1. By this miscellaneous applications filed under Section 254(2) of the IT Act, 1961, the Revenue seeks to recall the orders of the Tribunal in the aforesaid appeals.
2. The facts, in brief, giving rise to the aforesaid miscellaneous applications are that the Revenue filed appeals in aforesaid cases having tax effect less than Rs. 1 lakh. The assessee raised a preliminary objection with regard to the admissibility of the appeals on the ground that since the tax effect in each case was less than Rs. 1 lakh, the appeals were filed in violation of the policy decision taken by the CBDT vide Instruction No. 1979, dt. 27th March, 2000, and same were liable to be dismissed as unadmitted. The Tribunal dismissed the appeals filed by the Revenue as unadmitted because they were filed in violation of the aforesaid CBDT's Instructions.
3. It is admitted by both the parties that in the present cases, the tax including interest is more than Rs. 1 lakh.
4. At the time of hearing of these miscellaneous applications, the learned Departmental Representatives, Shri Raj Kumar, CIT-Departmental Representative, along with Shri Santosh Kumar, senior Departmental Representative drew our attention to the Instruction Nos. 1979, dt.
27th March, 2000, 1985, dt. 29th June, 2000 and Instruction No. 6/2003, dt. 17th July, 2003 and xerox copy of computation of tax in respective appeal. He argued that the CBDT Instructions referred to above by the learned Departmental Representative were available at the time of hearing of the appeals and the same has not been considered by the Tribunal at the time of passing of the aforesaid order. Therefore, he contended that, there is a mistake apparent on the face of the record and he requested that the orders dismissing the appeals of the Revenue in limine by following the decision of the jurisdictional High Court in the case of CIT v. Cameo Colour Co. , need recalling and the appeals filed by the Revenue may be decided on merits after giving reasons.
5. Shri Raj Kumar, learned CIT-Departmental Representative stated that right of appeal is a statutory right given by the Parliament and it cannot be taken away by issuing any instructions. For this proposition he relied on the decision of the Hon'ble Bombay High Court in the case of Nirmala L. Mehta v. CIT . He stated that in all the aforesaid cases, the Tribunal has not decided the appeals of the Revenue on merits. He requested that no prejudice will be caused to the assessees if the impugned orders of the Tribunal are recalled and the appeals of the Department are heard on merits after giving the parties an opportunity to represent their cases on merits because the appeals had been dismissed on a technical ground and this will prejudice the rights of the Revenue.
The learned CIT-Departmental Representative further stated that the Circular F.No. 279/126/98-IT, dt. 27th March, 2000 has been recognized by the Hon'ble jurisdictional High Court in the case of CIT v. Cameo Colour Co. (supra) and the observations of the Hon'ble High Court in this regard read as under: "Circular F.No. 279/126/98-IT, dt. 27th March, 2000, reflected the policy decision taken by the CBDT not to raise questions of law where the effect is less than the amount prescribed in the instructions issued by the CBDT with a view to reduce litigations before the High Courts and the Supreme Court. The circular is binding on the Revenue. An appeal or reference contrary to the instructions issued in the circular will not be considered by the Courts." He submitted that the other instructions are not recognized by the Court. He finally stated that the latest Instruction No. 6/2003, dt.
17th July, 2003, is only clarificatory and in continuation of earlier Instruction Nos. 1979, dt. 27th March, 2000 and 1985, dt. 29th June, 2000. He relied on this instruction in support of his contention and he requested that the impugned orders be recalled and the appeals filed by the Revenue may be decided on merits after hearing both the sides.
