Income Tax Appellate Tribunal - Ahmedabad
Bipinchandra Chimanlal Doshi, ... vs The Dcit Cir-1(1), Gandhinagar on 2 December, 2020
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'B' अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER Miscellaneous Application No. 215/Ahd/2017 ( in I.T(SS).A. No. 18/Ahd/2000) ( नधा रण वष / Assessment Year : Block Period 01-04-1986 to 31-03-1996 and 01-04-1996 to 01-08-1996) Shri Bipinchandra बनाम/ The Deputy Chimanlal Doshi Vs. Commissioner of C/o. Beena Medical Stores, Income Tax, Opp. Civil Hospital, Circle - 1(1), Himatnagar, Dist. Gandhinagar Sabarkantha थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAZPD3602 L (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri K. C. Thaker, A.R. यथ क ओर से/Respondent by : Shri Dileep Kumar, Sr.D.R. सन ु वाई क तार ख / Date of 16/10/2020 Hearing घोषणा क तार ख /Date of 02/ 12 /2020 Pronouncement आदे श/O R D E R PER PRADIP KUMAR KEDIA - AM:
The captioned Miscellaneous Application (MA) has been filed at the instance of assessee under s.254(2) of the Act on 19.07.2017 seeking recall of earlier order of the Tribunal in IT(SS)A No. 18/Ahd/2000 dated 15.05.2009 wherein the appeal of the assessee was partly adjudicated by ITAT limiting itself on the point of jurisdiction M . A. N o . 2 1 5 / Ah d / 2 0 1 7 ( I n I T ( S S ) A N o . 1 8 / Ah d / 2 0 0 0 ) - 2 -
questioned by the assessee with reference to Section 158BD of the Act. It was pointed out in the present MA that the grounds concerning objections on merits of additions were not adjudicated by the Tribunal at all causing grave prejudice to the assessee. A prayer was thus made to supplement/ modify the order of Tribunal for adjudication of grounds not disposed off in the previous order rendered by the tribunal dated 15-05-2009
2. Briefly stated, by way Tribunal order in IT(SS)A No. 18/Ahd/2000 dated 15.05.2009, the block assessment under appeal was annulled by the ITAT on the ground that assessment framed in the case of the assessee is invalid on the contours of Section 158BD of the Act and consequently, the assessment proceedings under s.158BC of the Act in pursuance of jurisdiction wrongly acquired under s.158BD of the Act was found to be nonest and void ab initio and thus bad in law. The ITAT thus annulled the block assessment itself leaving grounds of appeal on merits of additions un-adjudicated in the following terms as per para 8 of its order reproduced below:
"Since, we have already annulled the assessment, therefore, the adjudication of other grounds taken by the assessee will be merely academic and accordingly do not proceed with other grounds."
3. On challenge by Revenue, the Hon'ble High Court of Gujarat on 27.02.2017 reversed the action of ITAT and quashed and set aside the Tribunal order dated 15.05.2009. The conferment of jurisdiction on revenue authorities was found valid by the Hon'ble Gujarat High Court. By virtue of this judgment, the legitimacy of block assessment was thus per se restored. A Special Leave Petition (SLP) against the judgment of the Hon'ble Gujarat High Court was filed by the assessee. The SLP was however dismissed by the Hon'ble Supreme Court on 14.07.2017. Resultantly, a solitary question of law arising from the order of Tribunal in relation to validity of action of AO in carrying out assessment under s.158BC of the Act pursuant to jurisdiction M . A. N o . 2 1 5 / Ah d / 2 0 1 7 ( I n I T ( S S ) A N o . 1 8 / Ah d / 2 0 0 0 ) - 3 -
exercised under s.158BD of the Act was answered in favour of Revenue and against the assessee by the Hon'ble Gujarat High Court.
4. In the light of these broad facts, a Miscellaneous Application was filed by the assessee on 19.07.2017 i.e. within a period of about 5 months after the judgment was delivered on 27.02.2017 by the jurisdiction High Court with reference to legal point but belatedly after 4 years when seen with reference to the date of the appellate order passed by the Tribunal which is sought to be rectified. The assessee, in its MA, sought recall of the order of ITAT for adjudication of undecided grounds.
