The Commissioner Of Income Tax, Ludhiana v. M/S Pearl Woolen Mills, Ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITR No. 187 of 1998 (O&M)Date of decision: November 12, 2009 The Commissioner of Income Tax, Ludhiana ...Appellant Versus M/s Pearl Woolen Mills, Ludhiana ...Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE GURDEV SINGH Present: Mr. Krishan Mehta, Advocate, for the revenue.Mr. Pankaj Jain, Advocate, for the assessee. ORDER 1. The Income-tax Appellate Tribunal, Chandigarh Bench,Chandigarh, has referred the following questions of law for the opinionof this court arising out of its order dated 31.3.1997 passed in I.T.A. No.1497 & 1508/Chandi/71-72 for the assessment year 1966-67:- “(i) Whether on the facts and circumstances of the case,Tribunal was right in law in entertaining a secondapplication under section 254 (2) of the Act raising the sameand similar points which had been dealt with by it in thefirst application filed by the assessee under section 254 (2)of the Act after affording full hearing to the parties ? (ii) Whether on the facts and in the circumstances of thecase, the Appellate Tribunal was right in law in recalling itsprevious finding given in its Appellate Order dated18.3.1976 restoring the addition of Rs. 9,36,000/- by theIncome Tax Officer and affirming the order of theAppellate Assistant Commissioner granting relief to theassessee to the tune of Rs. 8,34,730/- against the aforesaidaddition ?” The assessee derived income from manufacture and sale of woolen yarn and scooter and declared loss for the year in question butthe Assessing Officer added unaccounted stock pledged with the bankand not accounted for in the books of account, as undiclosed income.The addition was partly upheld by the CIT (A). The Tribunal, vide itsorder dated 18.3.1976, restored the addition. 3.The assessee filed an application under Section 254 (2) forrectification of order dated 18.3.1976. The said application wasdismissed by order dated 12.7.1977 holding that there was no mistakeapparent on the record and points raised were of argumentative nature. 4.After 9 months, second application under Section 254 (2)was made which was almost similar to the application earlier made anddismissed on 12.7.1977. The said application was accepted, vide orderdated 31.3.1979 and reversing the view earlier taken by the Tribunal,addition made by the Assistant Appellate Commissioner was upheld.The Tribunal, inter-alia, observed as under:- “8. Once it is held that a mistake has crept in theTribunal's order by virtue of its omission to deal withground Nos. 7 & 8, as mentioned above, the question wouldbe as to how such mistake should be corrected. We have nohesitation in saying that we shall be shirking ourresponsibility and duty if we are to be to reject theassessee's present petition simply on the ground that sincethe assessee was rejected earlier on its petitions underSection 254 (2) of the Act, a fresh petition cannot lie. 9. This is a peculiar case inasmuch as the assessee hassuffered because of omission of the Tribunal and on thefacts of the case there are two courses open to us either torecall the Tribunal's order on the point of restoration ofaddition of Rs. 9,36,302/- or to adjudicate the disputeafresh. We like to adopt the second course because it has already taken a long time and it is nobody case that anyfresh evidence is required to decide the assessee's petition.” 5.Thereafter, the Tribunal considered the whole matterafresh, on merits and reversing the earlier view upheld the setting asideof additions. 6.We have heard learned counsel for the parties and perused the record. 9. This is a peculiar case inasmuch as the assessee hassuffered because of omission of the Tribunal and on thefacts of the case there are two courses open to us either torecall the Tribunal's order on the point of restoration ofaddition of Rs. 9,36,302/- or to adjudicate the disputeafresh. We like to adopt the second course because it has already taken a long time and it is nobody case that anyfresh evidence is required to decide the assessee's petition.” 5.Thereafter, the Tribunal considered the whole matterafresh, on merits and reversing the earlier view upheld the setting asideof additions. 6.We have heard learned counsel for the parties and perused the record. 