ITAT MUMBAI BENCH 'I'

IT Appeal No. 6756 (Mum) of 2002
M.A. No. 140 (Mum) of 2012
[ASSESSMENT YEAR 1990-91]

P.M. JAGTAP, ACCOUNTANT MEMBER
AND AMIT SHUKLA, JUDICIAL MEMBER

Shashi Tulsiyan for the Appellant.
Dinesh Kumar for the Respondent.

Amit Shukla, Judicial Member - By way of this miscellaneous application, the assessee seeks restoration of the appeal in ITA no. 6756/Mum/2012, which was dismissed ex-parte by the Tribunal for non-prosecution, vide order dated 4th August, 2006, for assessment year 1990-91.

2. The Tribunal has dismissed Assessee's appeal ex parte after applying the decision of the Tribunal in CIT v. Multiplan India (P.) Ltd.[1991] 38 ITD 320 (Delhi). The Tribunal, in its order, has observed that the Assessee's appeal was fixed for hearing on 28th November, 2005, 21st February, 2006 and 13th April, 2006 and on all these dates, none appeared on behalf of the Assessee.

3. Now, after a gap of six years, the Assessee has filed this application on 1st March, 2012, for recalling of the impugned ex parte order. Such an application is barred by limitation by 576 days. The Assessee, in its application, had submitted that he is a blind man and is aged more than 62 years. He was carrying on the business of estate broker and developer for the last several years in co-operation and complete assistance of his brother-in-law Mr. Haresh Parasrampuria. His income tax matters were looked after by Mr. S.L. Jain, Chartered Accountant of M/s. Shankarlal Jain & Associates, whose address was also given in Form no. 36. It has been further deposed that the said Chartered Accountant has not been cooperating with the Assessee and has been avoiding to attend his tax matters and the lis pending before the appellate courts. After a gap of a very long period, the Assessee came to know that the Income-tax Department have initiated the proceedings for attachment of his office by way of public auction. The said property was, in fact, later on sold by the Income-tax Department against the arrear demand of Rs. 20,00,000, in the month of January, 2011.

4. The Assessee, through the aforesaid Chartered Accountant, had filed appeal for the assessment year 1990-91 against the order passed by the learned Commissioner (Appeals) before the Tribunal on 5th December, 2002, and up to 20th January, 2011, the Assessee was not aware about the fate of his appeal. The main contention before us is that the Assessee had no knowledge of the ex parte order passed by the Tribunal. It was after various efforts and by way of application made under the Right to Information Act, 2005, that the Assessee could finally receive a duplicate order passed by the Tribunal on 17th February, 2012, and immediately thereafter the Assessee has filed this application on 1st March, 2012. In support of these facts, an averment on oath has been made by the assessee by way of an Affidavit.

5. The learned Counsel for the assessee submitted a detail chart showing dates and events right from the date of filing of appeal to the date of filing of the present application. The said chronology of dates and events, for better appreciation of the facts in the present case, are reproduced below:-

6. Based on the aforesaid, the learned Counsel reiterated the facts before us that the Assessee was completely a blind man and was totally dependent upon his Chartered Accountant Mr. S.L. Jain, who, due to some reasons, had started avoiding his tax matters and stopped cooperating with him. In the memorandum of appeal, which was filed before the Tribunal, the Chartered Accountant has mentioned his own official address whereby all the notices were to be communicated. However, he did not inform about any such notices or about the ex parte order passed by the Tribunal. It was only in the month of January, 2011, that he came to know that Income-tax Department has initiated the proceedings for the attachment of his office through public auction which, in fact, was sold on 20th January, 2011 and tax challan of Rs. 20,00,000 was issued by the Department. Thereafter, the Assessee rigorously pursued the matter for obtaining the copy of the Tribunal order, but the same could not be made available easily. It was after persistent efforts that the Assessee finally got the ex parte order passed by the Tribunal on 17th February, 2012.

7. With regard to the scope of rectification or recalling of the order within the ambit of section 254(2) of the Act, the learned Counsel submitted that the phrase "four years from the date of order" appearing in section 254(2), should be reckoned from the date on which the order was communicated to the Assessee. The said sub-section does not lay down any time period for filing of the application for rectification. In support of the legal connotation of the phrase "date of order", he relied upon various Supreme Court and High Court decisions that the "date of order" has to be construed as the date on which the party has received the order or the same has been communicated to the party. The judgments relied upon by him, are as under:-

8. In all these judgments, he submitted that the Courts have invariably held that wherever the statute has provided the limitation from the "date of order", the same should be taken from the date of service of the order i.e., the date on which the order has been communicated to the party. Thus, the date of order, in the present case, should be taken when the Assessee has received the order from the Registry i.e., on 17th December, 2012, and therefore, the application has been filed within the limitation period of four years.