Relying on the decision of the Rajasthan High Court in the case of CIT v. Ramesh Chand Modi , the decision of the Bombay High Court in the case of Blue Star Engineering Co. (Bombay) (P) Ltd. v. CIT and the case of CIT v. Ballabh Prasad Agarwalla , he submitted that the Tribunal is a final fact-finding authority and recalling of the order is permissible under the law.Shri C.J. Thakar and Shri S.C. Thakar, Shri Rajesh V. Loya, Shri M. Mani, Shri G.L. Bajaj, Shri M.M. Jain and Shri R.S. Bhattad, appeared for the respondents/assessees and advanced their arguments. Mainly, Shri C.J. Thakar, the learned advocate, argued that the Tribunal had mainly dismissed the appeal filed by the Revenue by following the decision of the jurisdictional High Court in the case of CIT v. Cameo Colour Co. (supra) because the monetary limit in each case is less than Rs. 1 lakh. He stated that the CBDT Instruction dt. 27th March, 2000 is very clear and this circular has been approved by the Hon'ble jurisdictional High Court in the case of Cameo Colour Co.
(supra). He further submitted that merely issuing other clarificatory Instructions No. 6/2003, dt. 17th July, 2003 does not supersede the earlier circular issued by the competent authority. He stated that the circular dt. 17th July, 2003 is not a good circular and the same has not been approved by any Court of law as the circulars dt. 27th March, 2000 and 29th June, 2000, have been approved by the Hon'ble jurisdictional High Court in the case of Cameo Colour Co. (supra).
7. He invited our attention to the order of the Tribunal, Hyderabad Bench 'A' in the case of Dy. CWT v. Nb. Syed Jaffar Ali Khan (2005) 95 TTJ (Hyd) 376 : (2005) 94 ITD 21 (Hyd) and stated that the arguments advanced by the learned Departmental Representative in the present cases have already been considered by the Hon'ble Hyderabad Bench of the Tribunal in the above cited case. He drew our attention to page No.29, para 10 of the said order and stated that the Instruction No. 1979, dt. 27th March, 2000 and other Instruction No. 1985, dt. 29th June, 2000 and Instruction No. 6/2003, dt. 17th July, 2003, referred by the learned Departmental Representative, have been considered by the Tribunal, Hyderabad Bench. He pleaded that it may not be proper to give a different view on the matter in the garb of clarification. If the CBDT is of the view that the earlier instructions contained an unintended error, it could have been withdrawn and fresh circular/instruction would have been issued, which is within the power of CBDT under Section 119 of the Act. He further stated that the Tribunal, Hyderabad Bench in the aforecited case has approved the Instruction No. 1979 and held that the said instruction leaves no room for doubt as to what should be the monetary limit to be taken into consideration while filing an appeal by the Revenue. He further stated that the circulars issued by the CBDT are not binding on the Courts but it is the duty of the Court to see to that the instructions which are binding upon the Revenue authorities being issued in exercise of their powers under Section 119 of the Act are followed by them. In support of his argument, he cited the decision of the Hon'ble Supreme Court in the case of Union of India and Anr. v. Azadi Bachao Andolan and Anr. (2003) 263 ITR 706 (SC) in which the Hon'ble Supreme Court observed as under: "If, in the teeth of this clarification, the AOs chose to ignore the guidelines and spent their time, talent and energy on inconsequential matters, we think that CBDT was justified in issuing 'appropriate' directions vide Circular No. 789 [see (2000) 243 ITR 57 (St)], under its powers under Section 119, to set things on course by eliminating avoidable wastage of time, talent and energy of the AOs set discharging the onerous public duty of collection of revenue." 8. He vehemently stated that the arguments advanced by the learned Departmental Representative in the present miscellaneous applications have been answered by the Tribunal, Hyderabad Bench, in para 10 of its order reported in (2005) 95 TTJ (Hyd) 376 : (2003) 94 ITD 21 (Hyd) (supra) and, therefore, they have no force and the present miscellaneous applications filed by the Revenue deserve to be dismissed. He further submitted that the learned Departmental Representative has not pointed out any mistake in the orders of the Tribunal apparent on the face of record. He further argued that the Circular No. 6/2003, dt. 17th July, 2003 was not brought to the notice of the Bench at the time of hearing of the appeals and the Tribunal has passed the orders on the basis of Instruction No. 1979, dt. 27th March, 2000 and Instruction No. 1985, dt. 29th June, 2000. Since the Instruction No. 6/2003, dt. 17th July, 2003 was not brought to the notice of the Bench, it is a new document which cannot be considered in the present miscellaneous applications.
