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Addl. Commissioner of Income-tax Vs. Income-tax Appellate Tribunal and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petition No. 5439 of 1974
Judge
Reported in[1983]139ITR615(AP)
ActsIncome Tax Act, 1961 - Sections 254(2); Constitution of India - Article 226
AppellantAddl. Commissioner of Income-tax
Respondentincome-tax Appellate Tribunal and anr.
Appellant AdvocateP. Rama Rao, Adv.
Respondent AdvocateS. Parvatha Rao, Adv. for respondent No. 2 and None for respondent No. 1
Excerpt:
.....to be quashed on ground of violation of any rule of natural justice. - - rama rao, is that it is always just, proper and equitable for the appellate tribunal to afford a reasonable opportunity to the commissioner as well as the assessee before passing any order in exercise of its suo motu power to rectify the mistake apparent on..........gave rise to this question. the 2nd respondent-assessee had preferred an appeal to the income-tax appellate tribunal, hyderabad bench, against the order of the aac, who had confirmed a levy of penalty of a sum of rs. 25,000 by the ito, september 25, 1967. the appellate tribunal had, by its order dated april 23, 1971, allowed the appeal preferred by the assessee holding that the penalty cannot be levied in this case, as part of the tax was paid, and that there was a genuine effort on the part of the assessee to pay the entire amount of tax and its bona fides were not questioned by the assessing authority. subsequently, the tribunal had passed a corrigendum on december 20, 1973, as in its opinion certain typographical errors had crept into their order dated april 23, 1971, and the.....
Judgment:

Kondaiah, J.

1. This writ petition by the Addl. Commissioner of Income-tax, A.P., Hyderabad, gives rise to a short question of law relating to the scope and applicability of Section 254(2) of the I.T. Act, 1961 (hereinafter called ' the Act '). In order to appreciate the scope of the question, we may briefly refer to the facts that gave rise to this question. The 2nd respondent-assessee had preferred an appeal to the Income-tax Appellate Tribunal, Hyderabad Bench, against the order of the AAC, who had confirmed a levy of penalty of a sum of Rs. 25,000 by the ITO, September 25, 1967. The Appellate Tribunal had, by its order dated April 23, 1971, allowed the appeal preferred by the assessee holding that the penalty cannot be levied in this case, as part of the tax was paid, and that there was a genuine effort on the part of the assessee to pay the entire amount of tax and its bona fides were not questioned by the assessing authority. Subsequently, the Tribunal had passed a corrigendum on December 20, 1973, as in its opinion certain typographical errors had crept into their order dated April 23, 1971, and the following corrections were ordered :

'(1) In paragraph 6, at page 4, line 15 for 'can abdicate' substitute ' had abdicated ';

(2) In line 21 of paragraph 6, for ' the assessee had any reasonable cause ', substitute ' the assessee had no reasonable cause '. '

2. It was further mentioned in the corrigendum that at page 7 of the original order, though some corrections have been made in lines 29 and 30, at page 7 by the Member, wherein it was signed and initialled, the same were not carried out by the office in the copies and it was, therefore, sought to be carried out in the following manner;

' In the lines 29 and 30, for 'in the present case, although the assessee cannot be said to have a reasonable cause ', substitute ' in the present case, even if the assessee were not said to have a reasonable cause '. '

3. Aggrieved by the passing of this corrigendum, the present writ to quash the same has been filed by the applicant. Mr. P. Rama Rao, the learned standing counsel for the I.T. Department contends that the impugned order, designated as corrigendum is illegal and without jurisdiction and, in any event, it is violative of the principles of natural justice as no notice or opportunity was given to the petitioner before passing the same. This claim of the petitioner is resisted by Sri Parvatha Rao, the learned counsel appearing for the assessee-respondent contending, inter alia, that the Tribunal has ample power and jurisdiction to pass the impugned order, as what had been done by the Tribunal was nothing but to correct its earlier order relating to typographical mistakes and errors apparent from the record and that power is invested in the Tribunal under Section 254(2) of the Act, and no notice or Hearing need be given to the petitioner as it is not contemplated under Section 254(2), and, therefore, there was no merit in the writ petition.

