee as the ex parte order of the Tribunal was based factually without the assessee having had the benefit of being heard.
Case Law Analysis:
CIT v. ITAT (1992) 196 ITR 838 (Ori), CIT v. Ramesh Electric & Trading Co. (1993) 203 ITR 497 (Bom), Kakarla Krishnamurthy v. CIT (1995) 216 ITR 206 (AP), Poonam Kumari v. ITO (1996) 59 ITD 106 (All-Trib) and State of UP v. Labh Chand (1993) 200 ITR 647 (SC) distinguished; Brij Lal v. Asstt. CIT (1996) 59 ITD 1 (Del-Trib) (TM), CIT v. Ballabh Prasad Agarwal (1998) 233 ITR 354 (Cal), CIT v. ITAT (1977) 120 ITR 231 (Ker), CIT v. Nopany Education Trust (1986) 159 ITR 367 (Cal), CIT v. Shakuntala Rajeshwar (1986) 160 ITR 840 (Del) and Joseph Michael & Bros. v. ITAT (1993) 199 ITR 466 (Ker) relied.
Application:
Applicable to current assessment year as well.
Dt.Ord:
29-9-1997
A.Y.:
1986-87
Decision:
In favour of assessee
Income Tax Act 1961 s.254
Income Tax(Appellate Tribunal) Rules 1963 r.24
Appeal (Tribunal)–RECTIFICATION UNDER S. 254(2)–Objection as to service of notice not properly dealt with by Tribunal
Ratio:
Where the Tribunal has not dealt properly with objection raised by the assessee that the notice was not received by the assessee or by any authorised person, there amounted to be a mistake apparent from the record and the Tribunal was empowered to rectify the same.
Held:
In addition to the provisions of section 254(1) read with rule 24 of the Tribunal Rules, the assessee’s case was also covered by the provisions of section 254(2) as certain mistakes have been pointed out by the assessee which are mistakes apparent from records and they are mistakes of law as well as of facts. The assessee’s contention that the finding of the Tribunal that the notice of hearing was received through an authorised person was a mistake apparent from record was correct.
The Tribunal proceeded on the wrong presumption that P was an authorised representative of the assessee and the notice has been served on the assessee through him and, therefore, the Tribunal can invoke its powers under section 254(2). The facts and circumstances of the case lead to the setting aside of the ex parte order and in noway go for review of the Tribunal order.
The provisions of sub-section (1) of section 254 in its true spirit had not been complied with while passing the ex parte order dated 10-9-1996 and that there was sufficient cause for non-appearance when the appeal was called on for hearing. Therefore, on the facts and circumstances of the case, the ex parte order of the Tribunal was set aside.
Case Law Analysis:
CIT v. ITAT (1992) 196 ITR 838 (Ori), CIT v. Ramesh Electric & Trading Co. (1993) 203 ITR 497 (Bom), Kakarla Krishnamurthy v. CIT (1995) 216 ITR 206 (AP), Poonam Kumari v. ITO (1996) 59 ITD 106 (All-Trib) and State of UP v. Labh Chand (1993) 200 ITR 647 (SC) distinguished; Brij Lal v. Asstt. CIT (1996) 59 ITD 1 (Del-Trib) (TM), CIT v. Ballabh Prasad Agarwal (1998) 233 ITR 354 (Cal), CIT v. ITAT (1977) 120 ITR 231 (Ker), CIT v. Nopany Education Trust (1986) 159 ITR 367 (Cal), CIT v. Shakuntala Rajeshwar (1986) 160 ITR 840 (Del) and Joseph Michael & Bros. v. ITAT (1993) 199 ITR 466 (Ker) relied.
Application:
Applicable to current assessment year as well.
Dt.Ord:
29-9-1997
A.Y.:
1986-87
Decision:
In favour of assessee
Income Tax Act 1961 s.254
Income Tax(Appellate Tribunal) Rules 1963 r.24
ORDER
R. Acharya, A.M.
1. This miscellaneous application is filed by the assessee against the order of the Tribunal dt. 10th September, 1996 in ITA No. 2950/Cal/1992 for the asst. yr. 1986-87.