9. Finally, he argued that there is no mistake apparent on the face of record and, therefore, there is no need to recall the impugned orders.
If this Hon'ble Bench recalls the impugned orders, then it will amount to review of the order which is not permissible under law. He cited the decisions reported in CIT v. Jagabandhu Roul and CIT v. Keshri Metal (P) Ltd. in support of his contentions. He also relied on the decisions reported in CIT and Anr.
v. ITAT and Ors. , Sree Palaniappa Transports v. CIT .
10. Shri Rajesh Loya, chartered accountant, appearing for the respondent Nos. 4 and 8 stated that he agrees with the arguments advanced by Shri C.J. Thakar, the learned counsel for the respondents.
In addition to that, he stated that the monetary limit in each case should be seen. In group case, monetary limit would apply with reference to each case taken individually. The working of monetary limit will not have cumulative revenue effect. He stated that the Instruction No. 6/2003, dt. 17th July, 2003 is a new document which cannot be considered in the present miscellaneous applications and on the basis of this new document, the impugned orders should not be recalled for hearing the appeals afresh on merits. He stated that if a counsel has not produced any documentary evidence at the time of hearing and later he produces the same in miscellaneous application for recalling the impugned order on the basis of a new document, it is not permissible under law. Finally, he stated that the scope of rectification under Section 254(2) is very limited and the Tribunal has no power to review its own order where there is no mistake in the order apparent from the face of record. In support of his contentions, he relied on the decisions reported in ITO v. Chandra Kant S. Dharma and Ors. (2005) 95 TTJ (Ind) 151 : (2005) 94 ITD 152 (Ind), CIT v. Suman Tea & Plywood Industries (P) Ltd. , Joseph Kuruvilla v. CIT , Mahakoshal Ceramics v. CIT , Karan & Co. v. ITAT (2002) 253 ITR 131 (Del) and CIT v. Ramesh Electric & Trading Co. .
11. In rebuttal to the arguments advanced by the Authorised Representative of the respondents, Shri Raj Kumar, the learned CIT-Departmental Representative, stated that the only question before the Bench is about the maintainability of appeal and not to decide the merits of the case. He stated that in all the appeals, the tax effect is more than Rs. 1 lakh and inadvertently by mistake unknowingly the Departmental Representative, at the time of hearing of the Departmental appeal, gave consent that the tax effect is less than Rs. 1 lakh. He submitted that the benefit of mistake should not be given to the assessee at the cost of exchequer. He requested that the impugned orders in all the aforesaid appeals be recalled because there is a mistake apparent from the record because Instruction No. 6/2003, dt.
17th July, 2003, has not been considered by the Tribunal in the impugned orders. He, therefore, submitted that the impugned orders may be recalled and all the appeals may be admitted and be heard on merits after giving opportunity to the Revenue to represent their cases.
12. We have heard both sides and perused the relevant material available on record. We have gone through the impugned orders passed by the Tribunal in the aforesaid appeals in which the Revenue has filed the present miscellaneous applications. We have also gone through the averments made in the miscellaneous applications and the written submissions filed by the Departmental Representative supported by the decisions rendered by the various Courts. On the contrary, we have also patiently heard the learned counsel for the assessee and also gone through the decisions cited by them in support of their contentions.
