High Court Of Madras
T. Jayabharathy vs. Assistant Commissioner Of Income Tax
Section 254(1), 254(2)
Block period 1986-87 to 1996-97
K. Raviraja Pandian & P.P.S. Janarthana Raja, JJ.
Tax Case (Appeal) No. 472 of 2007
17th July, 2007
Counsel Appeared
V. Ramachandran for Mrs. Anitha Sumanth, for the Appellant
JUDGMENT
K. Raviraja Pandian, J. :
The substantial questions of law formulated for consideration in this appeal are as follows :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the additions pertaining to the balances in the Indian Bank ?
Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in not having posted the appeal for hearing and giving the appellant due notice of the same subsequent to the hearing of the miscellaneous petition filed by the appellant ?
Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in passing the impugned order on the merits of the case in gross violation of the principles of natural justice ?”
2. The appellant/assessee filed an application in IT(SS) No. 23/Mad/1996 under s. 254(2) of the IT Act, 1961, for the block asst. yrs. 1986-87 to 1996-97 which has been heard and decided by the Tribunal on 21st Sept., 2004. The same is put in issue in this appeal.
3. The statement of facts, as culled out from the appeal memorandum is as follows : An assessment has been framed on the appellant/assessee pursuant to the search conducted in the assessee’s residence on 23rd July, 1995. The Asstt. CIT, Central Circle, Chennai, by order dt. 28th Nov., 1996, determined the total undisclosed income by making certain additions. That assessment was challenged before the Tribunal questioning the correctness in respect of three additions. The Tribunal passed an order dt. 21st Sept., 2004, allowing the appeals pertaining to addition Nos. 1 and 2, however, did not deal with the third addition. As the non-consideration of the third addition was regarded as an error apparent on the face of the record, the assessee filed a petition under s. 254(2) of the IT Act, 1961 for reconsideration of the issue. The Tribunal entertained the application and upon hearing counsel on either side on that application, decided the issue against the assessee.
4. The correctness of the said order is now canvassed in this appeal by contending that when the Tribunal admitted that the third addition which was also one of the items of dispute in the appeal, has not been considered and which requires reconsideration, should have given an opportunity to the assessee for production of factual materials available to sustain her case. Without doing so, the Tribunal took a curious decision to decide the issue on the basis of the letter dt. 20th Nov., 1996, stated to be filed by the assessee. There is absolutely no detriment on the part of the Tribunal if an opportunity is given to the assessee to argue the issue on the merits, by reopening the earlier order dt. 21st Sept., 2004. As the issue in dispute is in a narrow compass, when the matter was argued for admission, this Court issued notice to counsel for the Revenue and heard both sides today.
5. Learned counsel for the Revenue sought to sustain the order on the ground that the relief sought for in the miscellaneous petition was only for consideration of the issue raised in the petition pertaining to the deposit in three branches of the Indian Bank. While deciding the miscellaneous petition an opportunity was given to the assessee. The relief sought for in the miscellaneous petition was not for recalling the order dt. 21st Sept., 2004. Hence, there cannot be any exception to the order passed by the Tribunal in disposing of the issue in dispute while considering the miscellaneous petition.
6. Heard learned counsel on either side and perused the materials available on record.
7. It is a fact and there is no dispute that the Tribunal failed to consider the third addition when the order was passed by the Tribunal on 21st Sept., 2004, in the appeal filed by the assessee. Non-consideration of one of the disputed issues by the Tribunal in the appeal before it was regarded as a mistake apparent on the face of the record and on that basis the assessee was compelled to file an application under s. 254(2) of the IT Act for rectification of mistakes. Whether there is a mistake apparent on the face of the record was the only question in the miscellaneous petition filed by the assessee. It is also an undisputed fact that the miscellaneous petition was entertained by the Tribunal and thereby it is evident that there was an error apparent on the face of the record in the order made by the Tribunal on 21st Sept., 2004.
8. While allowing the assessee to establish her stand whether there exists an apparent mistake in the order passed by the Tribunal, the Tribunal can expect the assessee only to establish the point to that effect, but cannot expect to argue on the issue which the Tribunal failed to decide while passing the orders on the appeal on 21st Sept., 2004. In order to establish her case that the third addition is also uncalled for, the assessee may require to produce materials, which are factual in nature. The Tribunal, as an ultimate fact-finding authority cannot shut the door at the threshold by directing the assessee to argue on the fact in issue while making arguments in respect of an application under s. 254(2) of the Act. No prejudice would be caused to the Tribunal if an opportunity is given to the assessee to adduce materials to establish its case on the merits. The opportunity to be given to the assessee should be a real and reasonable opportunity and not an opportunity given for namesake. There is no apparent reason whatsoever for the Tribunal to hurriedly decide the issue which was left out in the main appeal, while deciding the miscellaneous petition itself. Not only natural justice, but also a fair play demands that the petitioner should be given a real opportunity to establish her case. Furthermore, if the assessee is not allowed to establish her case before the Tribunal on factual issue, she cannot raise any issues which are factual in nature as per the statutory provisions before the appellate forum.
9. Taking into consideration the overall circumstances of the case, we are of the view that the way in which the third issue has been dealt with by the Tribunal at the stage of deciding the miscellaneous petition itself, cannot be regarded as a correct approach. The appellant/assessee should have been given an opportunity to put forth her case in respect of the third issue which has been left out for consideration in the original order passed by the Tribunal by giving due opportunity. Hence, the impugned order in the appeal is set aside and the matter is remitted back to the Tribunal to reconsider the issue afresh after giving due opportunity to the appellant/assessee.
[Citation : 294 ITR 128]