2. Before this miscellaneous application, the assessee had filed one miscellaneous application on 5th November, 1996 which was rejected by the Tribunal vide order in MA No. 67/Cal/96 dt. 10th January, 1997 on the ground of receipt of notice under the signature of authorised person who does not appear to be Durban and on the basis of availability of seal of Dabur India Ltd. put on the acknowledgment receipt. The assessee also filed another miscellaneous application which was received by the Registry on 26th February, 1997 vide assessee’s letter dt. 24th February, 1997 and was rejected by the Tribunal at the stage of admission itself without hearing the assessee on the following grounds :
“As there is no sufficient cause and no mistake apparent from record, miscellaneous application is rejected as Tribunal cannot review its order CIT vs. Gokul Chand Agarwal (1992) 202 ITR 14 (Cal).”
Intimation to that effect was sent to the assessee vide this Registry office’s letter Misc. Appln. No. Nil dt. 13th June, 1997 by registered post.
3. In the present miscellaneous application the assessee has submitted that no opportunity to rebut and to produce evidence in support of the grounds on which earlier miscellaneous applications were rejected was given to the assessee as a matter of natural justice. In view of this the assessee has pointed out the following facts and submitted as under :
(i) That the recipient Lekhraj Pandey was never an authorised representative of the assessee-company and never an employee of the assessee as has been confirmed through an affidavit and is evident as per Annexure-B;
(ii) That Lekhraj Pandey was an employee of Estate C. L. Burman owner of the complex 142 Rash Behari Avenue, Calcutta-700 029, as it is evident from the copy of certificate as per Annexure-C;
(iii) That the assessee also furnished xerox copy of attendance register and salary register to prove that Lekhraj was an employee of the said concern as a gate-keeper and not as an officer or an educated person who could have under-stood the importance of Court notices;
(iv) That from salary register, it is clear that by the flow of signature and writing of the digit it did not suggest that Lekhraj was an educated person and not a gate-keeper;
(v) That he had picked up the seal from the premises of the assessee which was also operating in the same premises. But it is a fact that he never handed over the notice to any authorised person or responsible person of the assessee-company; and
(vi) That Lekhraj resigned from service as a gate-keeper; but the assessee had filed a certificate given by Estate C. L. Burman as per Annexure-C and affidavit of Lekhraj, who is at present at Nepal and being brought by sending a person there;
In view of above facts, the learned counsel for the assessee submitted that non-appearance was because of not having received the hearing notice and hence there was a reasonable cause. It was further submitted that the assessee’s contention was not that the case should be reviewed but the miscellaneous application is for recalling the ex parte order of the Tribunal dt. 10th September, 1996. He further contended that no opportunity was given when the second miscellaneous application was not considered and was rejected. The assessee has ultimately relied on the decisions of the Calcutta High Court in the following cases :
(i) CIT vs. Ballabh Prasad Agarwal 90 Taxman 283, and requested recalling of the order of the Tribunal dt. 10th September, 1996.
4. At the stage of hearing, the learned counsel for the assessee invited our attention to r. 24 of the Income-tax (Appellate Tribunal) Rules, 1963 and put emphasis on the words “shall make an order” appearing in the said rule, and argued that when the Tribunal is objectively satisfied that there is ‘sufficient cause’ it shall make an order setting aside the ex parte order and restoring the appeal. He further pleaded that since the assessee’s case is fully covered by the provisions of r. 24 of the Appellate Tribunal Rules, 1963 the original order of the Tribunal dt. 10th September, 1996 should be recalled and reheard. P. C. Jain, the learned counsel for the assessee also read out the provisions of s. 254(1) and 254(2) of the IT Act, 1961 and argued that the Tribunal may pass an order after giving opportunity of being heard to both the parties and, therefore, the “opportunity of being heard” is a must. He also distinguished the provisions of s. 254(1) from the provisions of s. 254(2) and submitted that when a mistake is apparent from record and is brought to the notice of the Tribunal the Tribunal can rectify the same. According to him, review is altogether different from rectification and recalling and is when asked for reappraisal of the facts or revision of the order. He relied on the Kerala High Court decision in the case of CIT vs. ITAT (1979) 120 ITR 231 (Ker) at p. 239 and contended that, the power of setting aside an ex parte order to offer the assessee an opportunity of being heard is not the same power as of ‘review’. He also relied on the Kerala High Court decision in the case of Joseph Michael & Bros. (1993) 199 ITR 466 (Ker) and submitted that in that case neither the assessee nor his representative was present and, therefore, the decision was rendered on merits; but when the assessee filed miscellaneous application the Tribunal refixed the appeal for hearing and on being challenged, the contention of the Revenue was negatived. In view of this, Jain pleaded that the assessee’s case is of recalling the ex parte order of the Tribunal and not of reviewing the earlier order. He also argued that it was a fit case, under r. 24 of the Tribunal Rules r/w ss. 254(1) and 254(2) of the IT Act, for recalling, restoring and rehearing of the ex parte order of the Tribunal dt. 10th September, 1996. The learned counsel also clarified that the assessee never knew about the service of the notice of hearing and it may be possible due to dispute in the family. He also contended that in view of above arguments and submissions the ratio of the Calcutta High Court in the case of CIT vs. Gokul Chand Agarwal (1992) 202 ITR 14 (Cal) on which the Tribunal relied, while rejecting miscellaneous application dt. 24th February, 1997 (presented on 26th February, 1997), is not applicable. He also reiterated that miscellaneous application (second) was rejected without giving any opportunity of being heard to the assessee.