The Hon'ble jurisdictional High Court in the case of CIT v. Cameo Colour Co. (supra) has made the following observation: "Circular F.No. 279/126/98-IT, dt. 27th March, 2000, reflected the policy decision taken by the CBDT. not to raise questions of law where the effect is less than the amount prescribed in the instructions issued by the CBDT with a view to reduce litigations before the High Courts and the Supreme Court. The circular is binding on the Revenue. An appeal or reference contrary to the instructions issued in the circular will not be considered by the Courts." In the aforesaid decision, the Hon'ble High Court considered and approved the Instruction of the CBDT, dt. 27th March, 2000. This circular prescribes monetary limit of tax effect of Rs. 1,00,000 for filing an appeal by the Department before the Tribunal. In addition to the above, there is Instruction No. 1985, dt. 29th June, 2000 by the CBDT which inter alia, states as under: "The monetary limit in the context of each case taken singly would mean each assessment year for each assessee considered at one point of time. For example, if filing of appeals were to be considered in the cases of XYZ Limited for asst. yrs. 1995-96 and 1996-97, the monetary limit as prescribed in Instruction No. 1979 would apply taking together the asst. yrs. 1995-96 and 1996-97." Instruction No. 6/2003, dt. 17th July, 2003, issued by the CBDT reads as under: "Subject: Clarification as regards the monetary limit for filing appeal before SC/HC/Tribunal--Reducing litigation--Regarding Reference is invited to Board's Instruction No. 1979, dt. 27th March, 2000, Instruction No. 1985, dt. 29th June, 2000 as also to earlier instructions issued to reduce litigation by fixing monetary limit for filing Departmental appeals before SC/HC/Tribunal.
In order to avoid ambiguity and to adopt uniformity in approach while filing appeals by the field formations, it is hereby clarified by the Board that the word 'monetary limit' and 'tax effect' in the aforesaid instructions be read as 'revenue effect' which denotes amount of tax, interest, penalty, fine or any other sum involved.
This instruction is clarificatory in nature and will apply to litigation under other direct taxes also e.g. wealth-tax, gift-tax, estate duty, etc.
13. We have perused the aforesaid instructions of the CBDT issued from time to time along with the order of the Tribunal, Hyderabad Bench in (2005) 95 TTJ (Hyd) 376 : (2005) 94 ITD 21 (Hyd) (supra) and the order of the Tribunal, Nagpur Bench, Nagpur, dt. 17th Sept., 2002 in the case of ITO v. Roopchand . Jain [reported at (2003) 79 TTJ (Nag) 406--Ed.], relied upon by the assessee's counsel. We have also perused the citations cited on behalf of both the parties.
14. In the Instruction No. 1985, dt. 29th June, 2000, it is also mentioned that the new monetary limit would apply with reference to each case taken singly. In other words, in group cases, each case should individually satisfy the new monetary limit and not to take into consideration the cumulative revenue effect. In para 3(iii) of the said instructions, it has been stated that the adverse judgments should be contested irrespective of the revenue effect in a case where prosecution proceedings are contemplated against any assessee. The CBDT has issued another Instruction No. 6/2003, dt. 17th July, 2003 which is issued for clarifying the earlier Instruction No. 1979, dt. 27th March, 2000 and Instruction No. 1985, dt. 29th June, 2000, in which it has been clarified that the words "monetary limit" and "tax effect" in the aforesaid instruction be read as "revenue effect" which denotes the amount of tax, interest, penalty, fine or any other sum involved. In view of the above clarificatory instructions of the CBDT, the question which came up for our consideration in the present miscellaneous applications is whether the revenue effect involved in each of the appeals in which miscellaneous applications are filed is less than Rs. 1 lakh or not. We find that the tax effect including interest involved in the aforesaid appeals is more than Rs. 1 lakh and in view of the clarification No. 6/2003 of the CBDT in respect of earlier Instruction No. 1979, dt. 27th March, 2000 and Instruction No. 1985, dt. 29th June, 2000, these appeals were maintainable before the Tribunal and since the Tribunal dismissed the appeals having been filed in violation of the aforesaid Board's Instructions, we are of the considered opinion that there is a mistake apparent from the face of records and the same needs to be rectified.