5. In this backdrop, it is essentially the case of the assessee that having regard to a very rare and peculiar facts and circumstances involved as narrated hereinabove, the Miscellaneous Application seeking recall of the Tribunal's order for adjudication of grounds remaining totally undecided by the Tribunal cannot be termed as time barred qua Section 254(2) of the Act, notwithstanding the prayer for rectification after stipulated time limit of four years when reckoned from the date of Tribunal's order. It is the case of the Assessee that the assessee was not previously aggrieved by the order of ITAT which decided the jurisdictional aspects in his favour and quashed the assessment order itself. The grievance arose to the assessee only upon reversal of order of ITAT and restoration of jurisdiction by Hon'ble Gujarat High Court. As pointed out, the Assessee promptly filed the MA before ITAT within the amended period of 6 months from the date of cause of action arising to the assessee.
6. When the Miscellaneous Application seeking restoration of substantive appeal of the assessee was placed for hearing before the Tribunal for modification of earlier order, the learned AR for the assessee submitted at the outset that the Tribunal had erroneously delivered judgment on legal point of jurisdiction alone whereby the M . A. N o . 2 1 5 / Ah d / 2 0 1 7 ( I n I T ( S S ) A N o . 1 8 / Ah d / 2 0 0 0 ) - 4 -
block assessment was rendered a nullity. However, while discharging its judicial function, the Tribunal has omitted to consider other grounds simultaneously urged by the assessee on the correctness of additions/disallowance on merits as made in the assessment framed in pursuance of block assessment made under s.158BC r.w.s. 158BD of the Act. It was reiterated on behalf of the assessee that the Tribunal, in its order, which is subject matter of present Miscellaneous Application, had agreed with the contention of the assessee on legal ground and quashed the assessment framed under s.158BC r.w.s. 158BD at the threshold and thus suo motu restrained itself from adjudicating other grounds raised. It was thus pointed out that the Tribunal owe sole responsibility for omission to adjudicate all relevant grounds presented before it and the mistakes committed by the Tribunal in not adjudicating certain grounds cannot be attributed to the assessee.
7. To prop up his case for maintainability of MA filed beyond limitation period of 4 years in such peculiar circumstances towards non adjudication of grounds on merits all together, the learned AR for the assessee placed reliance upon the decision of Hon'ble Supreme Court in S. Nagraj vs. State of Karnataka (1993) Supp 4 SCC 595 to profess that justice is a virtue which transcends all barriers. Neither the Rule of procedure nor the technicalities of law can stand in its way. The miscarriage of justice must not be perpetrated upon the assessee for no fault of his. The Tribunal should not allow the assessee to suffer for the mistake committed by the Tribunal in not disposing of the grounds duly taken by the assessee in his substantive appeal. It was submitted that notwithstanding statutory fetters, the Tribunal is bestowed with inherent power to rectify the mistake committed by it in the peculiar facts of a given case. It was contended that an attempt should be made to advance the cause of justice. The learned AR for the assessee made reference to several judicial pronouncements underlining the inherent power of the Tribunal to M . A. N o . 2 1 5 / Ah d / 2 0 1 7 ( I n I T ( S S ) A N o . 1 8 / Ah d / 2 0 0 0 ) - 5 -
grant substantial justice in supersession to technical considerations. We shall deal with these precedents in the later paragraphs to avoid repetitions.
8. In the ongoing deliberation on admissibility of rectification application under s.254(2) of the Act beyond limitation period, the learned Advocate Mr. Manish J. Shah sought leave of the Tribunal to lend supportive hand to the assessee on delineation of the point in issue, which was duly granted. It was submitted by Mr. Shah that rights of the assessee were severely affected by the non-adjudication of grounds by the Tribunal duly taken on behalf of the assessee. It was contended that the well-known legal maxim 'an Act of the Court shall prejudice no man' must serve as guiding principle to the Tribunal and the remedy against the order should not be lost by limitation for non- disposal of substantive grounds on aspects of merits of additions/ disallowances. The learned counsel referred to the decision of Hon'ble Gujarat High Court in Peterplast Synthetics (P.) Ltd. vs. ACIT 364 ITR 16 (Guj) to buttress his case.
9. The learned DR, on the other hand, submitted that the provision of Section 254(2) of the Act is meant to provide the Tribunal with a mechanism to rectify mistakes apparent from record within the stipulated time period. The limitation period is meant to give quietus to the litigation on lapse of time period. The proposed rectification thus cannot be carried out owing to bar of limitation, even if, the mistake committed by the Tribunal is apparent from record.
10. We have given our utmost consideration to the facts and peculiar circumstances of the present case, the materials to which our attention was invited and the rival submissions. The question posed before us is whether the Tribunal is empowered to condone the delay in peculiar circumstances where a grave prejudice has caused to the assessee for omission of Tribunal to adjudicate grounds on merits and restraining M . A. N o . 2 1 5 / Ah d / 2 0 1 7 ( I n I T ( S S ) A N o . 1 8 / Ah d / 2 0 0 0 ) - 6 -
itself to legal point which was later reversed by the Superior wisdom of Jurisdictional High Court.
