The Commissioner Of Income Tax,Chennai v. M/S.indian Overseas Bank762, Anna Salaichennai

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 06.03.2017 CORAM THE HONOURABLE MR.JUSTICE RAJIV SHAKDHERAndTHE HONOURABLE MR.JUSTICE R.SURESH KUMAR T.C.A.Nos.879 to 882 of 2016 AndC.M.P.Nos.20446 to 20448 of 2016 The Commissioner of Income Tax,Chennai. ... Appellant in all the T.C.As. Vs. M/s.Indian Overseas Bank762, Anna SalaiChennai. ... Respondent in all the T.C.As. Common Prayer: Appeals filed under Section 260-A of the Income Tax Act,1961, against the order dated 31.07.2015 passed inM.P.Nos.133/Mds/2014,134/Mds/2014,135/Mds/2014and136/Mds/2014respectively,inI.T.A.Nos.117/Mds/2007,118/Mds/2007, 577/Mds/05 and 578/Mds/2005 respectively, by theIncome Tax Appellate Tribunal, Madras “A” Bench, Chennai.against the order dated 17/10/2006 passed by the Commissioner ofIncome Tax (Appeals)III, Chennai-34, for the Assessment year (i)2000-01 in I.T.A.No.320/2006-07/A.III, (ii) 2003-04 inI.T.A.No.321/2006-07/A-III, respectively and against order dated29/11/2004 made in (i) I.T.A.TR.No.378/01-02 passed by theCommissioner of Income Tax, (Appeals) XI, Chennai, (ii) againstthe order dated 6/12/2004 passed by the Commissioner of Income-Tax (Appeals) XI, Chennai, in ITA No.08/2000-01 respectively,against the orders of the Joint Commissioner of Income tax,Special Range-I, Chennai dated 20-03-2000 & 30-03-2001 inP.A.No/G.I.No.AAACI 1223J/4-I and orders Assistant Commissionerof Income Tax, Chennai dated 30/03/2006 and 31/03/2006 inG.I.No./P.A.No.AAACI 1223J/1025-1 https://hcservices.ecourts.gov.in/hcservices/ For Respondent : Mr.Vijaya Raghavan for M/s.Subbaraya Iyer (Judgment of the Court was delivered by RAJIV SHAKDHER,J.) 1.These are four appeals filed under Section 260-A of theIncome Tax Act, 1961 (in short, the Act). 1.1.These appeals are directed against a common judgment andorder dated 31.07.2015, passed by the Income Tax AppellateTribunal (in short, the Tribunal). 2.The appellant, i.e., the Revenue, is aggrieved by the factthat the Tribunal has, vide, the impugned judgment recalled itsorder dated 18.04.2013, passed in miscellaneous petitions, i.e.,M.P.Nos.133 to 136/Mds/2014, preferred by the Assessee. 3.A perusal of the record would show, that it is in commonground, that the order dated 18.04.2013, was passed by theTribunal suo motu, without it being triggered, either based onan application filed by the Revenue or the Assessee. 4.To be noted, by virtue of the order dated 18.04.2013, theTribunal recalled its earlier orders, dated 20.08.2007 and21.01.2008. 4.1.Via the said orders, the Tribunal had dismissed theappeals of the Revenue, evidently, on the ground, that approvalof Committee On Disputes (in short, COD), was not taken forprosecution its appeals, before the Tribunal. 4.2.Quite obviously, the recall of the said orders, by theTribunal, vide its order dated 18.04.2013, caused prejudice tothe Assessee. 5.It is, in this background, that the Tribunal passed theimpugned judgment dated 31.07.2015, whereby, while allowing themiscellaneous petitions, filed by the Assessee, it recalled itsearlier order dated 18.04.2013 and restored the orders dated20.08.2007 and 21.01.2008. https://hcservices.ecourts.gov.in/hcservices/ 6.Mr.Ravi, who appears for the Revenue, says that theimpugned judgment and order of the Tribunal, is erroneous, bothin law and on facts, and hence, deserves to be set aside. 7.In support of his submissions, learned counsel contendsthat the order dated 18.04.2013, came to be passed by theTribunal, in view of the subsequent judgment of the SupremeCourt, rendered in: Electronics Corporation of India Limited Vs.Union of India and others, (2011) 332 ITR 58. 5.It is, in this background, that the Tribunal passed theimpugned judgment dated 31.07.2015, whereby, while allowing themiscellaneous petitions, filed by the Assessee, it recalled itsearlier order dated 18.04.2013 and restored the orders dated20.08.2007 and 21.01.2008. https://hcservices.ecourts.gov.in/hcservices/ 6.Mr.Ravi, who appears for the Revenue, says that theimpugned judgment and order of the Tribunal, is erroneous, bothin law and on facts, and hence, deserves to be set aside. 7.In support of his submissions, learned counsel contendsthat the order dated 18.04.2013, came to be passed by theTribunal, in view of the subsequent judgment of the SupremeCourt, rendered in: Electronics Corporation of India Limited Vs.Union of India and others, (2011) 332 ITR 58. 