15. Section 254(2) of the IT Act, 1961, expressly confers power upon the Tribunal to correct any mistake apparent from the record and power to amend any order passed under Sub-section (1) of Section 254. In the case of CIT v. Ballabh Prasad Agarwalla (supra), the Hon'ble Calcutta High Court has observed that the primary aim of legal policy is to do justice. It must be assumed that Parliament does not intend to do injustice or to allow a wrong thing to continue contrary to law or public policy. It is one of the basic principles and a legal policy that when there is a provision for rectification of a mistake apparent on the record, that power should be allowed to be exercised for correcting mistakes and/or error on the record and if the Tribunal feels that the Tribunal has committed an error of law, it would be against the concept of justice and fair play and also against the principle of legal policy not to allow the Tribunal to exercise such power.
16. In the case of Neeta S. Shah v. CIT (1991) 191 ITR 77 (Kar), the Karnataka High Court held that when an earlier order of the Tribunal is founded on a mistaken assumption and the error is discovered, the power of rectification under Section 254(2) can be invoked because the very basis of the earlier order requires rectification.
17. The primary aim of the legal policy is to do justice. It must be assumed that Parliament does not intend to do injustice or to allow a wrong thing to continue contrary to law or public policy.
18. Accordingly, applying the above principles, it cannot be said that the Tribunal, in the instant case, wanted to exercise its power of review. It is a case where the Tribunal is of the view that the clarificatory instructions of the CBDT had not been considered while taking into consideration the revenue effect in the aforesaid appeals and holding that the tax effect involved in each of the aforesaid appeal is below Rs. 1 lakh.
19. It is not the case of recalling the orders on merit by considering any fresh evidence or document. No prejudice will be caused to the assessee if the Tribunal decides the issue on merits. Recalling does not mean that the order of the CIT(A) would be sustained. Technicality may not come in the way of dispensing justice. The instructions of the CBDT have been given statutory acknowledgement by the jurisdictional High Court in Cameo Colour Co. (supra), then why not other instructions/provisions amended have to be taken into consideration.
All the instructions of the CBDT have to be taken into account while considering the monetary limit for filing an appeal by the Department before the Tribunal.
20. In the case of CIT v. Ramesh Chand Modi (supra), it has been held that when the Tribunal fails to decide some of the questions raised before it inadvertently or by oversight, the only appropriate method of correcting such mistake is to recall the order and make a fresh order after affording an opportunity of hearing to such party. In all such cases, ordinarily the Court or Tribunal acts ex debito justitute to prevent abuse of process even in the absence of any power. Further, it has also been held that the order under Section 254(2) of the IT Act, 1961, is not confined to arithmetical or clerical mistakes, not only to correct substantive mistakes but also procedural mistakes.
21. In the present case, inadvertently and unknowingly, the Departmental Representative admitted before the Tribunal that the tax effect involved in each of the appeals is less than Rs. 1 lakh and the Tribunal dismissed the appeals of the Revenue in limine. Had this clarificatory instructions of the CBDT brought to the notice of the Tribunal, the Tribunal should have admitted the appeals and decided the same on merits. Benefit of the mistake on the part of the learned Departmental Representative should not be given to the assessee at the cost of exchequer of the Government. In our view, no prejudice will be caused to the assessee if the appeals of the Revenue are heard on merits by recalling the earlier orders of the Tribunal passed in the aforesaid appeals of the Revenue because the Tribunal dismissed the appeals of the Revenue on technical ground and not on merits.Blue Star Engineering Co. (Bombay) (P) Ltd. v. CIT (supra), the High Court held that the Tribunal is a last fact-finding authority. On the basis of this decision, the learned Departmental Representative has contended that since the Tribunal is a last fact-finding authority, it can recall its orders for deciding the same on merits.