5. According to Jain, “notice is received by Dabur India Ltd.” is wrong and misnomer as the Hon’ble Bench is of the opinion that the notice was received by the assessee which is not the fact as it would be evident from the affidavit filed by the managing director of the assessee-company to the effect that “no notice of hearing had been received by our representative in the Calcutta office” – According to Jain, the statutory notice should be served on the authorised person and Lekhraj Pandey was not an authorised person, as it is evident and proved by the primary evidence produced before the Bench. It was further argued that reasonable opportunity was to be given to the assessee to prove as to whether Lekhraj Pandey was an authorised person of the assessee-company or not. In the shape of evidence viz. a certificate from the employer of Lekhraj Pandey, is placed at p. 11 of the paper-book, which certifies and proves that he was not an employee of the assessee-company, and likewise the attendance register and salary register placed at pp. 12 and 19 of the paper-book, respectively, prove the same. It was also stated that same signature is on stamp, salary register and on the acknowledgment slip and in order to prove the signature the assessee’s counsel also produced a letter dt. 9th June, 1997, of Lekhraj Pandey stating therein that he brought the seal from the office. In view of these facts, he argued that this is a very good case for recalling the ex parte order of the Tribunal dt. 10th September, 1996, as all the facts and circumstances of the case prove the reasonable cause for non-appearance of the assessee at the time of hearing of appeal.
6. Jain, the learned counsel for the assessee, addressed his arguments from another angle also and pleaded that even under s. 254(2) of the Act the mistake is apparent from record as would be evident from paras 3 and 4 of the Tribunal’s order dt. 10th September, 1996 where the Tribunal did not give its own reasons and finding for confirming the impugned disallowance and, therefore this is a mistake of law since substantial justice has not been done to the assessee. The learned counsel for the assessee relied on the following decisions :
(1) CIT vs. Nopany Education Trust (1986) 159 ITR 367 (Cal);
(2) CIT vs. Shakuntala Rajeshwar (1986) 160 ITR 840 (Del);
(3) Brij Lal vs. Asstt. CIT (1996) 59 ITD 1 (Del) (TM);
(4) ITO vs. Murlidhar Sarda (1975) 99 ITR 485 (Cal); and
(5) 90 Taxman 283 (Cal).
The learned counsel also argued the case on the basis of three limbs of law; equity, justice and fairplay and submitted that the order of the Tribunal dt. 10th September, 1996, should be recalled and the assessee should be heard to meet the ends of natural justice.
7. The learned Departmental Representative, R. N. Sinha, on the other hand, submitted that this is the third miscellaneous application and the earlier two have already been rightly rejected by the Tribunal. According to him, all the points and contentions of the assessee have already been considered by the Tribunal and these are only repetition of the same. He also contended that the orders of the Tribunal passed under s. 254(2) cannot again be rectified. In this connection, the learned Departmental Representative relied on the following decisions :
(a) Poonam Kumari vs. ITO (1996) 59 ITD 106 (All); and
(b) CIT vs. ITAT (1992) 196 ITR 838 (Ori).
He further argued that the order passed under s. 254(2) is not an order under s. 254(1). In this connection he relied on the decision of the Hon’ble Supreme Court in the case of State of U.P. vs. Labh Chand (1993) 200 ITR 647 (SC). The learned Departmental Representative further contended that fresh evidence or additional evidence and fresh reasons cannot supplement the original order for this proposition, he relied on the following decisions :
(a) CIT vs. Ramesh Electric & Trading Co. (1993) 203 ITR 497 (Bom); and
(b) Kakarla Krishnamurthy vs. CIT (1995) 216 ITR 206 (AP).
On the basis of above arguments and contentions, he urged that the present miscellaneous application also should be rejected.