11. It is the case of the assessee that the present application is not placed for rectification of any observations of ITAT in the previous order per se. It was contended that the objective of the application is to enable the Tribunal to pass a complete order by adjudication of all grounds raised before it without any rectification of mistake in existing order on legal point. What is being sought is supplementation of the existing order with findings on grounds not adjudicated so far. It is the case of the assessee that he has filed a rectification application promptly seeking cure for mistake committed by Tribunal as soon as it learnt of prejudice to assessee resurfaced and reinstated on adverse decision of the Hon'ble Gujarat High Cout on the point of jurisdiction. It was emphasized that since the legal point decided in favour of the assessee by Tribunal earlier had resulted in total obliteration of additions/ disallownces, there was no perceptible reason for the assessee to indulge in cost prohibitive protracted litigation for adjudication of grounds which were rendered infructuous at that point of time.
12. At this juncture, it may be pertinent to notice that the Assessee herein is an ordinary individual and it is not practical to expect him to be well versed with nuances of complex laws. What is to be weighed is whether the assessee in such case is reasonably diligent or guilty of gross negligence. The MA in the instant case was filed on reversal of decision of Tribunal on legal point whereby its conclusion on lack of jurisdiction did not hold field any longer. The judgment of the Hon'ble High Court was rendered after the lapse of 4 years time with reference to ITAT order giving a bonafide cause of action to the Assessee. In short, the MA was filed beyond the limitation period provided under s.254(2) of the Act owing to verdict of the High Court after 4 years but was filed swiftly within an revised limitation period M . A. N o . 2 1 5 / Ah d / 2 0 1 7 ( I n I T ( S S ) A N o . 1 8 / Ah d / 2 0 0 0 ) - 7 -
of six months from the date of judgment of the Hon'ble Gujarat High Court. It is the plea of the assessee that owing to jurisdictional ground decided against the assessee by the judgment of Hon'ble Gujarat High Court, a prejudice came to the fore owing to an inapt act of Tribunal towards non disposal of grounds on merits. The decision of the Hon'ble High Court and dismissal of SLP there against did give rise to a fresh cause of action for adjudication of grounds on merit remaining untouched & undecided thus far by Tribunal in the substantive appeal.
13. Admittedly, limitation period when reckoned from the date of Tribunal order stands time barred. The assessee, however, insists that starting point of limitation for the purpose of rectification of Tribunal order should be reckoned from the date when a bonafide cause of action arose non-disposal of grounds of substantial nature regardless of the date of order of the Tribunal.
14. As noted, the facts of case confronts a peculiar and rare situation indeed. In the instant case, the doctrine of merger of the order of ITAT with that of Hon'ble High Court would apply only to the extent, the subject matter of the order of ITAT and that of Hon'ble High Court is the same. The order of ITAT in respect of legal point thus stands merged with the appellate order of the Hon'ble High Court passed under S. 260A and as a consequence, no rectification of the existing order of the Tribunal rendered only on point of jurisdiction is permissible. However, the doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject matter of challenge as extensively dealt with by Hon'ble Supreme Court in the case of Kunhayammed vs. State of Kerala 2001 (129) E.L.T. 11 (S.C.). Thus, doctrine of merger would not extend to issues on merits remaining undecided by the Tribunal or by the Hon'ble High Court. Hence, in our humble view, there appears to be no bar exercising its inherent and statutory powers of Tribunal in revisiting its earlier M . A. N o . 2 1 5 / Ah d / 2 0 1 7 ( I n I T ( S S ) A N o . 1 8 / Ah d / 2 0 0 0 ) - 8 -
action with a limited purpose of adjudication of grounds which remained undecided.