23. The learned counsel, Shri C.J. Thakar strongly relied on the decision of the Tribunal, Hyderabad Bench reported in the case of Nb.
Syed Jaffar Ali Khan (supra). We have gone through the decision and we are of the considered opinion that the decision of the Hyderabad Bench is not applicable to the facts of the present case because the question before the Tribunal, Hyderabad Bench, was whether the appeals filed by the Revenue in the case of wealth-tax matters having tax effect of less than Rs. 1 lakh are contrary to Instruction No. 1979 and are liable to be dismissed as not maintainable. The Tribunal, Hyderabad Bench, decided the issue against the Revenue considering the Instruction No.1979, dt. 27th March, 2000. The question before us in the present case is whether the monetary limit and tax effect in the aforesaid instruction be read as revenue effect which denotes the amount of tax, interest, penalty or fine or any other sum involved. Considering this clarificatory Instruction No. 6/2003, dt. 17th July, 2003, the revenue effect involved in each of the appeals is not less than Rs. 1 lakh but inadvertently and unknowingly, the Departmental Representative admitted before the Bench at the time of hearing of appeal that the revenue effect involved in each case is less than Rs. 1 lakh.
24. The learned counsel for the assessee also cited the order of the Nagpur Bench of the Tribunal dt. 17th Sept., 2002 in ITA No.357/Nag/2000 in the case of ITO v. Roopchand Jain (supra), and stated that the interest does not include tax, and interest is independent and tax is independent. He also stated that the definition of 'tax' given in Section 2(43) does not include interest. The learned counsel for the assessee also stated that if the interest is excluded from the total demand, then the monetary limit confines only to tax which is less than Rs. 1 lakh in all the cases. Perusing the aforesaid order of the Tribunal, we are of the opinion that the facts of the cases in hand and arguments advanced by the learned Departmental Representative are entirely different from the case decided by the Tribunal, Nagpur Bench in the case of Roopchand Jain (supra). In the present case, the learned Departmental Representative argued that the appeals of the Revenue have been dismissed in limine on technical ground and no prejudice would be caused to the assessee if the impugned orders are recalled and the appeals of the Revenue are decided on merits after hearing both the sides.
25. The argument of the learned counsel for the assessee is that for the first time, a reference has been made to the clarificatory circular of the CBDT and on the basis of the same, the Revenue sought to review the earlier orders of the Tribunal which is not permissible. In this context, we have already stated that these are not new instructions but the Board has issued a clarification in respect of Instruction No.1979, dt. 27th March, 2000 and Instruction No. 1985, dt. 29th June, 2000 and it is not a new instruction laying down any new monetary limit for filing an appeal by the Revenue before the Tribunal. Therefore, it cannot be considered as a new document. At the time of hearing of the appeals, the Revenue did not bring these clarificatory instructions to the notice of the Bench and inadvertently and unknowingly admitted that the tax effect involved in each of the appeals is less than Rs. 1 lakh.
Had the Tribunal considered this clarificatory Instruction No. 6/2003, dt. 17th July, 2003, the Tribunal should not have dismrssed the appeals in limine as not maintainable. Without commenting on merits, we are of the view that ignorance of law should not affect the revenue which is very much necessary to run the country.
26. In view of the aforesaid discussions, we are of the considered opinion that there is an apparent mistake on the face of the record in the orders of the Tribunal and, therefore, we recall the impugned orders in all the aforesaid appeals of the Revenue in which the Tribunal had dismissed the appeals of the Revenue in limine without admitting the same by following the decision of the Bombay High Court in the case of CIT v. Cameo Colour Co. (supra).
27. In view of the above, the impugned orders of the Tribunal in the aforesaid appeals of the Revenue are recalled and the Registry is directed to fix the aforesaid appeals before the Bench in normal course for regular hearing and issue notices to both the parties.
28. In the result, the miscellaneous applications filed by the Revenue are allowed.