Income Tax Appellate Tribunal - Nagpur
Assistant Commissioner Of Income-Tax vs Smt. Rajranidevi Saraf on 25 June, 1996
Equivalent citations: [1997]60ITD249(NAG)
ORDER
K.P.T. Thangal, Judicial Member
1. This appeal by the revenue and the cross-objection by the assessee pertain to the assessment year 1989-90. The revenue is aggrieved by the order of the learned DCIT (A) in cancelling his order passed 5-2-1993 and restoring the appeal for fresh hearing. The assessee is in the cross-objection has supported the order of the DCIT(A).
2. The facts, in brief, are as under :
As per the notice, the appeal was fixed for hearing on 5-3-1993 and the notice was served on the assessee on 30-1-1993. It remained non-complied. The case of the assessee for non-compliances of the notice was that in the notice dated 27-1-1993 which was served on the assessee on 30-1-1993, the date of hearing was mentioned as 5-3-1993. The counsel of the assessee sought adjournment on 4-3-1993 as the assessee was out of station. But to the assessee's surprise, it was informed that the matter has been decided ex parte. In the above circumstances, the assessee's counsel made an application on 24-3-1993 requesting to recall the order and fix the same for hearing afresh. The assessee relied upon the following decisions :-
1. Khushalchand B. Daga v. T.K. Surendran, Fourth ITO [1972] 85 ITR 48 (Bom.)
2. ITO v. S.B. Singar Singh & Sons [1970] 75 ITR 646 (All.)
3. Shew Paper Exchange v. ITO [1974] 93 ITR 186 (Cal.)
3. Considering the above submissions, the learned DCIT (A) held that the assessee was confused by the date and thereby the assessee could not appear on the said date and this is clear in view of the fact that the assessee filed an application for adjournment on 4-3-1993 in respect of the case which was to be heard on 5-3-1993. Since the mistake had occurred in the office of the DCIT (A), relying upon the above cited decisions, he cancelled the order passed on 5-2-1993 and resorted the matter for fresh hearing. However, prior to the above order, the assessee preferred an appeal before the Tribunal against the order of the learned DCIT(A) which was passed ex parte for non-attendance of the assessee, bearing ITA No. 538/Nag/93. In view of the subsequent order of the DCIT(A) recalling the order dated 5-2-1993 which was passed ex parte, the assessee approached the Tribunal vide its letter dated 31-10-1994 seeking permission of the Tribunal to withdraw the appeal on the following lines :-
"The assessee respectfully begs to submit as under :-
1. The present appeal is filed by the assessee against the order passed by the learned DCIT(A), Nagpur wherein the learned DCIT(A) has passed the appellate order ex parte for alleged non-attendance on behalf of the assessee.
2. In an application filed before him it was pointed out that the date of hearing was 5-3-1993 whereas ex parte order is passed considering the date of hearing as 5-2-1993. Considering the facts the ld. DCIT(A) has recalled the order and restored the appeal for fresh hearing. The copy of the order passed under section 154 by the learned DCIT(A), Nagpur is enclosed.
3. In view of the above, the assessee crave leave for permission to withdraw the appeal."
Vide its order dated 7-11-1994, the Tribunal granted the permission to the assessee to withdraw the appeal. The present appeal by the department is against the order passed by the learned DCIT(A) dated 9-8-1994 recalling his order dated 5-2-1993 and restoring the matter for fresh hearing.
4. The learned Departmental Representative took us through section 154 of the Income-tax Act, 1961 which relates to the powers of the income-tax authorities to rectify the mistake apparent from the record. The ld. Departmental Representative submitted that the applicability of the said section is limited. It provides for rectification of any mistake apparent from the face of the records by any income-tax authorities either brought by the assessee or by the Assessing Officer. No power is extended to the DCIT(A) to recall his order and restore the same for fresh hearing under section 154 of the Act.
5. As against this, the learned counsel for the assessee, Shri L.S. Dewani, submitted that what the department is now trying is to take an undue advantage of its own mistake. First of all, the date mentioned for hearing in the notice of hearing of the appeal was 5-3-1993 whereas the appeal was disposed of an 5-2-1993 ex parte. It was under these circumstances, the assessee made the application under section 154. The DCIT(A) vide his order dated 9-8-1994 held that the assessee was confused due to mention of wrong date in the notice. In other words, on account of mistake of his office, he recalled the order and restored it for fresh hearing. The assessee against the dismissal of the original appeal ex parte, approached the Tribunal seeking the permission withdraw the appeal and the same was allowed. The learned counsel submitted that the revenue is not justified in filing this appeal against the order of the learned DCIT(A) on the following grounds :-
(a) Had the department made known to the assessee that the department has preferred an appeal against the order under section 154, the assessee would not have approached the Tribunal for withdrawing the appeal.
(b) The revenue by its own action, allowed the assessee to withdraw her appeal.
(c) Now the revenue is precluded in approaching the Tribunal against that order.
(d) The revenue is taking the advantage of its own mistake which is against the very fundamental rule of natural justice.
(e) The revenue is taking the advantage of its own mistake which no authority can do.