8.It was, thus, the contention of the learned counsel thatin view of the directions issued by the Supreme Court in thematter of Electronics Corporation of India Limited, the earlierregime, which was in place, which required, GovernmentDepartments, which included the Income Tax Department to obtainapproval of the COD, before prosecuting any action againstanother Government Department and/ or Public SectorUndertakings, was done away with. 8.1.The submission, therefore, advanced by Mr.Ravi, wasthat, the order of recall, though suo motu, was an order, basedon the judgment of the Supreme Court rendered in ElectronicsCorporation of India Limited case. 9.As against this, learned counsel for the Assessee submitsthat no interference is called for, with the impugned judgmentof the Tribunal, for the reason that, it is common ground, thatthe Tribunal in passing the order dated 18.04.2013, had acted onits own, without noticing the affected party, that is, theAssessee. 9.1.The submission being that the order dated 18.04.2013 waspassed, in complete breach of the principles of natural justice,and therefore, by virtue of the impugned judgment, the Tribunalcorrected that error. 10.This apart, the learned counsel submitted that the orderdated 18.04.2013, was beyond the jurisdiction of the Tribunal,in view of the fact that it was passed, well beyond the periodof limitation prescribed under Section 254 (2) of the Act. 10.1.In other words, the submission, was that, even if suomotu powers were exercised by the Tribunal, they could not havebeen exercised, beyond the period of limitation, prescribedunder Section 254 (2) of the Act. 11.In support of the submissions made above, reliance wasplaced by the learned counsel for the Assessee on the followingtwo judgments of the Bombay High Court: Commissioner of Income- https://hcservices.ecourts.gov.in/hcservices/ tax-2 Vs. Central Bank of India, [2014] 51 taxmann.com 527(Bombay) and Commissioner of Income-tax-5, Mumbai Vs. Air IndiaLimited, [2016] 66 taxmann.com 52 (Bombay). 12.We have heard the learned counsels for the parties andperused the record. 13.According to us, the following facts, clearly, emergefrom the record: (i)That the Revenue's appeals for assessment years, AY 1997-98 and AY 1998-99, were dismissed, by the Tribunal, videjudgment and order, dated 20.08.2007. (ii)Revenue's appeals for assessment years AY 2000-01 andAY 2003-04, were dismissed, by the Tribunal, vide judgment andorder, dated 21.01.2008. (iii)It is the Assessee's case that both appeals weredismissed, for want of approval from COD. (iv)The Revenue, on the other hand, has indicated, by way ofnote placed before the Court, that appeal for assessment year,AY 1997-98, was rejected, as no approval was obtained from COD,while appeal for assessment year AY 1998-99, was dismissed inlimine, as approval for filing an appeal, was refused by COD. (v)Insofar as assessment years AY 2000-01 and AY 2003-04,are concerned, the note submitted by the Revenue, does notelaborate specifically, as to why, appeals were dismissed. (ii)Revenue's appeals for assessment years AY 2000-01 andAY 2003-04, were dismissed, by the Tribunal, vide judgment andorder, dated 21.01.2008. (iii)It is the Assessee's case that both appeals weredismissed, for want of approval from COD. (iv)The Revenue, on the other hand, has indicated, by way ofnote placed before the Court, that appeal for assessment year,AY 1997-98, was rejected, as no approval was obtained from COD,while appeal for assessment year AY 1998-99, was dismissed inlimine, as approval for filing an appeal, was refused by COD. (v)Insofar as assessment years AY 2000-01 and AY 2003-04,are concerned, the note submitted by the Revenue, does notelaborate specifically, as to why, appeals were dismissed. (vi)The petition filed by the Revenue, before the Tribunal,which is dated 20.11.2015, however, adverts to the fact, thatappeals filed by the Revenue for assessment years, AY 1997-98,AY 1998-99, AY 2000-01 and AY 2003-04, were dismissed, for wantof COD approval. (vii)The Tribunal suo motu recalled orders dated 20.08.2007and 21.01.2008, vide, order dated 18.04.2013. (viii)In the interregnum, i.e., on 17.02.2011, the SupremeCourt rendered its judgment in Electronics Corporation of IndiaLimited case. (ix)The Revenue filed its miscellaneous petitions to seekrecall of orders dated 20.08.2007 and 21.01.2008, only on,15.01.2013, that is, much after the decision in ElectronicsCorporation of India Limited case had been delivered. 14.Having regard to the aforesaid facts and circumstances,what is clear, is that after the Supreme Court had rendered itsjudgment in the Electronics Corporation of India Limited case,the Revenue perhaps, still had time to seek rectification of theorders, passed by the Tribunal, i.e., orders dated 20.08.2007and 21.01.2008. 