ORDER
T.V. Rajagopala Rao, Judicial Member
1. The appeal was disposed of by this Tribunal by its order dated 29-4-1988. One of the prime contentions raised by the assessee in the appeal was that the reopening under Section 147(b) was bad in law. That contention was found against the assessee in those orders. The assessee filed miscellaneous petition on 27-10-1988. It is contended in the said miscellaneous petition that certain documents are in fact did not form the basis for issue of notices under Section 148 were found to have formed such basis for issue of notices under Section 148 by the Tribunal in its order and on that score the Tribunal upheld the legality of the notices. It was further contended that if the Tribunal discarded those documents then the Tribunal would have come to the conclusion that notice under Section 147(b)/148 is not valid since the Income-tax Officer had no reasonable belief to justify reopening. Thus considering the documents in its original orders and taking them as the basis of notice under Section 148 the Tribunal committed a mistake or an error borne on recrod and therefore the orders of the Tribunal dated 29-4-1988 are liable to be corrected, rectified and the notice under Section 148 should be held to be invalid and thus necessary rect ificatory orders should be passed by the Tribunal.
2. Before hearing the miscellaneous petition the office put up the petition before the Senior Member soliciting his orders as to whether the miscellaneous petition should be numbered or not. On 6-10-1989 the Senior Member while rejecting the miscellaneous petition wrote as follows:-
6-10-1989
Pages 1 to 23 of the Tribunal’s order dealt with the question of validity of reopening. We come to a finding that there is valid reopening. The present MP is filed in order to secure a review of our orders. We have no powers of review. Hence the petition is rejected.
The purport and not the text of the order dated 6-10-1989 was communicated to the assessee-petitioner. Even after the receipt of the purport of the order the assessee filed the present petition. The present petition was not put up to the Bench and no permission of the Bench was secured for numbering the petition though it is the mandatory procedure prescribed according to the standing orders of the Tribunal. The Asstt. Registrar himself ordered numbering of the petition and the notice also was given to the revenue (respondent). Afterwards it came up for hearing. The contention of the present petitioner is that the order dated 6-10-1989 extracted above constitute refusal to exercise powers under Section 254(2) and since the said orders were without hearing assessee-petitioner, there is an error apparent on the face of the record and that order itself is liable to be corrected under Section 254(2) and hence while holding that the previous orders dated 6-10-1989 as illegal and honest, fresh orders should be passed on the miscellaneous petition dated 21-9-1989.
3. During the course of hearing Sri Ajay Gandhi, learned Advocate for the assessee- petitioner heavily relied upon the Delhi Full Bench decision found in Smart (P.) Ltd. v. ITAT [1990] 182 ITR 384 and the Andhra Pradesh High Court’s decision in Addl. CIT v. ITAT [1983] 139 ITR 615 and contended strongly that rejecting the miscelleaneous petition on 6-10-1989 without affording an opportunity of hearing the petitioner is bad in law and amounts. to negating fruits of natural justice to the petitioner. Therefore, he argued that there is a mistake apparent on record which culminated in the orders dated 6-10-1989 and therefore those orders must be rectified and present M.P. should be heard and decided upon on merits.
4. On the other hand the learned Departmental Representative contended that a similar miscellaneous petition was already filed and it was rejected by the Tribunal by its order dated 6-10-1989 and those orders are perfectly valid under law and unassailable and therefore the present miscellaneous petition is ill-conceived and should be rejected. Further the learned Departmental Representative argued that unless the assessee-petitioner obtains an order in the form of a writ or other appropriate direction from the High Court in exercise of its writ jurisdiction that the order of this Tribunal dated 6-10-1989 is invalid, the present miscellaneous petition cannot be entertained.
5. The only point which arises for our decision in this miscellaneous petition is whether the order of the Tribunal dated 6-10-1989 refusing to exercise its jurisdiction Under Section 254(2) without giving opportunity of hearing to the assessee is valid under law. Section 254(2) along with the proviso is as follows :
254(2) The Appellate 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 (Assessing) Officer:
Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this Sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard.
Under what circumstances opportunity of hearing must be given Under Section 254(2) was the subject considered both by the Full Bench of Delhi High Court in Smart (P.) Ltd.’ s case (supra) as well as Andhra Pradesh High Court decision in ITAT scasc (supra). In our humble opinion there was a conflict between the two High Courts about this point. The Full Bench of Delhi High Court held at p. 391 of the reported judgment as follows :-
Even though it is not specifically provided that, while dismissing an application under Section 254(2), the applicant should be heard, in our jurisprudence, whenever a judicial Tribunal deals with an application requiring a judicial decision, then the applicant, at the first instance, has to be heard. After hearing, the Tribunal may either dismiss the application, without notice to the opposite party or, if it is of the opinion that an order under Section 254(1) may require amendment or modification, then it should issue notice to the opposite party and, thereafter, hear both the parties before disposing of such an application. In other words, no order varying an order under Section 254(1) can be passed by the Tribunal without hearing both the parties but an order refusing to exercise powers under Section 254(2) can be passed by the Tribunal by hearing only the applicant. Similarly, when the Tribunal wants to suo motu rectify any mistake, it must, in consonance with the principles of natural justice, hear both the parties before passing an order under Section 254(2).
