Calcutta High Court
Shaw Wallace & Co. Ltd. vs Income Tax Appellate Tribunal & Ors. on 28 July, 1999
Equivalent citations: (1999)155CTR(CAL)502
ORDER
Ajoy Nath Ray, J:
In this writ application I have called for detailed arguments even before filing of affidavits. This has been done to expedite the matter, The reason why such expedition is needed is this, the order under challenge is an order of the Tribunal recalling its earlier order passed in appeal. The date of the recall is 1st June, 1999, and the date of earlier order is 22nd April, 1998.
By that earlier order the Tribunal had set aside a block assessment made under Chapter XIV-B of the Income Tax Act, 1961. By reason of the order of recall, the set aside block assessment revives. If instead of hearing the writ, a stay is granted, it will completely freeze of assessment proceeding until further steps are taken. This is not a desirable course, as the matter, if the details are gripped, is really very short, usual and simple.
2. After the Tribunal passed its order in April, 1998, an Explanation was added to the Income Tax Act in Chapter XIV-B to s. 158BA. By that Explanation, regular assessments for all years in the block period are also required to be made.
In regard to the regular assessment for one particular assessment year in the block period of the same assessee, an earlier writ was filed and I have delivered a judgment in that matter, Shaw Wallace & Co. Ltd. v. Asstt. CIT (1999) 154 CTR (Cal) 105: (1999) 104 Taxman 238 (Cal).
In that judgment I opined that there will be a block assessment for an the years in question but in addition thereto there will be also a regular assessments for the separate years included in the block period. If any regular assessment remains incomplete at the time of search and seizure, then ordinarily that will be subsequently finalised after the block assessment is over.
3. A Miscellaneous application under s. 254(2) had been made in the department by the Revenue subsequent to the introduction of the amendment but prior to the delivery of my judgment in the earlier matter.
The Tribunal's order of April, 1998 insofar as the ordering portion is concerned, is in perfect accordance with the added Explanation and the earlier judgment delivered by me. However, in the body of the Tribunal's order, it was observed by the Tribunal that the block assessment will be one assessment and there would not be separate assessments for the individual assessment years orders included in the block period.
In the impugned order of 1st June, 1999, the Tribunal has observed that that remark of the Tribunal is a mistake apparent on the face of the record. On the basis of that the Tribunal has set aside the entire order passed on 22nd April, 1998.
The result of this is that simple because of the setting aside of the entire order, the block assessment which had been set aside, has been revived; the direction given in my earlier judgment that the regular assessment will be made within six months of completion of the block assessment is also rendered inoperative because my judgment assumed a future block assessment to be made in accordance with the Tribunal's views given in its order dt. 20th April, 1998.
4. Mr. Bajoria, learned counsel for the petitioner, submitted that under s. 254(2), the Tribunal can make amendments rectifications which are obvious and which do not involve debate or dispute. He refers to the case of CIT v. Swadeshi Commercial (1992) 106 CTR (Cal) 122 [also the case of CIT v. E. Sefton (1989) 80 CTR (Cal) 64 : (1989) 179 ITR 435 (Cal) : 1. He also said that the powers of the Tribunal under s. 254(2) do not evisage a total recall of the order and obliteration to it. It would not be within the jurisdiction of the Tribunal acting under this sub-section to recall its earlier order totally and then and thereafter again enter into long drawn arguments for the purpose of rewriting its judgment.
5. In this regard, Mr, Bajoria gave me two Division Bench decisions of the Orissa High Court-CIT v. ITAT (1992) 102 CTR (On) 79 : (1992) 196 nR 590 (On) : 1370 and in CIT v. 1TAT & Anr. (1992) 101 CTR (On) 291 : (1992) 196 17R 683 (On) : 1293 and a decision of the Andhra Pradesh High Court in CIT v. ITAT & Anr. (1994) 118 CTR (AP) 187: (1994) 206 ER 126 (AP) : 8.
Mr. Bajoria's submission was that the order impugned should properly be dealt with by the writ Court so that the assessee is not in any manner prejudiced by this most imperfect order.
6. Mr. Mallick, appearing for the Revenue submitted that if there is an amendment introduced in the statute book which brings about retrospective changes, then and in that event the records of the Tribunal and its judgment and order might be rendered erroneous on its face necessitating invocation of jurisdiction under s. 254(2). That this might be so was not even disputed by Mr. Bajoria. However, Mr. Mallick gave me three authorities in this regard, CIT v. Kelvin Jute Co. Ltd. (1980) 17 CTR (Cal) 138 : (1980) 126 ITR 679 (Cal) : 1259, CIT v. R.M. & Co. (1984) 148 ITR 353 (AP) : 1359 and CIT v. M.P. Electricity Board (1994) 210 ITR 425 (MP) : , As there was no dispute in regard to this point, I do not discuss these cases.