8. In reply, the learned counsel for the assessee, Jain submitted that it is not the repetition of the same points and arguments. According to him, previously it was ‘review’ but now it is ‘recall’. He further argued that the learned Departmental Representative had not challenged the genuineness of the documents and, therefore, all of them are admissible evidence. He also pointed out that the primary facts were not considered by the Tribunal originally and reasonable opportunity of being heard was also not granted to the assessee.
9. We have carefully considered the rival contentions, the relevant facts and the material placed on record. We have also gone through the case law on which reliance is placed by both the parties. It is noticed that the first miscellaneous application (M.A. No. 67/Cal/96) moved by the assessee is rejected by the Tribunal on the basis of mistaken assumption that the notice was received by Lekhraj Pandey as an authorised person who appeared to be educated person from the flow of his signature and writing and not as a Darwan. The assessee had challenged the finding of the Tribunal in the order on M.A. No. 67/Cal/96, dt. 15th January, 1997 that “acknowledgment proves beyond doubt that the registered post is received by Dabur India Ltd. under the seal and signature of authorised person”. The contention of the assessee is also supported by the affidavit dt. 1st November, 1996 filed by the managing director of the assessee-company wherein, G. C. Burman has solemnly affirmed that no notice of hearing has been received by their representative in Calcutta. This primary evidence was not taken cognizance of by the Tribunal although affidavit was filed along with the miscellaneous application. No opportunity was also granted by the Tribunal to the assessee to clarify as to whether Lekhraj Pandey was their employee or not. The assessee has filed a certificate from the manager, Estate C. L. Burman, stating therein that Lekhraj Pandey was working as a Badlie/Durban with that concern and he had resigned from service w.e.f. 18th October, 1996. A copy of the certificate is placed at p. 11 of the paper-book.
This certificate proves that Lekhraj Pandey was not an employee of Dabur India Ltd., the assessee. Photocopies of attendance register and salary register, placed at pp. 12 and 19 of the paper-book respectively also prove the fact that Pandey was not an employee of the assessee-company, but of Estate of C. L. Burman. The salary register and attendance register also prove the signature of Shri Lekhraj Pandey, Darban. In addition to this, in a letter dt. 9th June, 1997, Lekhraj had stated that he is “matriculate (failed)” and was employed with Estate C. L. Burman (Decd.) and that he received the notice “by picking up a seal from the reception of the premises of Dabur India Ltd.” and that “inadvertently and by mistake the notice was not delivered” to any employee of the Dabur India Ltd. which he had lost. In our opinion this is the basic and primary evidence and material to prove the contention of the assessee that the Tribunal had proceeded on wrong presumption or mistaken assumption which resulted in rejection of M.A. No. 67/Cal/96 causing prejudice to the assessee. As no opportunity was granted to the assessee originally to rebut this mistaken assumption, the assessee could not produce those materials and evidence at the time of hearing of the first miscellaneous application. It is also evident that the contents of the affidavit was not taken cognizance of, which is an apparent mistake from record. In this view of the matter the contention of the learned Departmental Representative that fresh evidence, additional evidence and fresh reasons cannot supplement the original ones does not hold good, as those fresh and additional evidence and fresh reasoning were advanced at the time of the current miscellaneous application under consideration.
10. The second miscellaneous application received by the registry on 26th February, 1997, vide assessee’s letter dt. 24th February, 1997 was rejected by the Tribunal at the stage of admission itself without hearing and without registering the application on the following grounds :
“As there is no sufficient cause and no mistake apparent from record. M.A. is rejected as Tribunal cannot review its order (1992) – CIT vs. Gokul Chand Agarwal (1994) 202 ITR 14 (Cal).”
Thus, it is clear that the Tribunal followed the ratio of the decision of the Calcutta High Court in the case of Gokul Chand Agarwal and rejected that miscellaneous application presuming that the Tribunal cannot review its order passed in M.A. No. 67/Cal/96 dt. 15th January, 1997. Here again, the rejection of the second miscellaneous application was based on mistaken presumption as the second miscellaneous application, as is evident from its subject that this was against the order passed in ITA No. 2950/Cal/92 for the asst. yr. 1986-87 and not against M.A. No. 67/Cal/96. In other words, this miscellaneous application was filed against the ex parte order passed by the Tribunal with a request to recall and restore the appeal as reasonable and sufficient cause was there. The prayer for recalling/restoration of appeal is apparent from paras 6 and 9 of the application. As the application was not for review but for recalling and restoration of appeal, this is a mistake apparent from record. Moreover, this order was passed without admitting the miscellaneous application and without granting and opportunity of being heard to the assessee. In the case of Brij Lal vs. Asstt. CIT (supra) of the Tribunal, observed that “what applies to the appeal before the Tribunal, equally applies to the miscellaneous application before the Tribunal. The Tribunal is expected to go into the miscellaneous application itself, apply its mind and give its decision thereon”. On the issue of ex parte order, it was held as under :
“This was not the correct approach, as, even in respect of an ex parte disposal. The Tribunal was obliged to consider dispassionately the contents of the miscellaneous application and the evidence furnished vis-a-vis the non-appearance on a particular date before the Tribunal. Therefore, it was to be held that Tribunal could not dismiss the miscellaneous application filed by the assessee, only on the ground that he failed to appear on the date of hearing”.
