Case Note & Summary
The case involves a writ petition filed by the Commissioner of Income Tax-12, Mumbai (Revenue) under Article 226 of the Constitution of India, challenging an order dated 05.01.2009 passed by the Income Tax Appellate Tribunal, 'G' Bench, Mumbai. The Tribunal had recalled its earlier order dated 30.04.2008 passed in ITA No.2148/M/2004 for the assessment year 1999-2000 and directed hearing of the appeal afresh. The respondent, Ronak Parikh (HUF), is an assessee under the Income Tax Act, 1961. A search and seizure operation under Section 132 of the Act was conducted on 16.06.1998 at the premises of Shri Y.J. Chokshi and his associates, during which it was found that the respondent had issued cheques after depositing cash received from those persons, acting as a Hawala operator. Pursuant to the search, block assessment under Section 158BD was carried out, and for the assessment year 1999-2000, the assessing officer passed an order under Section 143(3) on 26.03.2002, adding Rs.72,89,385.00 as income from undisclosed sources. The respondent appealed to the Commissioner of Income Tax (Appeals)-V, Mumbai, who by order dated 16.01.2004 deleted the addition. Revenue appealed to the Tribunal, which by order dated 30.04.2008 set aside the first appellate authority's order and restored the matter to the assessing officer for fresh consideration, noting that the first appellate authority had accepted the assessee's explanation without verification. The respondent then filed a miscellaneous application under Section 254(2) of the Act, contending that the Tribunal's order was passed ex parte without giving an opportunity of hearing. The Tribunal, by the impugned order dated 05.01.2009, recalled its earlier order and directed fresh hearing, holding that there was a mistake apparent from the record as the assessee was not heard. Revenue challenged this recall order in the High Court. The High Court examined the scope of Section 254(2) and held that the Tribunal has the power to rectify mistakes apparent from the record, including procedural mistakes like passing an order without hearing a party. The court distinguished between recall and review, noting that recall is permissible under Section 254(2) to correct such mistakes. The court found that the Tribunal's order was in the interest of justice and natural justice, and dismissed the petition, upholding the Tribunal's order.
Headnote
A) Income Tax - Appellate Tribunal - Power to Recall - Section 254(2) Income Tax Act, 1961 - The Tribunal has the power to recall its ex parte order under Section 254(2) if there is a mistake apparent from the record, including the fact that the assessee was not heard. The Tribunal's order recalling its earlier ex parte order and directing fresh hearing was held to be within its jurisdiction and not a review. (Paras 2-10) B) Income Tax - Rectification of Mistake - Section 254(2) Income Tax Act, 1961 - A mistake apparent from the record includes a procedural mistake such as passing an order without hearing the party. The Tribunal can rectify such mistake by recalling the order and rehearing the appeal. (Paras 8-10) C) Income Tax - Natural Justice - Hearing - Section 254(2) Income Tax Act, 1961 - The principle of audi alteram partem requires that no order be passed against a party without affording an opportunity of hearing. The Tribunal's recall order was in furtherance of natural justice. (Paras 8-10)
Issue of Consideration
Whether the Income Tax Appellate Tribunal has the power to recall its ex parte order under Section 254(2) of the Income Tax Act, 1961, and whether the impugned order recalling the earlier order and directing fresh hearing was valid.
Final Decision
The High Court dismissed the writ petition, upholding the Tribunal's order dated 05.01.2009 recalling its earlier order and directing fresh hearing.
Law Points
- Power of Income Tax Appellate Tribunal to recall its ex parte order under Section 254(2) of the Income Tax Act
- 1961
- Scope of rectification of mistake apparent from record
- Distinction between recall and review
- Principles of natural justice