15. Apart from what is noted above, It is the commonly known principle that express grant of statutory power carries with it all such authority to use reasonable means to make such power effective. The powers conferred by Section 254 of the Act on the Appellate Tribunal for disposal of appeals before it is of widest possible amplitude and carries with it, by necessary implication, all powers and duties incidental and necessary to make the exercise of its functions fully effective. Where the Act confers jurisdiction, impliedly, also grants the power of doing all such acts as are essentially necessary to its execution. The aforesaid legal principle has been affirmed and applied as regards power of the Tribunal under s.254 of the Act while adjudicating on the power of the Tribunal to grant stay by the Hon'ble Supreme Court in ITO vs. Mohammed Kunhi (1969) 71 ITR 815 (SC). As logically flows therefrom, power to condone delay is incidental and necessary to render, dispose and to fully and truthfully discharge its duties and functions. Significantly, in the instant case, it is the Tribunal which has committed error in restricting itself to legal ground and in not addressing itself on certain other grounds of substantial nature without any fault attributable to the assessee. In such a situation, the cause of substantial justice deserves to be preferred over the technical considerations pitted against it by way of limitation, to shun an apparent miscarriage of justice. Noticeably, rectification application in the instant case has been filed promptly with reference to the judgment of Hon'ble Gujarat High Court and thus there can be no presumption that delay is occasioned deliberately in the instant case. No culpable neglizance or malafide can be presumed in the peculiar facts. It is an admitted position that mistake is apparent and has been committed by the Tribunal. It is manifest that the denial to rectify the own mistake of ITAT on the grounds of limitation would cause grave miscarriage of justice. Thus, befittingly, M . A. N o . 2 1 5 / Ah d / 2 0 1 7 ( I n I T ( S S ) A N o . 1 8 / Ah d / 2 0 0 0 ) - 9 -
it is the obligation of the Tribunal to set right the injustice by recalling earlier order with a view to pass order on remaining points.
16. This apart, there can be another plausible school of thought to condone the delay. Section 253(5) of the Act specifically refers to the judicial power of the Tribunal to condone the delay and admit the appeal or cross objection etc. for adjudication. However, Section 254(2) of the Act does not expressly refer to such judicial power but Section 254(2) of the Act is not water-tight. Section 5 of the Limitation Act, 1963 refers to the powers of the Courts and Tribunal to condone the delay in appropriate circumstances. The Income Tax Act, 1961 itself provides that the provisions of the civil procedure code relating to appeals, procedures etc. as far as possible are applicable. The power to condone the delay thus needs be read to be existent by virtue of the Limitation Act. We may draw parallel from the judgment of the Hon'ble Bombay High Court (Panji Bench) in the case of CIT vs. Velingkar Brothers (2007) 289 ITR 382 (Bombay Full Bench) in the context of 'appeals to High Court as provided in Section 260A of the Act'. Erstwhile Section 260A of the Act, the Hon'ble Bombay High Court held in that case that the provisions of Section 260A of the Act does not exclude the application of Section 5 of the Limitation Act, 1963 and thus, the Court has inherent power to condone the delay in filing of the appeals.
17. The decision of the Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. vs. CIT 295 ITR 466 (SC) also provides useful guidance. The Hon'ble Supreme Court held that the purpose behind enactment of Section 254(2) of the Act is based on the fundamental principles that no party appearing before the Tribunal should suffer on account of any mistake committed by the Tribunal. If a prejudice has resulted to the party, which prejudice is self evidently attributable to the Tribunal's mistake, error or omission, then the Tribunal is justified in rectifying its mistake. The Hon'ble Allahabad M . A. N o . 2 1 5 / Ah d / 2 0 1 7 ( I n I T ( S S ) A N o . 1 8 / Ah d / 2 0 0 0 ) - 10 -
High Court in ITO vs. Singar Singh 75 ITR 646 (All.) has noted that the Tribunal has inherent jurisdiction to rectify a wrong that was inadvertently caused to the innocent assessee by not considering the relevant ground and for that reason. As per the aforesaid decision, The Tribunal is bestowed with an inherent jurisdiction to rectify a wrong committed by itself when that wrong causes prejudice to a party for which that party is not responsible. The aforesaid decision although reversed in 105 ITR 570 (SC) but was on a different point. The Assessee in the instant case may at best be considered a lesser pragmatic person but can not be seen to be a negligent or indolent person in any manner. In view of the decision of the Hon'ble Allahabad High Court holding inherent jurisdiction with the Tribunal to rectify its own mistake, we are of the view that there does not appear to be an absolute prohibition on the Tribunal for rectifying mistake in the countervailing circumstances existing in the present case. The circumstances warrant exercise of inherent powers of ITAT in promoting justice and shun technicalities by recalling the earlier order.
18. The Hon'ble Supreme Court in S. Nagraj (supra) while emphasizing on paramount need to do justice in all circumstances in overwhelming manner, inter alia, observed that the power to do so can either be statutory or inherent. The inherent power is available to the Court where the mistake is that of the Court. It was further observed that in administrative law, the scope is still wider. Technicalities apart, if the Court is satisfied of the injustice, then it is under obligation to set it right by recalling its order. Hence, the Hon'ble Supreme Court has yet again reiterated that Emblem of justice stands tall and technicalities would not stand in its way for Courts to exercise its inherent powers to cure the mistake.