4. We may notice at this stage, the provisions of Sub-section (2) of Section 254 :

' The Appellate Tribunal, may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under Sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Income-tax Officer : Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard,'

5. The aforesaid provision would amply give jurisdiction to the Appellate Tribunal to amend any order passed by it under Sub-section (1) to Section 254, if it is within four years from the date of such order and the amendment was only to rectify any mistake apparent from the record. This section hastwo parts. The first part empowers the Appellate Tribunal to exercise its suo motu power of amendment in so far as it relates to the rectification of any mistake apparent from the record. The second part of this sub-section enjoins the Tribunal to make such an amendment, if the mistake is brought to its notice by the assessee or the ITO. The suo motu power may or may not be used in the discretion of the Appellate Tribunal. But undoubtedly, it has got power and jurisdiction to rectify its mistake apparent from the record and make a suitable amendment of any order passed by it under Sub-section (1) to Section 254. Where the assessee or an ITO brings to the notice of the Appellate Tribunal about the creeping in or existence of any mistake apparent from the record, the Tribunal shall make suitable amendment and rectify such mistakes. In the latter case, the Tribunal has a statutory duty to exercise its power of rectification and make suitable amendment of its earlier order. However, the proviso to this Sub-section (2) of Section 254 enjoins the Appellate Tribunal to give notice to the assessee of its intention to make any amendment, rectifying a mistake apparent from the record, if such amendment would have the effect of enhancing an assessment or reducing refund or otherwise increasing the liability of the assessee. The affording of a reasonable opportunity to the assessee of being heard provided in the proviso, must be given only when the liability of the assessee relating to the tax is increased or it has the effect of reducing the refund or enhancing the assessment. Otherwise, the proviso shall not come into play.

6. The submission of Mr. P. Rama Rao, is that it is always just, proper and equitable for the Appellate Tribunal to afford a reasonable opportunity to the Commissioner as well as the assessee before passing any order in exercise of its suo motu power to rectify the mistake apparent on record. True, it is always just and proper for the Appellate Tribunal to give a reasonable opportunity to both the parties concerned before making any amendment or alteration in the original order passed by the Tribunal. We also endorse this view of the learned standing counsel as a very equitable and fair one. It is always in the interests of justice that the Income-tax Appellate Tribunal which is a quasi-judicial authority would afford a fair and reasonable opportunity, even though Section 254(2) does not specifically enjoin it to do so, to both the parties before it. If such opportunity is afforded to the parties before it, before passing any order of amendment, it would avoid unnecessary comment and a feeling to any party aggrieved by such an order of amendment. Such process would be in tune with the judicious process with which the Appellate Tribunal conducts its procedure. There are cases where opportunity should be given to both the parties before the Tribunal, before passing an amendment of its original order by virtue of its power under Section 254(2), We, therefore, express that normallythe Appellate Tribunal must give notice and opportunity to both the parties before passing any order under Section 254(2) to rectify any mistake apparent from the record.

7. However, in the present case, the mistakes which are rectified are only typographical and in the nature of supplying omissions in the copies supplied to the parties. The typographical mistakes or errors can be corrected by the Tribunal suo motu and no party can have any serious objection for such a rectification. The other portion also was stated to have been there in the original. We also perused the original order and this particular sentence which has been added was written by a Member, who passed the order and he has initialled it. We have no reason to disbelieve the statement of the Tribunal to the effect that the original order contains the correction made by a Member and initialled by him and the same has not been carried out in the copies supplied to the parties. We, therefore, find that in the present case, the rectification could be made without any notice to the parties, suo motu, as the mistakes which have crept into the original order and been sought to be rectified are only mistakes apparent from the record and no prejudice can be said to have been caused to the Commissioner, even though no notice was given to him in the present case. However, it would always be just, proper and equitable for the Appellate Tribunal while exercising its power of rectification under Section 254(2) to afford a reasonable opportunity to both the parties before it, before making any amendment to its original order. Such a practice would be conducive to the quasi-judicial nature of its proceedings and also it would avoid unnecessary feeling that the concerned party was not heard before any order of amendment has been passed. It would be salutary for the Tribunal to follow such procedure in future.

8. We have no hesitation, on a consideration of the provisions of Section 254(2), to hold that the Appellate Tribunal has ample power and jurisdiction to pass the impugned order and the same is not liable to be quashed on the ground that it is violative of any rule of natural justice. We may add that no other ground has been specifically taken by the applicant in the writ petition in attacking the validity of the impugned order.

9. For the reasons stated above, the writ petition merits dismissal and is hereby dismissed, but in the circumstances, there shall be no order as to costs.


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