Dr. S. Panneerselvam Vs. the Assistant Commissioner of Income Tax and Income Tax Appellate Tribunal (B Bench) Represented by the Assistant Registrar - Court Judgment

Excerpt:

.....of the act and to implement the purpose behind the act. the fact that the rule making authority has prescribed procedure in exercise of the powers under section 67 for making an application to the director does not mean that the suo motu power which is explicit in section 5(2) of the act is in any way curtailed or taken away. therefore, the contention of the respondent that making an application is sine qua non for invoking the power under section 5(2) of the act is not tenable. -- t.n. estates (abolition & conversion into ryotwari) act, 1948. sections 5(2) & 67; suo motu revisional powers held, on a bare reading of the provisions of section 5(2) of the act, it is clear that the power conferred on the director by section 5(2) to cancel or revise any of the orders, acts or proceedings of the settlement officer is very wide. in the first place, the director need not necessarily be moved by any party in that behalf, and the power could be exercised either on an application by an aggrieved person or suo motu. for example, if the director comes to know that contrary to the scheme of the act or due to misrepresentation or fraud played, a patta had been granted to a person under..........17/2001 for rectification in terms of section 254(2) of the income tax act, 1961 and rectification order was passed on 25.4.2001. 4. thereafter, the writ petitioner/assessee in both writ petition has filed one more m.p. no. 92/2003 for further rectification. the tribunal dismissed the petition holding as follows:3. we have heard and perused the material on record. admittedly the earlier mp of the assessee bearing no. 38/01 was disposed by this tribunal vide order dated 25.4.01 in relation to i.t.a. no. 2151 and m.p. no. 17/01 was disposed off by this tribunal on 25.4.01 in relation to i.t.a. no. 2457 & 2458/93 and 2501 & 2502/93 for the assessment year 1982-83 & 1983-84, 1984-85 and 1987-98. hence this is the second mp by the assessees for the year 1984-85 and 1987-88. as per section 254(2), the tribunal has no power to pass order in mp on mp. this view is also supported by the judgment of hon'ble orissa high court in the case of cit v. itat and anr. in 196 itr 641. accordingly the mp is dismissed.5. on going through the averments made in the affidavits filed in support of the writ petitions, it is clear that the writ petitioner has at the first instance filed an application mp.....

Judgment:

ORDER

R. Sudhakar, J.

1. Both the Writ Petitions are filed to issue Writ of Certiorarified mandamus, calling for records in M.P. No. 92/2003 (38/Mds/2001 in I.T.A. Nos. 2501/Mds/1993) and M.P. No. 92/2003 (38/Mds/2001 in I.T.A. Nos. 2502/Mds/1993) respectively on the file of the second respondent and quash the orders dated 26.12.2005 and direct the second respondent to dispose of the claims for rectification of the order passed in I.T.A. No. 2501/Mds/1993 and I.T.A. 2502/Mds/1993.

2. When the matters were listed on 19.10.2009, there was no representation on behalf of the petitioner. Today also there is no representation on behalf of the petitioner. Mr. K. Subramanian, learned Counsel appearing for the Department/first respondent present and the matter is taken up and disposed off on merits.

3. On going through the orders which are under challenge, it is found that the original orders were passed by the Income Tax Appellate Tribunal on 27.11.2000 and thereafter, the petitioner filed M.P. No. 17/2001 for rectification in terms of Section 254(2) of the Income Tax Act, 1961 and rectification order was passed on 25.4.2001.

4. Thereafter, the writ petitioner/assessee in both writ petition has filed one more M.P. No. 92/2003 for further rectification. The Tribunal dismissed the petition holding as follows:

3. We have heard and perused the material on record. Admittedly the earlier MP of the Assessee bearing No. 38/01 was disposed by this Tribunal vide order dated 25.4.01 in relation to I.T.A. No. 2151 and M.P. No. 17/01 was disposed off by this Tribunal on 25.4.01 in relation to I.T.A. No. 2457 & 2458/93 and 2501 & 2502/93 for the Assessment Year 1982-83 & 1983-84, 1984-85 and 1987-98. Hence this is the Second MP by the Assessees for the year 1984-85 and 1987-88. As per Section 254(2), the Tribunal has no power to pass order in MP on MP. This view is also supported by the Judgment of Hon'ble Orissa High Court in the case of CIT v. ITAT and Anr. in 196 ITR 641. Accordingly the MP is dismissed.