Thus, it is clear that the miscellaneous application cannot be disposed of ex parte without going into the merit and without considering the evidence or material placed on the record.
11. Being aggrieved by the above three orders of the Tribunal the assessee has filed the present miscellaneous application against the order passed by the Tribunal in ITA No. 2950/Cal/92, dt. 10th September, 1996 and has requested therein that the contention of the assessee was not that the case was to be reviewed but through this application it has requested for recalling the ex parte order dt. 10th September, 1996. The assessee has also relied on the Calcutta High Court decision in the case of CIT vs. Ballabh Prasad Agarwalla (supra) wherein the Tribunal subsequently found that there were mistake of law and fact in its earlier order which had not been considered and the assessee had prima facie a case for recalling this order for a fresh hearing, the Tribunal shall be justified in recalling its order because it has been held that it is a well-settled proposition that an act of Court should not prejudice a party.
12. After hearing both the parties at length, after perusal of material and documentary evidence placed on the record, and after going through the case on which reliance is placed by both the parties, we have come to the conclusion that the assessee’s case is entirely covered by the proviso to r. 24 of the Income-tax (Appellate Tribunal) Rules, 1963 as the assessee has proved by adducing documentary evidence that notice of hearing was not received either by it or by any authorised person on behalf of the assessee and, therefore, there was sufficient cause for non-appearance of the assessee when the appeal was called on for hearing. On the facts and circumstances of the present case, we are also of the opinion that the provisions under sub-s. (1) of s. 254 in its true spirit had not been complied with in passing the ex parte order and, therefore, the power to set aside its ex parte order in the interest of justice is inherent in the Tribunal and could be traced to sub-s. (1) of s. 254. According to the provisions of s. 254(1) of the Act, giving a reasonable opportunity of being heard is essentially part of the jurisdiction of the Tribunal and we find, in the present case, that the ex parte order happened to be passed without giving a reasonable opportunity of being heard to the assessee. In our opinion, therefore, the Tribunal has power to make available reasonable opportunity of being heard to the assessee as we have subsequently realised that the ex parte order of the Tribunal was based factually without the assessee having had the benefit of being heard. This view of ours finds support from the decision of the Kerala High Court in the case of CIT vs. ITAT (1979) 120 ITR 231 (Ker) wherein it has been held as under :
“There is no express provision prohibiting the Tribunal from exercising the power to set aside such ex parte order. Therefore, it must be presumed that the power under s. 254(1) extends to the power of setting aside an ex parte order in the interests of justice when the Tribunal is clear in its mind that the provision under the sub-section in its true spirit had not been complied with in passing the ex parte order.”
The Court distinguished the power of setting aside an ex parte order from the power of review and held as under at p. 232 of the report (head-notes) :
“The power of setting aside an ex parte order to afford an opportunity of being heard to the aggrieved party is not the same as the power of review.”
When this distinction is borne in mind, there is no scope for the argument that because the Tribunal has no power to review its own order, it cannot also set aside its ex parte order for affording an opportunity of being heard to the respondent.”
