Bombay H.C : recalling the entire order amounted to passing a fresh order in appeal which is not permissible

High Court Of Orissa

K.K. Ravindran Vs. Income-Tax Appellate Tribunal

Section : 254

Gopala Gowda, CJ. And I. Mahanty, J.

Wp (C) No. 17324 Of 2009

July  1, 2010


1. Heard learned counsel for the petitioner and the learned standing counsel for the Revenue.

2. In this writ application the petitioner assails the order dated 15-10-2009 passed by the Income-tax Appellate Tribunal, Cuttack Bench, Cuttack (hereinafter referred to as “the Tribunal”), in exercise of its power under section 254(2) of the Income-tax Act, 1961 in Miscellaneous Petition No. 53/CTK/2009, arising out of IT(SS) A No. 82/CTK/2005. The grievance of the petitioner is that against the order of assessment which was confirmed by the first appellate authority, the petitioner preferred an appeal before the Income-tax Appellate Tribunal and the Tribunal on consideration of the grounds taken by the appellant, upon hearing both sides and considering the materials available on record, partly allowed the appeal by recording its finding in paragraph 27 of the order which runs as follows :

“. . . We find no justification in making the addition of the entire addition of Rs. 17,17,205, simply based on the DVO’s valuation. We further found, the case on which the assessee’s learned counsel relied is squarely applicable in the facts and circumstances of the case. Hence, we set aside the orders of the Revenue authorities on this issue and direct the Assessing Officer to delete the addition of Rs. 17,17,205. This ground of the assessee is allowed.”

3. The aforesaid finding of the Tribunal was sought to be reviewed by the Tribunal in Miscellaneous Petition No. 53/CTK/2009 filed by the Revenue on the ground that addition of the aforesaid sum on account of unexplained house property by the assessee is a mistake apparent on the face of the record for which the said finding is liable to be set aside. The case of the Revenue was accepted by the Appellate Tribunal and the order passed in the appeal was set aside with a direction to hear the appeal afresh on the merits in due course.

4. The said order passed by the Tribunal on the miscellaneous petition is challenged in the present writ petition contending that the Tribunal has exceeded its jurisdiction in exercise of review power under section 254(2) of the Act which is contrary to the decision of a Division Bench of this court in the case of CIT v. ITAT [1992] 196 ITR 640 / 60 Taxman 507. In the said case this court after interpreting section 254(2) of the Act in a similar set of facts observed that recalling the entire order obviously would mean passing of a fresh order. The order passed by the Tribunal under section 254(1) is the effective order so far as the appeal is concerned and any order passed under section 254(2) either allowing amendment or refusing to amend merged with the original order passed. It was further observed that an order under section 254(2) does not have existence de hors the order under section 254(1).

5. Learned standing counsel for the Revenue, on the other hand, supports the impugned order contending that exercise of power by the Tribunal is in conformity with the factual aspects as the assessee had misled the Tribunal in deleting the addition to the tune of Rs. 17,17,205.

6. With reference to the aforesaid legal contentions, we have carefully examined the correctness of the order passed by the Tribunal in recalling the order passed under section 254(1) and directing readjudication of the assessee’s ground No. 7, i.e., deletion of a sum of Rs. 17,17,205 is justified or not.

7. We answer the issue in favour of the assessee for the following reasons :

The Appellate Tribunal on the basis of the factual and legal aspect urged in appeal, particularly, on ground No. 7 allowed the appeal holding that the addition of the entire sum of Rs. 17,17,205, basing upon the report of the DVO is not supported by any material evidence on record. That finding was based on records produced by the Revenue in justification of the assessment order passed by the Assessing Officer and therefore, now it cannot be contended that it is vitiated on account of error on the face of the record. Exercise of power under section 254(2) of the Act by the Tribunal in recalling the entire order amounted to passing a fresh order in appeal which is not permissible.

8. Therefore, the legal contention urged by the assessee that the impugned order is vitiated on the ground of exercise of power by the Tribunal beyond its scope and ambit is accepted. The writ petition is allowed in part and the impugned order under annexure 2 in so far as it relates to setting aside the finding regarding deletion of Rs. 17,17,205 is quashed, but as to correction of Rs. 13,10,000 (instead of Rs. 13,100) in figure and words remains unaltered. Liberty is granted to the Revenue to challenge the order of the Tribunal passed in appeal before the appropriate forum, if so advised. Even if there is some delay, the same may be condoned.

[Citation : 332 ITR 569]

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