5. On going through the averments made in the affidavits filed in support of the writ petitions, it is clear that the writ petitioner has at the first instance filed an application MP No. 17/2001 for rectification which has been allowed on 25.4.2001. Thereafter, after more than two years, petitioner filed another rectification petition for rectifying the original order of the appellate tribunal dated 27.11.2000.

6. The Tribunal took the view that the second miscellaneous petition cannot be filed for rectification of the original order once over. It relied upon the decision of a Division Bench of Orissa High Court in Commissioner of Income-tax and Anr. v. Income-tax Appellate Tribunal and Anr. reported in (1992) 192 ITR 640. The Orissa High Court considering the scope and ambit of application of Section 254(2) of the Income Tax Act, 1961, held as follows:

'The scope and ambit of an application of Section 254(2) is very limited. The same is restricted to rectification of mistakes apparent from the record. We shall first deal with the question of the power of the Tribunal to recall an order in its entirety. Recalling the entire order obviously would mean passing of a fresh order. That does not appear to be the legislative intent. The order passed by the Tribunal under Section 254(1) is the effective order so far as the appeal is concerned. Any order passed under Section 254(2) either allowing amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining unamended is the effective order for all practical purposes. The same continues to be an order under Section 254(1). That is the final order in the appeal. An order under Section 254(2) does not have existence de hors the order under Section 254(1). Recalling of the order is not permissible under Section 254(2). Recalling of an order automatically necessitates rehearing and readjudication of the entire subject-matter of appeal. The dispute no longer remains restricted to any mistake sought to be rectified. Power to recall an order is prescribed in terms of Rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963, and that too only in cases where the assessee shows that it had a reasonable cause for being absent at a time when the appeal was taken up and was decided ex parte.'

No doubt, in the above case, the question was whether the Tribunal can recall the order in its entirety exercising the power under Section 254(2) of the Income Tax Act, 1961. The court, however, held that any order passed under Section 254(2) either allowing amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining unamended is the effective order for all practical purposes. The same continues to be an order under Section 254(1). That is the final order in the appeal. In the present case, the rectification was ordered in terms of Section 254(2) and it got merged with the original order passed under Section 254(1). What has been refused by the Tribunal while allowing the application under Section 254(2) should be read as having been rejected. Therefore, the petitioner cannot file another application to grant further benefits. Successive application for rectification of the original order cannot be maintained as it will defeat the object of Section 254(2) of the Act. Section 254(2) of the Income Tax Act 1961, provides for rectification of any mistake apparent from the order passed by it under Section 254(1) of the Act. Once this has been done, no further application is maintainable. The remedy by way of appeal is the only course open.

7. In this case, the second petition was filed for rectification of mistake after two years stating that the order of the Commissioner of Income Tax (Appeals) was not properly considered by the Appellate Tribunal and therefore, rectification of the order was sought for. This Court is unable to agree with such a stand taken on behalf of the petitioner for the simple reason that if the assessee is aggrieved by the order of the Tribunal on appreciation of the materials on record, the remedy available to the writ petitioner/assessee will be to file an appeal as provided under the statute and not challenge the same by way of writ petitions stating that the Tribunal should have decide the matters in one way or the other as intended by the assessee/writ petitioner. As against the order passed under Section 254(1) and the rectification order passed under Section 254(2) of the Income Tax Act, there is an appeal remedy provided under Section 260A(1) of the Act and such remedy has not been exhausted by the present writ petitioner. Apparently, the second petition filed for rectification appears to be one intended to bridge the long delay in not challenging the order of the Appellate Tribunal dated 27.11.2000 and the rectification order dated 25.4.2001. The writ petitions deserve to be dismissed on the ground of failure to pursue the alternative remedy and also on the ground of delay and laches, which has not been explained.

8. Both the writ petitions are, therefore, dismissed. There will be no order as to costs.