As we have already discussed that the assessee has proved before us that there were reasonable causes for its non-appearance before the Tribunal at the time of hearing and, therefore, this case is fully covered under r. 24 of the Income-tax (Appellate Tribunal) Rules, 1963, and the assessee’s prayer is to set aside the ex parte order and not to review the order of the Tribunal. On almost similar facts and circumstances as found in this case, the Kerala High Court in the case of Joseph Michael & Bros. vs. ITAT (supra) has held that “the power of setting aside an ex parte order to afford an opportunity of being heard to the aggrieved party is not the same as the power of review”. In that case, the Tribunal did not accept the request for an adjournment and dismissed the appeal ex parte after hearing the learned Departmental Representative. The assessee moved an application under r. 24 of the Income-tax (Appellate Tribunal) Rules, 1963, praying for restoration of the appeal decided ex parte and for hearing the case on merits. The assessee also produced the notice received by him from the Settlement Commission to appear before the Commission on 5th May, 1987 at Bangalore. The Tribunal dismissed that application by an order dt. 17th August, 1987 holding that the Tribunal had no power of review and hence it could not review its earlier judgment. The counsel representing the assessee then moved M.P. No. 37 of 1987, in M.P. No. 14/Coch/ of 1987, under r. 24 of the Tribunal Rules, giving the entire circumstances under which he happened to be absent. That application was also rejected by the Tribunal by its order dt. 20th January, 1988, on the ground that the assessee had not brought out any mistake as such arising from the order of the Tribunal. On such facts and circumstances of the case, the Kerala High Court held :
“The prayer in such a situation for rehearing the appeal was not a prayer to review its earlier decision. It was to set aside its ex parte order for affording an opportunity of being heard. This power was inherent in the Tribunal. The Tribunal had refused to exercise that power for no justifiable reasons. The order of the Tribunal was not justified and was liable to be quashed.
In our view the case of the instant assessee stands on a better footing in the sense that the assessee, unlike Joseph Michael & Bros.’ case (supra), has brought out some mistake as such arising from the ex parte order of the Tribunal dt. 10th September, 1996.
13. In addition to the provisions of s. 254(1) r/w r. 24 of the Tribunal Rules, the assessee’s case is also covered by the provisions of s. 254(2) as certain mistakes have been pointed out by the assessee which are mistakes apparent from records and they are mistakes of law as well as of facts. The assessee’s contention that the finding of the Tribunal that the notice of hearing was received by the Dabur India Ltd. through an authorised person is a mistake apparent from record is correct. The assessee has also pointed out that since the Tribunal has not given its own reasoning and finding in paras. 3 and 4 of its ex parte order dt. 10th September, 1996, while confirming the disallowance, this is a mistake of law. The assessee has also contended that as reasonable opportunity of being heard was not granted by the Tribunal to the assessee, substantial justice was not done and, therefore, the mistake of law has occurred. In the case of CIT vs. Nopany Education Trust (supra) the Hon’ble Calcutta High Court has held as under :
“… the question whether the ITO was correct in invoking the provisions of s. 12(2) entirely depended on whether the two paying trusts were exempt under s. 11 or not. This factual aspect of the matter was entirely ignored by the Tribunal in arriving at its conclusion. The Tribunal did not find the basis and primary fact for deciding the controversy in issue, but proceeded on a patently wrong finding of fact incidental to the question (case remanded).”
In the instant case also, the Tribunal proceeded on the wrong presumption that Pandey was an authorised representative of the assessee and the notice has been served on the assessee through him and, therefore, the Tribunal can invoke its powers under s. 254(2) of the Act. Our view is duly supported by the decision of the Delhi High Court in the case of CIT vs. Shakuntala Rajeswar (supra) wherein it was held as under at p. 842 of the head-notes :
“(iii) That, on the facts, the earlier order of the Tribunal was founded on a mistaken assumption on the part of all concerned, including the Tribunal, that the decision of the CIT(A), Chandigarh, has become final an assumption which was clearly wrong. When the assumption apparent from its order and recorded was found to be erroneous, the Tribunal was justified in invoking its powers under s. 254(2)”.
In the case of J. K. Synthetics vs. Collector of Central Excise (1996) 86 ELT 472 (SC), it was held as under :
“It is for CEGAT to consider in every such case whether the respondent who applies for recall of the ex parte order against him had sufficient cause for remaining absent when it was passed and, if it is established to the satisfaction of CEGAT that there was sufficient cause, CEGAT must set aside the ex parte order, restore the appeal to its file and hear it afresh on merits.”
Again, in the case of CIT vs. Ballabh Pd. Agarwalla (supra), the Hon’ble Calcutta High Court gave the meaning of the word “review”. According to it, “review of an order means reexamination or to give a second view of the matter for the purpose of alternation or reversal of view already taken after changing the earlier opinion or view”. According to the jurisdictional High Court, s. 254(2) expressly confers power upon the Tribunal to correct any mistake apparent from record and power to amend any order passed under sub-s. (1) of s. 254. In the instant case, it is not ‘reversal of view already taken’ or “alteration” of the earlier “opinion or view”. It is only the rectification of mistake apparent from record and, therefore, in our opinion, the provisions of s. 254(2) are also applicable to the present case. For this proposition, we derive strength from the jurisdictional High Court in the case of Ballabh Pd. Agarwalla (supra) wherein it was held as under :
“It is a well-settled proposition that an act of Court (which, in the context, means and includes a Tribunal of the nature of Tribunal) should not prejudice a party. In such a case, it would not be just to drive the party to a reference under s. 256. It must be left to the Tribunal to reopen the appeal if it finds that it has omitted to deal with an important ground urged by the party. It is not correct to say that the expression ‘record’ in the phrase ‘mistake apparent from the record’ in s. 254(2) means only the judgment. The record means the record before the Tribunal. Failure to deal with a preliminary objection amounts to a mistake apparent from the record.”