7.Learned counsel for the revenue submits that the scope ofrectification under section 254 (2) is limited to correcting of an error onthe face of record and not to re-adjudicate the issues. Reliance has been-placed on T.S. Balaram, Incometax Officer, Company Circle IV,Bombay v. Volkart Brothers and others(1971) 82 ITR 50,Commissioner of Income-Tax v. Ramesh Electric and Trading Co. (1993) 203 ITR 497, Commissioner of Income-tax v. Hero Cycles Pvt.Ltd. and others(1997) 228 ITR 463, Commissioner of Income-tax v.Kamal Bhai Ismailji(2007) 288 ITR 297 (All), Commissioner ofIncome-tax v. Income-tax Appellate Tribunal and other (2007) 293 ITR118 (Delhi), Assistant Commissioner of Income-tax v. SaurasthtraKutch Stock Exchange Ltd.(2008) 305 ITR 227 and Deva MetalPowders (P) Ltd. Versus Commissioner, Trade Tax, Uttar Pradesh(2008) 2 Supreme Court Cases 439. 8.Learned counsel for the assessee, however, submits that theassessee could not be made to suffer on account of omission of theTribunal in appreciating the submissions which were made and theTribunal was justified in observing that either the earlier order shouldbe recalled or matter should be adjudicated afresh. 9.Question to be considered is whether it is open to Tribunalto readjudicate the matter and that too when an earlier applicationunder Section 254 (2) had been dismissed on the same issue. 10.We are clearly of the opinion that the Tribunal could nothave readjudicated the matter under Section 254 (2). 11.It is well settled that a statutory authority cannot exercise power of review unless such power is expressly conferred. Referencemay be made to judgment of the Hon’ble Supreme Court in PatelNarshi Thakershi and others v. Shri Pradyuman Singhji Arjunsinghji,(1971) 3 SCC 844, wherein it was observed as under:- “4……It is well settled that the power to review is notan inherent power. It must be conferred by law eitherspecifically or by necessary implication….” 12.The above view has been reiterated in Kapra Mazdoor Ekta Kapra Mazdoor EktaUnion v. Birla Cotton Spinning and Weaving Mills Limited, (2005) 13SCC 777. The above view has been reiterated in Kapra Mazdoor Ekta Kapra Mazdoor Ekta 13.There is no express power of review conferred on theTribunal. Even otherwise, scope of review does not extend to rehearingof a case on merits. (Tuleshwar Sharma v. Aibam Pishak Sharma,(1979) 4 SCC 389, Meera Bhanja v. Nirmala Kumari Chaudhary,(1995) 1 SCC 170). Finality of order of Tribunal cannot be disturbed bya different bench beyond the statutory power available to it. TheTribunal has referred to principle of inherent power and incidentalpower and also the principle that act of Court cannot prejudice anyone.Scope of the principle “Actus curiae neminem gravabit” i.e. nobody willbe prejudiced by act of court, extends to correcting an error from anaccidental slip or omission. Such power is available under section 254 13.There is no express power of review conferred on theTribunal. Even otherwise, scope of review does not extend to rehearingof a case on merits. (Tuleshwar Sharma v. Aibam Pishak Sharma,(1979) 4 SCC 389, Meera Bhanja v. Nirmala Kumari Chaudhary,(1995) 1 SCC 170). Finality of order of Tribunal cannot be disturbed bya different bench beyond the statutory power available to it. TheTribunal has referred to principle of inherent power and incidentalpower and also the principle that act of Court cannot prejudice anyone.Scope of the principle “Actus curiae neminem gravabit” i.e. nobody willbe prejudiced by act of court, extends to correcting an error from anaccidental slip or omission. Such power is available under section 254 (2) of the Act, which is akin to Section 152 CPC. In Niyamat Ali Mollav. Sonargon Housing Coop. Society Ltd.,(2007) 13 SCC 421, afterreferring to earlier judgments, the scope of such power was consideredand it was observed that the said power was neither akin to power ofreview nor could clothe the court to modify judgment on merits. Scopeof power of rectification has been repeatedly considered, inter-alia, inVolkart Brothers, Deva Metal,Saurashtra Kutch(supra) and suchpower is limited to correcting an error apparent on the face of recordand not to an error to be discovered by long drawn process ofreasoning. Thus, neither by invoking inherent power nor the principleof mistake of court not prejudicing a litigant nor by involving doctrineof incidental power, the Tribunal could reverse a decision on merits.Power available to a court of record, ex debito justitiae,or power to beinvoked where an order may be nullity, on account of having passedwithout service of a party, stand on a different footing. 14.Thus, we hold that the Tribunal was not justified inrecalling its previous finding restoring the addition, more so when anapplication for the same relief had been earlier dismissed. 15.The questions referred are, thus, answered in favour of therevenue and against the assessee. 16.Reference is disposed of accordingly. (ADARSH KUMAR GOEL) JUDGE November 12, 2009 prem (GURDEV SINGH ) JUDGE