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2015 Supreme(Bom) 585
HIGH COURT OF JUDICATURE AT BOMBAY
M.S. SANKLECHA & G.S. KULKARNI, JJ.
Gyan Construction Co. – Appellant
Versus
Income Tax Appellate Tribunal, Mumbai Bench 'G' – Respondent
Writ Petition Nos. 162 & 150 of 2015
Decided On : 23-01-2015
For the Petitioner:Dr. K. Shivram, Sr. Counsel, Ajay Kumar Singh, Neelam Jadhav, Advocates.
For the Respondent:N.C. Mohanty, Advocate.
The main legal point established in the judgment is that while recalling an order suffering from mistakes apparent from the record is permissible, making observations on the merits of adjudication in the impugned order was not justified.
Headnote:
Income Tax Act - Rectification of Order - Section 254(2) - 29th December, 2010 - 17th October, 2014
Fact of the Case:
The case involved two petitions challenging a common order passed under section 254(2) of the Income Tax Act, 1961 by the Income Tax Appellate Tribunal, which recalled a previous order and directed the appeals on quantum and penalty to be decided on merits.
Finding of the Court:
The court found that there was an error apparent on the record in the previous order for not considering a communication dated 21st August, 2000, but it did not uphold other observations made by the Tribunal in the impugned order regarding the jurisdictional issue.
Issues: The main issues were whether there was an error apparent on the record in the previous order and whether the Tribunal was justified in making observations on the merits of the controversy in the impugned order.
Ratio Decidendi: The court held that while recalling an order suffering from mistakes apparent from the record is permissible, making observations on the merits of adjudication in the impugned order was not justified. The regular bench of the Tribunal would not be influenced by the observations made in the impugned order on the merits of the controversy.
Final Decision: The petition was disposed of with directions to the regular bench of the Tribunal to consider the appeals on quantum and penalty, and to extend the benefit of making submissions to the petitioner at the hearing of the appeal.
1. At the request of counsel, both the Petitions are being disposed of at the stage of admission.
2. These two Petitions under Article 226 of the Constitution of India challenge a common order dated 17th October, 2014 passed under section 254 (2) of the Income Tax Act, 1961 (the 'Act') by the Income Tax Appellate Tribunal (the 'Tribunal') allowing the application for rectification filed by the Revenue. The common impugned order dated 17th October 2014 was passed on two applications seeking to rectify a common order dated 29th December 2010 dismissing two appeals of the Revenue on quantum and penalty for block period 1.4.1988 to 17.12.1988.
3. By the impugned order dated 17th October, 2014 in exercise of its powers under section 254 (2) of the Act recalled the common order dated 29th December, 2010 passed under section 254 (1) of the Act relating to the Block period 1st April, 1988 to 17th December, 1988 both in quantum and penalty proceedings. Thereafter the impugned order directed that both the appeals on quantum and penalty be placed before the regular bench to be decided on merits.
4. The genesis of the present proceedings is a search action under section 132 of the Act of one M/s R.K. Madhani and Co. a sister concern of the petitioner. Consequent to search action on M/s R.K. Madhani & Co, assessment was framed upon the petitioner. The Tribunal by order dated 29th December, 2010 set aside the proceedings against the petitioner. This on the ground that it is an admitted position that no satisfaction under section 158 BD of the Act was recorded by the Assessing Officer of M/s R.K. Madhani & Co in respect of the petitioner. Thus holding that in the absence of above satisfaction, the Assessing Officer of the petitioner was not vested with jurisdiction to frame the block assessment in respect of the petitioner.
5. The revenue by its Misc. Application dated 18th July, 2011 and 12th September, 2013 one in respect of quantum assessment and other in respect of penalty sought to rectify a common order dated 29th December, 2010 of the Tribunal in respect of quantum and penalty respectively. In its Misc. Application for rectification the revenue pointed out that the Assessing Officer of M/s R. K. Madhani & Co. (person searched) had recorded a satisfaction of undisclosed income belonging to the petitioner by letter dated 21st August 2000 addressed to the Assessing Officer of the petitioner. Thus the order dated 29th December 2010 proceeding on the basis that admittedly no satisfaction was recorded resulted in an error apparent on record warranting rectification under section 254 (2) of the Act.
6. Dr. Shivram learned senior counsel appearing for the petitioner in support of the petition submits as under :
(A) The impugned order is without jurisdiction as there is no error apparent on record in the order dated 29th December, 2010 as the same was passed after having considered the revenue's submission with regard to recording satisfaction under section 158 BD of the Act; and
(B) In the alternative and without prejudice to the above, the impugned order when recalling order dated 29th December, 2010 for fresh consideration cannot decide the issue on merits so as to foreclose the issue for the regular bench of the Tribunal before whom the appeal is to be posted for rehearing and disposal.
7. On the other hand, Mr. Mohanty learned counsel appearing for the revenue submits in support of the impugned order as under :
(A) Order dated 29th December, 2010 proceeded on a fundamental error to the extent it proceeds on an admitted position that there was no satisfaction recorded under section 158 BD of the Act in respect of the petitioner. Thus, the rectification application under section 254 (2) of the Act was the only remedy available to the revenue to correct the order dated 29th December, 2010; and
(B) The impugned order dated 17th October, 2014 calls for no interference as it is open to the petitioner to present its point of view before the Tr