19. The headnote in the case of CIT vs. Hansha Agencies (P.) Ltd. 255 ITR 493 (P &H) reads as under:
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"Appeal (Tribunal)--Mistake apparent--Is sued left undecided in first appeal--CIT( A) had accepted assessee's appeal on the ground of lim itation but had not gone into the other grounds--Revenue's appeal dismissed by Tribunal but High Court answered the reference in favour of Revenue and Tribunal then accepted Revenue's appeal-- Assessee had no occasion to file any cross-appeal before the Tri bunal for the sim ple reason that the entire asses sm ent had been annulled-- It would be wholly unjust and unfair if the assessee is denied an opportunity to have it s case considered by the appellate authorit y on other issues--Thus, t he order of t he Tribunal recalling its earlier decision and rem anding the case to t he CI T(A) for a decision on the ground(s) left undeci ded was justified"
The facts and circumstances of the case of the assessee is quite similar. The assessee in the instant case has no occasion to challenge the order of Tribunal at earlier point of time as the assessment itself was annulled by the Tribunal which action was later reversed by the Hon'ble Gujarat High Court. Hence, the plea of the assessee merits acceptance.
20. The Hon'ble Andhra Pradesh High Court in CIT vs. Hyderabad Deccan Liquor Syndicate (1974) 95 ITR 130 while discussing the scope of powers of Tribunal observed that where the Tribunal held the assessment invalid only on one ground and did not consider other grounds raised by assessee, the Tribunal was competent to consider such other grounds in the second round consequent upon assessment being held valid by the High Court in reference de hors any direction by the High Court.
21. In CIT vs. Keshav Fruit Mart (1993) 199 ITR 771 (All.), it was observed that non-consideration of grounds set up in appeal amounts to mistake apparent from record. The Tribunal was thus justified in recalling its original order.
22. The Appellate Tribunal has all the trappings of a Court of Law. Notably, the Tribunal is a last fact finding authority. The Tribunal is thus cast with the inherent duty to consider and decide all issues that M . A. N o . 2 1 5 / Ah d / 2 0 1 7 ( I n I T ( S S ) A N o . 1 8 / Ah d / 2 0 0 0 ) - 12 -
are brought before it as echoed in Esthuri Aswathiah vs. CIT(1967) 66 ITR 478(SC and other plethoro of decisions including Shreeji Chitra Mandir vs. CIT(2004) 269 ITR 55(MP). In short, the provisions of Section 254(2) of the Act limiting the period seeking remedy for an manifestly incomplete order rendered at the first instance would not transcend the inherent power of Tribunal to enable it deliver decision on undecided grounds which did not merge in the judgment of Hon'ble High Court. In refusing to do so, a grave injustice would result to the litigant for no fault of his and would simply trigger futile litigation and also undesired dissatisfaction in the mind of Taxpayer.
23. We cannot part with this order without recording our grateful appreciation to the learned Advocate Shri Manish J. Shah who has voluntarily joined the proceedings for inviting the attention of the Bench on nuances of law.
24. To summarise, the remedy sought by the assessee can not be frustrated on the grounds of bar of limitation without weighing the circumstances of the case. An incomplete order wholly attributable to the Tribunal itself should not ordinarily cause miscarriage of justice. Fair play is one of the most essential facets of any judicial process. When the principles laid down by Hon'ble Supreme Court in S. Nagraj (supra) and other precedents are applied, in our thoughtful consideration, the obligation is cast upon the Tribunal to set right and remove the error of an incomplete disposal in conformity with judicial functions endowed upon it. The Tribunal, in our view, is competent to do so.
25. In the result, miscellaneous application of the assessee is allowed and the order of the Tribunal in IT(SS)A No. 18/Ahd/2000 is recalled for the limited purpose of adjudication of grounds remaining undecided at the time of disposal of the substantive appeal.
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26. The registry shall list the date of hearing of the substantive appeal on undecided grounds on 17/12/2020. No separate intimation to the parties would be required in this regard.
This Order pronounced in Open Court on 02/ 12 /2020
Sd/- Sd/-
(MADHUMITA ROY) (PRADIP KUMAR KEDIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad: Dated 02/12/2020
TRUE COPY
S. K. SINHA
आदे श क त!ल"प अ#े"षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं*धत आयकर आयु,त / Concerned CIT
4. आयकर आयु,त- अपील / CIT (A)
5. 0वभागीय 3त3न*ध, आयकर अपील य अ*धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड9 फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपील य अ*धकरण, अहमदाबाद ।
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