Full Judgment
Reference applications under Section 256(1) were filed by the CIT, Delhi-VII, New Delhi. The said reference applications were notified by the Registry as barred by limitation. Accordingly opportunity was given to the applicant for explaining the delay. The applicant did not file any explanation for the delay nor was any application filed for condo nation of delay. Reference applications were accordingly rejected as barred by limitation.
2. The revenue has filed application requesting for recalling the order dated 20th October, 1992 on the ground that the reference applications filed by the revenue were not barred by limitation as the order of the Tribunal had been served on the Chief Commissioner of Income-tax who had forwarded the same to the concerned Commissioner of Income-tax.
Whereas the date of service of the order upon the Chief Commissioner of Income-tax was 26th March, 1992 the date of service upon the concerned Commissioner of Income-tax was 20th April, 1992. Reference has been made to the decision of the Delhi High Court in the case of J.K.Synthetics Ltd. [CPW No. 78 of 1991 dated 22-3-1991] in support of the contention that the limitation for filing of reference application starts from the date of the service of the order upon the Commissioner of Income-tax and not from the service of the order upon the Chief Commissioner of Income-tax.
3. The learned counsel for the assessee - Shri Anoop Sharma contended that the application filed by the revenue is not in order. According to Shri Sharma the application under Section 254(2) can be filed against orders passed under Section 254. Since the order passed by the Tribunal was not an order under Section 254 the application of the revenue cannot be considered to be an application under Section 254(2).
4. Shri Sharma further contended that the order of the Tribunal Is not an order passed under Section 256(1) as reference application has not been decided on merits. On the other hand the application has been considered to be not maintainable. Reliance was placed on the decision of Punjab and Haryana High Court in the case of S.P. Jaiswal v.CIT[1969] 73 ITR 179, in support of the contention that where reference application is dismissed as not maintainable reference under Section 256(2) does not lie. According to Shri Sharma the only remedy available to the revenue is by way of Writ Petition for seeking directions from the Hon'ble High Court. Accordingly it was urged that the application filed by the revenue may be dismissed.
5. We have given our careful consideration to the rival contentions. As per reference applications filed by the revenue the date of service of the order of the Tribunal in Col. No. 2 has been indicated as 20th April, 1992. The Registry of the Tribunal had taken the date of service of the order of the Tribunal as 26-3-1992. It is on this basis that the delay of 24 days was computed by the Registry. Notice admittedly had gone to the Department for explaining the delay in filing of the reference applications. No explanation had been furnished by the revenue nor was any application filed for condo nation of the delay.
However, as per the facts available with us today it becomes abundantly clear that the Registry was wrong in presuming the date of service of the order of the Tribunal as 26-3-1992. This is the date of service of the order upon the Chief Commissioner of Income-tax. As held by their Lordships of the Delhi High Court in the case of J.K. Synthetics Ltd. (supra) the limitation for purposes of reference application is to be reckoned from the date of the service of the order of the Tribunal upon the concerned Commissioner of Income-tax and not from the date of service upon the Chief Commissioner of Income-tax. Thus the mistake has been committed by the Registry of the Tribunal in computing the period of limitation. No doubt the revenue did not avail of the opportunity allowed by the Tribunal for explaining the delay yet it is clear from the facts that the basic mistake of computation of the limitation period is that of the Registry of the Tribunal. As per the information furnished by the applicant the date of service had correctly been indicated in the reference application and if that date had been taken as the correct date of service of the order of the Tribunal then the reference applications would have been taken as within the time of limitations provided under the Act. The decision of the Tribunal in rejecting the reference applications as barred by limitation is thus not in order.
