Dr.s.panneerselvam v. The Assistant Commissioner Of Income Tax (Special Investigation Circle), Salem-7

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR. JUSTICE R.SUDHAKAR Writ Petition Nos.18693 and 18694 of 2006 Dr.S.Panneerselvam ..Petitioner in both W.Ps. vs. 1. The Assistant Commissioner of Income Tax (Special Investigation Circle), Salem-7. 2. Income Tax Appellate Tribunal (B Bench), A3-2nd Floor, Rajaji Bhavan, Besant Nagar, Chennai-600 090, represented by the Assistant Registrar. ..Respondents in both W.Ps. Writ Petitions are filed under Article 226 of the Constitutionof India to issue Writ of Certiorarified mandamus, calling forrecords in M.P.No.92/2003 (38/Mds/2001 in I.T.A.Nos.2501/Mds/1993)andM.P.No.92/2003(38/Mds/2001inI.T.A.Nos.2502/Mds/1993)respectively on the file of the second respondent and quash theorders dated 26.12.2005 and direct the second respondent to disposeof the claims for rectification of the order passed inI.T.A.No.2501/Mds/1993 and I.T.A.2502/Mds/1993. For Petitioner in both W.Ps. : No appearance For 1[st] Respondent in both W.Ps. : Mr.K.Subramanian COMMON ORDER Both the Writ Petitions are filed to issue Writ ofCertiorarified mandamus, calling for records in M.P.No.92/2003(38/Mds/2001inI.T.A.Nos.2501/Mds/1993)andM.P.No.92/2003(38/Mds/2001 in I.T.A.Nos.2502/Mds/1993) respectively on the file ofthe second respondent and quash the orders dated 26.12.2005 anddirect the second respondent to dispose of the claims forrectification of the order passed in I.T.A.No.2501/Mds/1993 andI.T.A.2502/Mds/1993. https://hcservices.ecourts.gov.in/hcservices/ 2. When the matters were listed on 19.10.2009, there was norepresentation on behalf of the petitioner. Today also there is norepresentation on behalf of the petitioner. Mr.K.Subramanian,learned counsel appearing for the Department/first respondent presentand the matter is taken up and disposed off on merits. 3. On going through the orders which are under challenge, it isfound that the original orders were passed by the Income TaxAppellate Tribunal on 27.11.2000 and thereafter, the petitioner filedM.P.No.17/2001 for rectification in terms of Section 254(2) of theIncome Tax Act, 1961 and rectification order was passed on25.4.2001. 4. Thereafter, the writ petitioner/assessee in both writpetition has filed one more M.P.No.92/2003 for further rectification.The Tribunal dismissed the petition holding as follows:- "3. We have heard and perused the material onrecord. Admittedly the earlier MP of the Assesseebearing No.38/01 was disposed by this Tribunalvide order dated 25.4.01 in relation toI.T.A.No.2151 and M.P.No.17/01 was disposed off bythis Tribunal on 25.4.01 in relation toI.T.A.No.2457 & 2458/93 and 2501 & 2502/93 for theAssessment Year 1982-83 & 1983-84, 1984-85 and1987-98. Hence this is the Second MP by theAssessees for the year 1984-85 and 1987-88. Asper Section 254(2), the Tribunal has no power topass order in MP on MP. This view is alsosupported by the Judgment of Hon'ble Orissa HighCourt in the case of CIT Vs. ITAT and another in196 ITR 641. Accordingly the MP is dismissed." 5. On going through the averments made in the affidavits filedin support of the writ petitions, it is clear that the writpetitioner has at the first instance filed an application MPNo.17/2001 for rectification which has been allowed on 25.4.2001.Thereafter, after more than two years, petitioner filed anotherrectification petition for rectifying the original order of theappellate tribunal dated 27.11.2000. 5. On going through the averments made in the affidavits filedin support of the writ petitions, it is clear that the writpetitioner has at the first instance filed an application MPNo.17/2001 for rectification which has been allowed on 25.4.2001.Thereafter, after more than two years, petitioner filed anotherrectification petition for rectifying the original order of theappellate tribunal dated 27.11.2000. 6. The Tribunal took the view that the second miscellaneouspetition cannot be filed for rectification of the original orderonce over. It relied upon the decision of a Division Bench of OrissaHigh Court in Commissioner of Income-tax and another – vs. - Income-tax Appellate Tribunal and another reported in (1992) 192 ITR 640.The Orissa High Court considering the scope and ambit of applicationof Section 254(2) of the Income Tax Act, 1961, held as follows:- "The scope and ambit of an application ofsection 254(2) is very limited. The same isrestricted to rectification of mistakes apparentfrom the record. We shall first deal with thequestion of the power of the Tribunal to recallan order in its entirety. Recalling the entireorder obviously would