In the instant case also, the preliminary objection raised by the assessee that notice was not received either by the assessee or by any authorised person was not dealt with properly or correctly by the Tribunal and, therefore, it amounts to a mistake apparent from the record and the Tribunal is, therefore, empowered to rectify the mistake to meet the ends of justice.
14. In the case of ITO vs. Murlidhar Sarda & Anr. (1975) 99 ITR 485 (Cal), the Hon’ble Calcutta High Court took a similar view running as under :
“The learned single Judge allowing the application held that the Tribunal had inherent jurisdiction, ancillary to the jurisdiction given by s. 254 of the IT Act, 1961, to restore and rehear an appeal disposed of on the merits in the absence of any party who has been prevented by reasonable and sufficient cause from appearing before the Tribunal at the hearing of the appeal and directed the Tribunal to consider the application for restoration and rehearing of the appeal.
On appeal, at the instance of the Revenue, the Division Bench, agreeing with the single Judge, dismissed the Departmental appeal.
15. From the above discussion and the ratios of the case law narrated, it is obvious that all the case law quoted above support the cause of the assessee on three fronts, viz. (i) as per r. 24 of the Tribunal Rules; (ii) as per provisions of s. 254(1) and (iii) as per provisions of s. 254(2). The distinction between the expression ‘setting aside the ex parte order’ and ‘review of the order’ is also clear from the above judicial pronouncements and we find that the facts and circumstances of the case lead to the setting aside of the ex parte order and in noway go for review of the Tribunal order.
16. On the other hand, we find that the case law on which the learned Departmental Representative has relied in order to support his contention, do not help the cause of the Revenue. The first objection of the Revenue is that when the original miscellaneous application is rejected, no miscellaneous application lies under s. 254(2) as this amounts to repetition of the same.
He placed reliance on the decision of the Tribunal, Allahabad Bench, in the case of Smt. Poonam Kumari vs. ITO (supra) wherein it was held that once a miscellaneous application under s. 254(2) against original order of the Tribunal is rejected, another application against the same order of the Tribunal and containing same matter cannot be entertained. We find that the ratio of this decision does not apply to the facts of the present case as the contents of the misc. application in M.A. No. 61/Cal/97 were altogether different and they are, in short, given as under :
(i) No opportunity to rebut or to produce evidence against the wrong presumption of the Tribunal that notice was received by the assessee through an authorised person was afforded;
(ii) To prove that Lekhraj Pandey was gate-keeper photocopies of attendance register and salary register, as proof of employee of Estate C. L. Burman (Decd.) with signature were produced;
(iii) About the second miscellaneous application, the assessee has submitted that without giving any opportunity of being heard, it was rejected ex parte;
(iv) It was clarified that second miscellaneous application was not for reviewing the order passed under s. 254(2) but for recalling the ex parte order passed under s. 254(1); and
(v) The assessee relied on the Calcutta High Court decision in the case of CIT vs. Ballabh Pd. Agarwalla (supra) for recalling the ex parte order passed on 10th September, 1996.
From the above what emerges is that the contents of the present miscellaneous application are altogether different from other two miscellaneous applications; whereas in the case of Smt. Poonam Kumari (supra) all the contents were the same.
In the case of Smt. Poonam Kumari the contention of the assessee was that her counsel was not called by the Bench and on the contrary the Tribunal found from the order-sheet that the counsel was present and was heard and this was pointed out in the order of the Tribunal also. But in the present case, the Tribunal had rejected the first miscellaneous application on mistaken assumption that notice was served on the assessee through authorised person and rejected the second miscellaneous application at the time of admission stage itself without hearing the assessee on the ground that the assessee’s request was to review the order in the first miscellaneous application. Here, again the Tribunal had wrongly presumed that the second miscellaneous application was against the first miscellaneous application; but, in fact, it was against the original order of the Tribunal dt. 10th September, 1996.