6. Before the order passed by us based on the mistaken assumption is recalled the objection raised on behalf of the assessee that the application filed by the revenue is not an application under Section 254(2) as order passed by the Tribunal was neither an order under Section 254(1) nor was it an order under Section 256(1), may have to be considered. Admittedly the order passed by the Tribunal was not an order under Section 254(1). Therefore, provisions of Section 254(2) are inapplicable in this case. To this extent the contention raised on behalf of the assessee is correct. However, the order passed by the Tribunal in refusing to entertain the application filed by the revenue under Section 256(1) is an order under Section 256. As per the scheme of the Act there are two stages in an appeal before the Tribunal as well as in the case of reference applications. One stage is that of admission of an appeal or reference application. The other stage is disposal of the appeal or reference application on merits. Where the Tribunal refuses to admit an appeal for being barred by limitation or otherwise the order would be an order under Section 254. Similarly where reference application is dismissed on the ground of being barred by limitation it would be an order under Section 256. In the case of Mela Ram & Sons v. CIT [1956] 29 ITR 607 their Lordships of the Supreme Court considered as to whether an order passed by the Appellate Assistant Commissioner in refusing to condone the delay under Section 30(2) of the Income-tax Act, 1922 (corresponding to Section 249) and rejecting the appeal as time barred is an order passed under Section 31 of the Income-tax Act, 1922 (corresponding to Section 250) of the Income-tax Act, 1961 and whether an appeal lies to the Appellate Tribunal. Their Lordships of the Supreme Court held than an appeal presented out of time is an appeal and an order dismissing it as time barred is one passed in appeal. Applying the same principle to the reference applications filed by the revenue we have no doubt in our minds that the order passed by the Tribunal in refusing to consider their reference applications on the ground of being barred by limitation is an order under Section 256.
7. The decision of the Punjab and Haryana High Court in the case of S.P. Jaiswal (supra) relied upon by the learned counsel for the assessee is distinguishable on facts. In that case the Tribunal had rejected the reference applications filed by the assessee as time barred being beyond the period of limitation prescribed under Section 66(1). The assessee filed an application under Section 66(2) of the Income-tax Act, 1922 seeking direction from the Hon'ble High Court to the Tribunal for drawing the statement of the case. The Hon'ble High Court held that the Tribunal had no power to condone the delay in filing of the reference applications under Section 66(1) and that the High Court had also no power to issue a direction under Section 66(2) of the 1922 Act, to the Tribunal for drawing the statement of the case.
8. Now another question that arises in this case is as to whether the Tribunal has the power to rectify any mistake in an order under Section 256 - Section 254(2) admittedly being applicable only in respect of the orders passed under Section 254(1). In this connection we may usefully refer to the decision of the Supreme Court in the case of ITO v. M.K.Mohammed Kunhi [1969] 71 ITR 815. In this case their Lordships considered as to whether the Tribunal has any power to grant stay of recoveries when there is no express powers conferred under the statutes. Their Lordships held that the Tribunal has inherent powers to grant stay as incidental or ancillary to its appellate jurisdiction.
Their Lordships further held though Income-tax Appellate Tribunal is not a Court but it exercises judicial powers. Reference has been made to Sub-section (6) of Section 254 which provides that the proceedings before the Appellate Tribunal shall be deemed to be a judicial proceedings within the meaning of Sections 193 and 228 and for the purpose of Section 196 of the Indian Penal Code (SLV of 1860) and that the Appellate Tribunal shall be deemed to be Civil Court for all purposes of Section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898 (V of 1898).
9. We may also refer to the decision of Allahabad High Court in the case of TTO v. S.B. Singar Singh & Sons [ 1970] 75 ITR 646 reversed on another point by the Supreme Court in the case of TTO v. S.B. Singhar Singh & Sons [1976] 105 ITR 570. In this case it has been held that even when express power is not conferred by a statute, a Court or a Tribunal has inherent jurisdiction to rectify a wrong committed by itself when that wrong causes prejudice to a party for which that party is is not responsible. Similar view has been taken by the Punjab High Court in the case of Mangat Ram Kuthiala v. CIT [1960] 38 ITR 1, where it has been held that a Judicial Tribunal could recall and quash its own order in exceptional cases when it was shown that it was obtained by fraud or by palpable mistake or was made in utter ignorance of a statutory provision and the like. Their Lordships of the Punjab High Court further held that if the proceedings before the Tribunal are in the nature of judicial proceedings, then the Appellate Tribunal had inherent jurisdiction to correct an error.
10. The order passed by the Tribunal in this case was on the basis, of wrong information furnished by the Registry of the Tribunal. The revenue cannot suffer merely because it did not furnish any explanation for wrongly assumed delay on the date of hearing. A wrong fact does not become right merely because the party affected by it does not point out about its inaccuracy or does not challenge its correctness. We have found as a matter of fact that the date of service of the order of the Tribunal was rightly given by the Commissioner of Income-tax as 20th April, 1992 and the Registry of the Tribunal had wrongly intimated that the reference applications were time barred by 24 days. We accordingly set right the wrong committed on the basis of mistaken assumption of the service of the order of the Tribunal and overrule the objection raised on behalf of the assessee in recalling of our order dated 20th October, 1992. In exercise of our inherent powers we recall our order referred to above and restore the reference applications 713 and 714/Del/92 to be disposed of on merits in accordance with law.