15.The Revenue, for the reasons best known to itself, hadfiled, as noticed above, miscellaneous petitions only on15.01.2013. Clearly, on the date, when these petitions werefiled, the period of limitation prescribed under Section 254 (2)of the Act, had been crossed. 16.The Tribunal, could have recalled its orders, dated20.08.2007 and 21.01.2008, based on the petitions filed by theRevenue, if the same, had been filed, within a period of fouryears, from the date, when the said orders were passed. 16.1.Since, the miscellaneous petitions filed by the Revenuewere beyond time, clearly, they could not have been entertainedby the Tribunal. 16.2.The fact however, remains that these miscellaneouspetitions dated 15.01.2013, were never pressed before theTribunal, prior to its recall order dated 18.04.2013. The saidpetitions were brought up, before the Tribunal only on29.07.2016. 16.3.The record would show that the said miscellaneouspetitions were numbered by the Tribunal only in 2013. 16.4.The numbers accorded to these miscellaneous petitions,were: M.P.Nos.224/Mds/2013, 225/Mds/2013 and 226/Mds/2013. 16.5.As would be evident from the numbers set out above, forone assessment year, no petition appears to have been filed. 17.As is evident from the facts narrated above, in themeanwhile, the Assessee had filed and pressed, instead, itsmiscellaneous petitions bearing numbers: M.P.Nos.133 to136/Mds/2014 - for recall of order dated 18.04.2013. 17.1.The Tribunal, therefore, passed the impugned judgmentand order dated 31.07.2015 based on the Assessee's miscellaneouspetitions. 18.In our view, apart from a slight procedural infraction,which is, that no formal orders were passed by the Tribunal, quathe Revenue's Miscellaneous petitions, the conclusion reached bythe Tribunal cannot be faulted as it is in consonance with the https://hcservices.ecourts.gov.in/hcservices/ principles of natural justice. 19.The fact that no notice was given to the Assessee by theTribunal, prior to passing the order dated 18.04.2013 having notbeen disputed before us, persuades us, to sustain the view takenby the Tribunal, in the impugned judgment. 17.1.The Tribunal, therefore, passed the impugned judgmentand order dated 31.07.2015 based on the Assessee's miscellaneouspetitions. 18.In our view, apart from a slight procedural infraction,which is, that no formal orders were passed by the Tribunal, quathe Revenue's Miscellaneous petitions, the conclusion reached bythe Tribunal cannot be faulted as it is in consonance with the https://hcservices.ecourts.gov.in/hcservices/ principles of natural justice. 19.The fact that no notice was given to the Assessee by theTribunal, prior to passing the order dated 18.04.2013 having notbeen disputed before us, persuades us, to sustain the view takenby the Tribunal, in the impugned judgment. 20.We may, only indicate herein, that it was sought to beemphasised by Mr.Ravi, that the limitation prescribed underSection 254 (2) of the Act, did not apply, when, the Tribunalexercises suo motu powers. 20.1.It was the learned counsel's submission that whileexercising suo motu powers, the Tribunal takes recourse toinherent powers vested in it. 21.In our opinion, this submission cannot be sustained, fora rudimentary reason that the Tribunal is a creature of thestatute and therefore, it can exercise only those powers, whichare specifically conferred upon it. The Tribunal, to our minds,has no inherent power to recall judicial orders. (SeeK.S.Venkataraman & Co.(P) Ltd., Vs. State of Madras, (1966) 60ITR 112; Martin Burn Limited Vs. R.N.Banerjee, 1958 SCR 514; andTranscore Vs. Union of India, (2008) 1 SCC 125). 21.1.Besides the aforesaid, in our opinion, a clear perusalof Section 254 (2) of the Act, would show that the Tribunal hasbeen vested with the power, to rectify any mistake apparent fromthe record, both on its own, and also, when a mistake is broughtto its notice, either by the assessee or the Revenue. In bothcases, the limitation prescribed under the said Section wouldapply. 