Mentha and Allied Products Co. Pvt. Ltd. vs Income Tax Appellate Tribunal and Others

Arun Kumar, J.—This writ petition is directed against an order dated July 13, 1994, passed by the Income Tax Appellate Tribunal (for short "the Tribunal") in R. A. No. 520 (Delhi) of 1993, arising out of ITA No. 2476/Delhi of 1989, pertaining to the assessment year 1985-86, whereby the Tribunal, purportedly exercising powers u/s 254(2) of the Income Tax Act, 1961 (for short "the Act"), has recalled its order dated January 25, 1994, rejecting the reference application filed by the Revenue and has directed the listing of the said reference application for hearing. The Tribunal has observed that the reference application filed by the Revenue was wrongly rejected by following a circular issued by the Central Board of Direct Taxes on April 3, 1991, which in fact had already been withdrawn on June 26, 1992. Thus, it felt that this was a mistake apparent from the record which could be rectified by exercising the inherent powers vested in the Tribunal.

In the reply affidavit filed by the Assessing Officer the petition is resisted.

We have heard learned counsel for the parties.

Mr. R.C. Pandey, learned senior standing counsel for the Revenue, has raised two preliminary objections to the maintainability of this petition, namely : (1) since the seat of the Assessing Officer is at Moradabad (U. P.), in view of the decisions of this court in SETH BANARSI DASS GUPTA Vs. COMMISSIONER OF Income Tax, DELHI (CENTRAL)., , Geep Industrial Syndicate Ltd. and another Vs. Central Board of Direct Taxes and others, , Oil and Natural Gas Commission Vs. Union of India and others, , CHOTUBHAI AND ANOTHER Vs. UNION OF INDIA AND OTHERS, and Suresh Desai and Associates Vs. Commissioner of Income Tax, , this court does not have the territorial jurisdiction and (2) the petitioner has an alternative remedy by way of a reference against the impugned order, In rejoinder, Mr. A. Raghubir, learned senior counsel for the petitioner, has submitted that since the impugned order has been passed by the Tribunal at New Delhi, the cause of action has arisen within the territorial jurisdiction of this court and, Therefore, this court is competent to entertain this petition. In support, he has relied on certain observations of this court in Raj Kumar Mangla Vs. Chairman, Central Board of Direct Taxes and Others, . The stand of the Revenue regarding availability of an alternative remedy, as urged by learned counsel for the Revenue, is also refuted. We find substance in the contentions urged by learned counsel for the petitioner.

In so far as the question of territorial jurisdiction of this court is concerned, the impugned order has been passed by the Tribunal based in Delhi and, Therefore, it can be safely said that the part of cause of action, within the meaning of Article 226(2) of the Constitution of India, has arisen within the territorial jurisdiction of this court. Thus, this court is competent to entertain the petition. The ratio of the afore noted decisions, relied upon by learned counsel for the Revenue, which are otherwise distinguishable on the facts, is not applicable to the facts of the instant case. The decision in the case of SETH BANARSI DASS GUPTA Vs. COMMISSIONER OF Income Tax, DELHI (CENTRAL)., , followed in the subsequent decisions of this court, was rendered in a case where the court was dealing with the issue as to which court will be competent to give opinion on a reference u/s 256(2) of the Act. In cases where the impugned actions were challenged by way of a writ petition and this court had held that it did not have the territorial jurisdiction to entertain the writ petitions, it had been clearly observed that none of the impugned orders had been passed by an authority falling within the territorial jurisdiction of this court. Hence, we reject the objection.

Coming to the second objection raised by learned counsel for the Revenue regarding the availability of an alternative remedy against the impugned order, the argument is stated to be rejected. From a bare reading of Section 256 of the Act it is clear that an application for reference under the said section lies only against an order passed by the Tribunal u/s 254 of the Income Tax Act, 1961. Therefore, the question arises whether the order passed by the Tribunal, purportedly rectifying its order passed u/s 256(1) of the Act could at all be said to be an order u/s 254 of the Act. In our view, the answer has to be in the negative.

The relevant provisions of Section 254 read as under :

"254. Orders of Appellate Tribunal--(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.

(2) The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under Sub-section (1) and shall make such amendment if the mistake is brought to its notice by the asses-see or the Assessing Officer ; . . ."

The afore noted provisions of law are clear and unambiguous. A bare reading whereof leaves no doubt in our mind that the Tribunal is competent to rectify a mistake apparent from the record and amend any order which has been passed under sub-section (1). Admittedly, by the impugned order, the Tribunal has sought to rectify the order passed by it u/s 256(1) of the Act and not an order passed u/s 254(1). We have no hesitation in holding that the Tribunal is not clothed with an inherent power to rectify/recall an order passed u/s 256(1) of the Act by taking recourse to Section 254(2) of the Act and, Therefore, the impugned order is illegal and invalid. The view taken by us finds support from a decision of this court in Commissioner of Income Tax Vs. Kabir Das Investment Ltd. and another, .

Accordingly, the writ petition is allowed, the impugned order is set aside and the rule is made absolute. There will be no order as to costs.

Before parting, we may note an apprehension expressed by Mr. R.C. Pandey, learned counsel for the Revenue, namely, that since the order passed by the Tribunal, on January 25, 1994, dismissing the Revenue''s application u/s 256(1) of the Act stood recalled by virtue of the impugned order, the Revenue did not file an application u/s 256(2) against the said order but now in view of the setting aside of the impugned order of rectification, if the Revenue chooses to file an application u/s 256(2), the same may be treated as barred by limitation. In the light of the interim order passed by this court on December 1, 1994, staying the operation of the impugned order, we do not find any cause for such an apprehension.