7. As regards the power of recall of the Tribunal of its own order in its entirety, Mr. Mallick gave the case of CIT v. Uttar Pradesh Shoe Industrials (1999) 152 CTR (All) 205 : (1999) 235 ITR 663 (All). It is an Allahabad Division Bench judgment. There the Tribunal had disposed of a particular ground No. 5 in the memorandum stating that relief in that regard had already been given by the Income Tax Officer acting under s. 154. This appeared later to be erroneous because the s. 154 application has been rejected. In these facts, the Tribunal set aside its order with regard to the ground No. 5 and respect (sic-restore) the appeal in the file for hearing on this point. The High Court found nothing wrong with this procedure as it appeared to be the only way to set the mistake right. Mr. Mallick submitted on this basis that this decision of the High Court is a pointer towards the Tribunal's power to set aside its order under s. 254(2) and then redecide it once again.
Further, Mr. Mallick submitted that the writ petition should not be entertained as an appeal is now permitted under s. 260A; on the point of alternative remedy, the writ petition should fail.
8. In my opinion, Mr. Bajoria is right in his submission that invocation of s. 254, sub-section (2) in a matter like this was improper because the matter is one requiring long drawn arguments. Even though I have delivered a judgment in the matter and the Tribunal has done nothing wrong in trying to give full effect to it, yet, there are conflicting High Court decisions even now on record; the Tribunal should not have tried to give effect to my judgment on a s, 254(2) application but should have made note of the judgment and thereafter said that the matter being one of debate and dispute its jurisdiction under s. 254(2) was not properly invoked.
9. Regarding total recall of the Tribunal's own order, my view is that this type of absolute obliteration of its earlier order is not within the jurisdiction of the Tribunal. It cannot totally recall its order under s. 254(2) and proceed to rehear the matter on de novo arguments.
The words of the said sub-section refer to amendment or rectification not a total recall. Even in the Allahabad decision given by Mr. Mallick, there was no total recall of the order but only a rehearing on a ground of appeal where there had been no real hearing in the first place at all. It is conceivable, if s. 254(2) were to clothe the Tribunal with a power of total recall that it decides in one way, then recalls the order and an absolutely different decision is reached on a second hearing after equally protracted arguments. This would be neither amendment nor rectification but a type of rehearing which even ordinary Courts of law can hardly indulge in.
10. Regarding the point of s. 260A, in my opinion, an appeal would not be permissible from any and every order passed by the Tribunal under this section. If, say, an order of adjournment is passed, the assessee could not come in appeal to the High Court under s. 260A. There are many instances of provisions allowing appeals where words such as every order, any order, all orders, etc. have been interpreted to mean and include only those orders which are substantially final in some sense or the other, and which finally dispose of or affect the parties rights in regard to some important point in controversy. In my opinion, the words every order in s. 260A mean exactly this. Also to be appealable, the order of the Tribunal has to be passed in appeal. Here, the impugned order of the Tribunal was not passed in appeal but in a miscellaneous application directed towards rectifying mistake apparent from the record. If the order under s. 254(2) had taken the shape of modifying by way of amendment or rectification, the original order to some extent, then both of those jointly might have been appealable under s. 2604 but an order of recall is clearly not appealable. Alternatively even if appealable, then impugned order being also without jurisdiction the writ application should be entertained in this case, as an exception, in the interest of expedition of the assessment proceedings.
11. To my mind the Tribunal has fallen into the most serious error in recalling a good and right ordering portion of its order passed on 22nd April, 1998, for trying to rectify mistakes which cropped into the reasoning portion. The ordering portion which allowed the block assessment to be redone was good and correct. It directed the block assessment to include the entirety of the period, that is in accordance with my earlier judgment also. This ordering portion needed no rectification and no amendment.
In the reasoning portion a mistaken view is no doubt on record that regular assessment for separate assessment orders included within the block period will be obviated by the block assessment; but this was mere reasoning. The Tribunal was not entitled under s. 254(2) to rectify or amend any reasoning of it which did not affect the correctness of its final 'order. Thus, in one manner of speaking, to try to avoid a small evil, the Tribunal has fallen into a greater one.
12. In my opinion, although the Tribunal's impugned order needs correction, it obviously proceeded bona fide and with the best of motive seeking only to give full effect to my earlier judgment; insofar as this motive is concerned, as I have earlier said, not only do not find any fault with it, but I approve of this statutory procedure.
13. However, for the reasons as aforesaid, the writ application succeeds. The ordering portion of the impugned order dt. 1st June, 1999, is cancelled and set aside so that the ordering portion of the order dt. 22nd April, 1998, shall revive and be of full effect. However, the department hereafter will read the reasoning of the 1st June, 1999, order also along with the body of the order dt. 22-4-1998, as by doing this, they will be proceeding correcting to make the block assessment and also the separate regular assessments for the individual assessment orders included in the block period. In proceeding with these assessments, the department shall be guided also properly by the judgment and reasoning given in my earlier Shaw Wallace judgment, the reference to which I have given above.
With the above order, the writ application is finally disposed of.
14. As affidavits were not permitted, the allegations in the petition cannot be taken (by the Revenue) to have been admitted to any part at all.
15. There will be, however, no order as to costs.
OPEN