22.In order to fully appreciate what we have indicatedabove, it is necessary, for us, to extract the relevant parts ofSection 254 of the Act: “254 (1) The Appellate Tribunal may, after giving boththe parties to the appeal an opportunity of beingheard, pass such orders thereon as it thinks fit. (2) The Appellate Tribunal may, at any time within[six months from the end of the month in which theorder was passed][1], with a view to rectifying anymistake apparent from the record, amend any orderpassed by it under sub-section (1), and shall makesuch amendment if the mistake is brought to its noticeby the assessee or the [Assessing] Officer: Provided that an amendment which has the effect ofenhancing an assessment or reducing a refund orotherwise increasing the liability of the assessee,shall not be made under this sub-section unless theAppellate Tribunal has given notice to the assessee ofits intention to do so and has allowed the assessee areasonable opportunity of being heard: [Provided further xxxxxxxx ] [(2A) xxxxxxxx : [Provided that the xxxxxxx :Provided further xxxxxxxxxxx :[Provided also that xxxxxx ]] (2B) xxxxxxxxx ] (emphasis is ours)” 22.1.A perusal of sub-section (2) of Section 254 of the Act,would show that it supports, what is stated herein above, by us. 23.Insofar as, suo motu power is concerned, it is containedin the first limb of sub-section (2) of Section 254 of the Act,while the second limb of the same provision, confers powers onthe Tribunal, to carry out a rectification of mistake, apparenton the record, on it being triggered by an application moved,either by the assessee, or the Assessing Officer, i.e., theRevenue. 23.1.The difference in the language, is brought forth, byuse of the expression “may, at any time” in the first limb asagainst “and shall” in the second limb. 24.As indicated above, qua both situations, the prescribedperiod of limitation was four years in respect of the assessmentyear(s) in issue. 22.1.A perusal of sub-section (2) of Section 254 of the Act,would show that it supports, what is stated herein above, by us. 23.Insofar as, suo motu power is concerned, it is containedin the first limb of sub-section (2) of Section 254 of the Act,while the second limb of the same provision, confers powers onthe Tribunal, to carry out a rectification of mistake, apparenton the record, on it being triggered by an application moved,either by the assessee, or the Assessing Officer, i.e., theRevenue. 23.1.The difference in the language, is brought forth, byuse of the expression “may, at any time” in the first limb asagainst “and shall” in the second limb. 24.As indicated above, qua both situations, the prescribedperiod of limitation was four years in respect of the assessmentyear(s) in issue. 24.1.To be noted, with effect from 01.06.2016, the period oflimitation has been reduced to six months from the end of themonth, in which, the order was passed. The amended period is,admittedly, not applicable in the facts of the instant case. 25.This apart, the proviso, to our minds, has a role to playin the present matter. 25.1.The first proviso clearly indicates, that any amendment https://hcservices.ecourts.gov.in/hcservices/ made to the order which has the effect of enhancing anassessment or reducing a refund or increasing the liability ofthe Assessee, shall not be made, under the said sub-section,i.e., sub-section (2) of Section 254 of the Act, unless theTribunal, gives notice to the Assessee, of its intention to doso and allows the Assessee, a reasonable opportunity of beingheard. 25.2.Clearly, the recall of orders dated 20.08.2007 and21.01.2008, could have the effect of enhancing the liability ofthe Assessee. 25.3.The Tribunal, therefore, to our minds, was required toissue notice to the assessee, before recalling its orders dated20.08.2007 and 21.01.2008. 25.4.Thus, for all these reasons, we are of the view thatthe order dated 31.07.2015, need not be disturbed. 26.As indicated above, the only lapse, if there was any, inthe order dated 31.07.2015, was that the Tribunal, did not,formally pass orders on the miscellaneous petitions, filed bythe Revenue. 26.1.In our opinion, this by itself, will not impact theimpugned judgment and order dated 31.07.2015, as these petitionswere filed beyond the period of limitation, as prescribed underSection 254 (2) of the Act. 27.Therefore, for the foregoing reasons, the appeals aredismissed. The impugned judgment of the Tribunal is sustained. 28.However, there shall be no order as to costs.Consequently, the connected miscellaneous petitions are closed. Sd/- Assistant Registrar(CCC) //True Copy// Sub Assistant Registrar pri To 1. The Income Tax Appellate Tribunal, 'A' Bench, Chennai. 2. The Commissioner of Income Tax (Appeals) III, Chennai-34. (Appeals) III, Chennai-34. 3. The Commissioner of Income Tax (Appeals) XI, Chennai. 4. Joint Commissioner of Income Tax Special Range-I, Chennai. 5. Assistant Commissioner of Income Tax, Chennai. +2cc to Mr.T.Ravi Kumar, Advocate, S.R.No.14525/17+1cc to Mr.Subbaraja Aiyar Padmanabhan, Advocate, S.R.No.14468/17 T.C.A.Nos.879 to 882 of 2016And C.M.P.Nos.20446 to 20448 of 2016BR(CO)CS/23/05/17