The learned counsel for the assessee relied upon the following decisions :-
1. Khushalchand B. Daga's case (supra)
2. S.B. Singar Singh & Sons' case (supra)
3. Shew Paper Exchange's case (supra)
4. CIT v. ITAT [1979] 120 ITR 231/2 Taxman 337 (Ker.)
5. Joseph Michael Bros. v. ITAT [1993] 199 ITR 466 (Ker.) Relying upon the above cited decisions, the learned counsel contended that the Tribunal or any other appellate authority has power to set aside its earlier order (ex parte) to give the aggrieved party an opportunity of being heard and to decide the issue on merit. All these cases, ex parte hearing took place before the Tribunal or the Tribunal rejected application for review of its order in which the issues agitated before the Tribunal was not specifically considered. The learned counsel further relied upon the decision of the Supreme Court in the case ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 and the decision of the Andhra Pradesh High Court in the case of CIT v. ITAT [1994] 206 ITR 126 also to bring home the point that the Tribunal or any authority for that matter who is discharging a judicial function has an inherent power to rectify any mistake, and to pass any consequential order to do justice to the aggrieved party. The decisions relied upon the by the learned counsel makes it clear that the judicial authority or any body discharging the judicial function has an inherent power to rectify the mistake committed by it.
6. However, the question before us is whether the revenue authority had a power to recall its order and direct to have a fresh hearing under section 154 wherein the statute only speaks of correction of mistake apparent from the face of the record. Under section 154, the income tax authorities have empowered to rectify any mistake apparent from the record by amending any order passed by it and/or amending any intimation sent by it, and no more. Section 154 does not specifically give a power to recall an order and to decide the issue afresh.
7. Question before us is whether, under the given circumstances like this, the assessee is without remedy and suffer injustice done for no fault of her but for the act or mistake of other party. We are afraid to take advantage of its own mistake on the ground that the statute does not empower the authority to recall its order and, therefore, the assessee should suffer the injustice, is against the very fundamental principles of natural justice. No authority can take an undue advantage of its own mistake.
8. It is true that in a taxing statute, one has to took merely as to what is clearly stated. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implies. One can only took fairly at the language used.
Under section 154, there is no specific power conferred on the revenue authority to recall order, it can only amend a mistake apparent on the face of the record. But under section 154 of the Income-tax Act, 1961, there is no specific denial also.
9. Under the above circumstances, the Tribunal or any authority exercising a judicial or quasi-judicial power has to resort to the principles of natural justice as held in the case of Wisemen v. Borneman 45 TC 540 by his Lordship, Lord Morris of Borthy-Gest :
"That the conception of natural justice should all stages guide those who discharge judicial functions is not merely an acceptable but is an essential part of the philosophy of the law. We often speak of the rules of natural justice. But there is nothing rigid or mechanical about them. What they comprehend has been analysed and described in many authorities. But any analysis must bring into relief rather their spirit and their inspiration than any precision of definition or precision as to application. We do not search for prescriptions which will lay down exactly what must, in various divergent situation, be done. The principles and procedures are to be applied which, in any particular situation or set of circumstances, are right and just and fair. Natural justice, it has been said, is only 'fair play in action'. Nor do we wait for directions from Parliament. The common law has abundant riches : there may we find that Byles, J. called 'the justice of common law'.
In case of A.K. Kraipak v. Union of India AIR 1970 SC 150, their Lordships of the Supreme Court observed :
"The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words, they do not supplant the law of the land but supplement it. The concept of natural justice has undergone a great deal of change in recent years.... An just decision in an administrative enquiry may have more far reaching effect than a decision in a quasi-judicial enquiry. As observed by this Court Suresh Koshy George v. University of Kerala Civil Appeal No. 990 of 1968, dated 15-7-1968 (AIR 1969 SC 198), the rules of natural justice are not embodied rules. What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of the case, the framework of the law under which the enquiry is held and the constitution of the Tribunal or body of persons appointed for that purpose. Whenever, a compliant is made before a Court that some principle of natural justice had been contravened the Court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case."
The above decision was followed by the Hon'ble Supreme Court again in the case of State of Gujarat v. Ambalal Haiderbhai AIR 1976 SC 2002. Their Lordships held in that case that the rules of natural justice may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its content should be for a given case must depend to a great extent on the fact and circumstances of that case, the framework of the law under which the equity is held, and the constitution and the nature of duties of the Tribunal or the body of person appointed for that purpose. Thus, even in the absence of any express rule of natural justice embodied in the statute, the Courts have to supply such rules as the circumstances of the case may demand in order to do justice.
10. Byles, J. emphasising the duty to hear in very emphatic terms in Cooper v. Wandsworth Board of Works [1863] 143 E.R. 414, quoted the observations of Justice Fortescue in Dr. Bentley's case. A fair hearing of the party consists of the following three elements :-
(a) Notice of the proposed action.
(b) Notice when the Judge propose to proceeds with the matter.
(c) A fair opportunity to show cause against the proposed action.
In the case of Sangram Singh v. Election Tribunal AIR 1955 SC 425, their Lordships observed as under :
"Next, there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them. Of course, there must be exceptions and where they are clearly defined, they must be given effect to. But taken by and large, and subject to that proviso, our laws of procedure should be construed wherever that is reasonably possible in the light of that principle."
11. In the instant case of the assessee, the notice was served on the assessee mentioning the wrong date of hearing. The assessee could not represent her case. Subsequently, on application by the assessee, the wrong order was set aside by the DCIT(A). Believing that the assessee will have a fair opportunity before the DCIT(A), the assessee withdrew the appeal filed by her before the Tribunal against the wrong dismissal. At the time of the withdrawal of the appeal by the assessee, the revenue did not make aware the assessee that it has filed an appeal before the Tribunal against the order of the DCIT(A) recalling his order. Thus, the assessee has been prevented by the action or inaction of the revenue from getting justice by presenting her case.
12. On a strict construction of section 154, we come to the conclusion that the revenue authority is not empowered to set aside and recall its earlier order but it can only amend its order, if mistake is apparent. However, in the decisions quoted above, their Lordships make it clear that the rule of natural justice cannot be shed out completely so as to preclude the assessee by the revenue getting justice by action or inaction.
13. In the light of the above, we dismiss the appeal by the revenue.