Thus it can be seen even if the Tribunal wants to suo motu rectify formal mistakes in its original order according to the Delhi High Court decision, principles of natural justice would require that both the parties should be heard before rectifying the mistakes and passing a rectificatory order. The Andhra Pradesh High Court which was relied upon by the learned counsel for the assessee himself, holds diametrically an opposite view. The facts of the case before the Andhra Pradesh High Court were that after passing of the order Under Section 254(1) the Tribunal suo motu exercised its powers of rectification and corrected only typographical mistakes which are apparent on the face of record and passed a rectificatory order without issuing any notice to the department. The revenue filed a writ petition before the Hon’ble Andhra Pradesh High Court challenging that passing a rectificatory order in the form of corrigendum on 20-10-1973 by the Appellate Tribunal purporting to rectify the mistakes in its order dated 23-4-1971 without issuing notice to the department and without hearing its objections is bad in law. That writ petition was dismissed by the Andhra Pradesh High Court with the following observations found at p. 619 of the reported decision:
We, therefore, find that in the present case, the rectification could be made without any notice to the parties, suo motu, as the mistakes which have crept into the original order and been sought to be rectified are only mistakes apparent from the record and no prejudice can be said to have been caused to the Commissioner, even though no notice was given to him in the present case.
Therefore, it can be seen that according to the Delhi High Court Full Bench, even in a case of suo motu rectification right of hearing should be given to both the parties, whereas the Andhra Pradesh High Court held that no notice need be given in a case where the mistake sought to be rectified suo motu by the Tribunal when those mistakes are formal in nature representing typographical errors etc., when the said order does not either increase the tax, reduce the refund or enhance the assessment. Further there appears to be cleavage between these two High Courts as founder what circumstances opportunity of hearing should be afforded under the proviso under Section 254(2). According to the Delhi High Court even in a case where the Tribunal refused to exercise its powers Under Section 254(2), the applicant should be heard inasmuch as the principles of natural justice are enshrined in Section 254(2) itself and so a liberal construction of the said proviso as against its strict literal construction should be preferred and followed. The Andhra Pradesh High Court appeared to have preferred literal and strict construction of the proviso to Section 254(2) inasmuch as their Lordships of the Andhra Pradesh High Court held the following at p. 618 :
But undoubtedly, it has got power and jurisdiction to rectify its mistake apparent from the record and make a suitable amendment of any order passed by it under Sub-section (1) to Section 254. Where the assessee or an ITD brings to the notice of the Appellate Tribunal about the creeping in or existence of any mistake apparent from the record, the Tribunal shall make suitable amendment and rectify such mistakes. In the latter case, the Tribunal has a statutory duty to exercise its power of rectification and make suitable amendment of its earlier order. However, the proviso to this Sub-section (2) of Section 254 enjoins the Appellate Tribunal to give notice to the assessee of the intention to make any amendment, rectifying a mistake apparent from the record, if such amendment would have the effect of enhancing an assessment or reducing refund or otherwise increasing the liability of the assessment or reducing refund or otherwise increasing the liability of the assessee. The affording of a reasonable opportunity to the assessee of being heard provided in the proviso, must be given only when the liability of the assessee relating to the tax is increased or it has the effect of reducing the refund or enhancing the assessment Otherwise, the proviso shall not come into play.
6. Therefore, it is seen that according to the Andhra Pradesh High Court giving of notice to the assessee and affording him a reasonable opportunity of being heard is essential only when the rectificatory order is going to increase the liability of the assessee or it has the effect of reducing the refund or enhancing the assessment. Rejecting miscellaneous application as we did by our orders dated 6-10-1989 does not result either in increase of tax or reduction of the refund or enhancement of assessment and therefore, giving notice to the assessee before passing orders dated 6-10-1989 appears to be perfectly justified under law and appears to be in consonance with the ratio of the Andhra Pradesh High Court judgment in IT AT s case (supra). The two requirements set out by the Delhi High Court to justify rejection of a petition seeking to rectify the mistakes in the original order are :
(1) to give opportunity of hearing to the assessee, and
(2) indicate the grounds in the orders while rejecting the application.
7. As far as the first requirement is concerned according to the Andhra Pradesh High Court whose decision is binding against us being jurisdictional High Court is that no notice of hearing need be given to the assessee when the order does not have the effect of increasing the tax, reducing the refund or enhancing the assessment, with great respect to the Delhi High Court the first condition is not essential condition under law.
Regarding the second condition we are of the opinion that we have substantially complied with the same inasmuch as we have assigned reasons in our orders dated 6-10-1989 as to why the Tribunal is rejecting the miscellaneous petition.
8. Therefore, in our view the present miscellaneous petition is not maintainable and we further hold that the orders of the Tribunal dated 6-10-1989 rejecting the miscellaneous petition dated 21-9-1989 filed by the assessee is perfectly valid order and it does not represent any mistake apparent from record.
9. In the result the petition is dismissed.