mean passing of a freshorder. That does not appear to be thelegislative intent. The order passed by theTribunal under section 254(1) is the effectiveorder so far as the appeal is concerned. Anyorder passed under section 254(2) either allowingamendment or refusing to amend gets merged withthe original order passed. The order as amendedor remaining unamended is the effective order forall practical purposes. The same continues to bean order under section 254(1). That is the finalorder in the appeal. An order under section 254(2) does not have existence de hors the orderunder section 254(1). Recalling of the order isnot permissible under section 254(2). Recallingof an order automatically necessitates rehearingand readjudication of the entire subject-matterof appeal. The dispute no longer remainsrestricted to any mistake sought to be rectified.Power to recall an order is prescribed in termsof rule 24 of the Income-tax (Appellate Tribunal)Rules, 1963, and that too only in cases where theassessee shows that it had a reasonable cause forbeing absent at a time when the appeal was takenup and was decided ex parte." (emphasis supplied). No doubt, in the above case, the question was whether the Tribunalcan recall the order in its entirety exercising the power underSection 254(2) of the Income Tax Act, 1961. The court, however, heldthat any order passed under Section 254(2) either allowing amendmentor refusing to amend gets merged with the original order passed.The order as amended or remaining unamended is the effective orderfor all practical purposes. The same continues to be an order undersection 254(1). That is the final order in the appeal. In thepresent case, the rectification was ordered in terms of Section 254(2) and it got merged with the original order passed under Section254(1). What has been refused by the Tribunal while allowing theapplication under Section 254(2) should be read as having beenrejected. Therefore, the petitioner cannot file another applicationto grant further benefits. Successive application for rectificationof the original order cannot be maintained as it will defeat theobject of Section 254(2) of the Act. Section 254(2) of the Income Tax Act 1961, provides for rectification of any mistake apparent fromthe order passed by it under Section 254(1) of the Act. Once thishas been done, no further application is maintainable. The remedy byway of appeal is the only course open. Act 1961, provides for rectification of any mistake apparent fromthe order passed by it under Section 254(1) of the Act. Once thishas been done, no further application is maintainable. The remedy byway of appeal is the only course open. 7. In this case, the second petition was filed forrectification of mistake after two years stating that the order ofthe Commissioner of Income Tax (Appeals) was not properly consideredby the Appellate Tribunal and therefore, rectification of the orderwas sought for. This court is unable to agree with such a standtaken on behalf of the petitioner for the simple reason that if theassessee is aggrieved by the order of the Tribunal on appreciation ofthe materials on record, the remedy available to the writpetitioner/assessee will be to file an appeal as provided under thestatute and not challenge the same by way of writ petitions statingthat the Tribunal should have decide the matters in one way or theother as intended by the assessee/writ petitioner. As against theorder passed under Section 254(1) and the rectification order passedunder Section 254(2) of the Income Tax Act, there is an appeal remedyprovided under Section 260A(1) of the Act and such remedy has notbeen exhausted by the present writ petitioner. Apparently, thesecond petition filed for rectification appears to be one intended tobridge the long delay in not challenging the order of the AppellateTribunal dated 27.11.2000 and the rectification order dated25.4.2001. The writ petitions deserve to be dismissed on the groundof failure to pursue the alternative remedy and also on the ground ofdelay and laches, which has not been explained. 8. Both the writ petitions are, therefore, dismissed. Therewill be no order as to costs. Sd/Asst.Registrar /true copy/ ts Sub Asst.Registrar To 1. The Assistant Commissioner of Income Tax (Special Investigation Circle), Salem-7. Salem-7. 2. The Assistant Registrar, Income Tax Appellate Tribunal (B Bench), A3-2nd Floor, Rajaji Bhavan, Besant Nagar, Chennai-600 090. Income Tax Appellate Tribunal (B Bench), A3-2nd Floor, Rajaji Bhavan, Besant Nagar, Chennai-600 090. + 2 c.cs. to M/s. K. Subramaniam, Advocate. S.R.Nos.55326 & 55327. W.P.Nos.18693 & 18694 of 2006 SSK (CO)GSK 06.11.2009.