17. The learned Departmental Representative also relied on the decision of the Hon’ble Orissa High Court in the case of CIT vs. ITAT (supra) wherein it was held that an order rejecting an application for rectification under s. 254(2) is not an order passed under s. 254(1) and it cannot be rectified under s. 254(2). The ratio of this decision is not applicable to the facts of the present case as the miscellaneous application filed by the assessee is for rectification of the order passed under s. 254(1) and not to rectify any order passed under s. 254(2). In the above case, the prayer of the assessee in the second miscellaneous application was to exercise its power under s. 254(2) and to rectify the alleged mistakes in the order dt. 6th March, 1990, passed by the Tribunal in the first miscellaneous application and that is why it was held so. In the instant case, the assessee has all the times requested the Tribunal to recall its original order dt. 10th September, 1996, passed under s. 254(1) of the Act as would appear from the subject-matter and paras of 6 and 9 of the second miscellaneous application and from subject and last para of M.A. No. 61/Cal/97.
18. The Revenue has also placed reliance on the Supreme Court decision in the case of State of Uttar Pradesh & Anr. vs. Labh Chand (supra) wherein it has been held that “it is a well-established salutary rule of judicial practice and procedure that an order of a single Judge or of a larger Bench of the same High Court dismissing the writ petition either on the ground of laches or non-exhaustion of alternate remedy, shall not be bypassed by a single Judge or Judges of a larger Bench except in exercise of review or appellate powers possessed by it”. In other words, once a writ petition is dismissed by the High Court, the second writ petition on the same matter cannot be entertained by the same High Court even if the first petition was dismissed for laches or non-exhaustion of alternate remedy. In our opinion, a writ petition under Art. 226 of the Indian Constitution cannot be compared with a miscellaneous application under s. 254(2); and more so when miscellaneous application filed under s. 254(2) is governed by the proviso to r. 24 of the IT (AT) Rules, 1963, whereby the Tribunal is empowered to restore the appeal after setting aside the ex parte order if the assessee can satisfy the Tribunal that there was sufficient cause for its non-appearance. Moreover, the Tribunal is also empowered and has inherent power to rectify its mistake if it is apparent from record. In view of above, the decision in Labh Chand’s case does not help the cause of the Revenue.
19. The learned Departmental Representative also placed reliance on the decision of the Bombay High Court in the case of CIT vs. Ramesh Electric & Trading Co. (supra) wherein it is held that failure of the Tribunal to consider arguments is not an error apparent from record, although it may be an error of judgment. The ratio of this decision is also not applicable to the facts of the case before us, as nowhere in the miscellaneous application the assessee has requested to consider some of the arguments advanced by the assessee which were not considered by the Tribunal. In that case, in the miscellaneous application, the assessee contended that the Tribunal did not consider some of the arguments advanced by the assessee and the Tribunal entertained this application and exercised its power of rectification under s. 254(2). This is not the legal and factual position in the case before us and it has already been discussed in clear terms that the Tribunal does not have any power to review its own order under the provisions of the Act.
20. In continuation of same type of arguments and contentions, the learned Departmental Representative also relied on the Andhra Pradesh High Court decision in the case of Kakarla Krishnamurthy vs. CIT (supra) wherein it is held that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. The legal proposition laid own in this case is also not applicable to the facts of the present case, as it has already been clarified in one of the earlier paragraphs of this order, that fresh evidence, additional evidence and fresh reasons do not supplement the original ones. In the instant case, the validity of orders in first and second miscellaneous applications are to be judged by the reasons so mentioned in those orders and nowhere their validity or otherwise have been supplemented by fresh reasons in the shape of affidavit or otherwise. The affidavit of the managing director of the assessee-company was already filed along with the first miscellaneous application stating therein that no notice of hearing had been received by their representative in the Calcutta Office. In view of this neither the ratio of this decision is applicable to the facts of the instant case nor the contention of the Revenue holds good.
21. In view of the above as well as for the reasons given in the aforesaid paragraphs, we come to the conclusion that the provisions of sub-s. (1) of s. 254 in its true spirit had not been complied with while passing the ex parte order dt. 10th September, 1996 and that there was sufficient cause for non-appearance when the appeal was called on for hearing. We, therefore, on the facts and circumstances of the case, hold accordingly and set aside the ex parte order of the Tribunal dt. 10th September, 1996, and restore the appeal in all fairness and in the interest of justice.
22. As the original ex parte order of the Tribunal dt. 10th September, 1996 is set aside and the appeal is recalled, the registry is directed to fix up the appeal for fresh hearing.
23. In the result, the miscellaneous application is allowed.