9. On the other hand, the learned Departmental Representative submitted that from a plain reading of the provisions of section 254(2), it is evident that the Tribunal can rectify any mistake apparent from the record only within the period of four years from the date of order and the date of order has to be understood, when the order is signed. In the present case, the order has been passed and signed on 4th August, 2006 and, therefore, the application filed by the Assessee in the month of March 2012, is clearly barred by the limitation. In support of his contentions, he heavily relied upon the Five Members' decision of Special Bench of the Tribunal, Mumbai, in Arvindbhai H. Shah v. Asstt. CIT[2004] 91 ITD 101 (Ahd.) wherein it has been held that no rectification can be made after the period of limitation of four years and is applicable to suo motu action of the Tribunal as well as to the action taken on the request of the parties. He referred to the various paragraphs and the decision of the Special Bench of the Tribunal relied upon. On the judgment relied upon by the learned Counsel for the assessee, he submitted that none of the judgments are on section 254(2).

10. In the rejoinder, the learned Counsel for the assessee, while referring to Paras-17 to 32 of the Special Bench decision of Arvindbhai H. Shah (supra) contended that the Special Bench has clearly stated that they are not expressing their opinion on the issue, whether the period of limitation should be counted from the service of the order from which date the rectification is sought for by the parties. Thus, the decision of the Special Bench will not be applicable on the facts of the present case.

11. We have given our anxious consideration to the rival contentions and perused the material placed on record. The main issue which needs to be adjudicated by us is, whether the impugned ex parte order dated 4th August, 2006, passed by the Tribunal can be recalled or rectified within the terms of section 254(2) after the expiry of limitation period of four years from the date of order passed by the Tribunal or not. In the present case, it has not been disputed that the impugned order 4th August, 2006, passed by the Tribunal was not communicated to the Assessee prior to 17th February, 2012. The Assessee, in the present case, is a completely blind man of more than 62 years of age, who has filed its appeal before this Tribunal on 5th December, 2002. On a perusal of the memorandum of appeal in Form no. 36, it is seen that the address for communication has been mentioned as "Shri Pawan Kumar Jain, C/o M/s. Shankarlal Jain & Associates, 12, Engineer Building, 265, Princes Street, Mumbai 400 002". This is the address of the Chartered Accountant, who was looking after the taxation matter of the Assessee. It has been deposed by the assessee that the said Chartered Accountant has not communicated either the notice of hearing or the order passed by the Tribunal, which has not been controverted before us. Under these circumstances, whether the Assessee is entitled to file an application for recalling of the impugned order or for rectification of mistake apparent from record after the expiry of four years from the date of passing of the order.

12. For better appreciation, section 254(2) of the Act is reproduced below:-
"Sec. 254
(1) ………………

(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 assessee or the [Assessing] Officer." [Emphasis added]

The above provisions provide that the rectification of any mistake apparent from the record or to amend any order passed by the Tribunal under sub-section (1) of section 254, can be done suo motu or when such mistake is brought to its notice and rectification is sought by the Assessee or the Department. The time frame prescribed is "four years from the date of the order". Whether limitation for filing of rectification would start running from the date when the order is communicated or would be reckoned from the date of order itself. The interpretation of the phrase "from the date of the order" in the context of period of limitation has come for judicial scrutiny before the Hon'ble Apex Court on large number of occasion. In the leading case, the Hon'ble Supreme Court in Raja Harish Chandra Raj Singh v. Dy. Land Acquisition Officer, AIR 1961 SC 1500, had an occasion to consider the question as to what would be the starting point of limitation in a case under the Land Acquisition Act. It was a matter concerning a reference under section 18 of the Land Acquisition Act which provides for a limitation of six months from the date of the collector's award for seeking a reference when the person interested was not present before the collector at the time of making of the award or had not received any notice of the date of pronouncement of the award. The Hon'ble Supreme Court held that (pages 1504, 05):-

"The knowledge of the party affected by the award, either actual or constructive, being an essential requirement of fair play and natural justice the expression 'the date of the award' used in the proviso must mean the date when the award is either communicated to the party or is known by him either actually or constructively. In our opinion, therefore, it would be unreasonable to construe the words 'from the date of the Collector's award' used in the proviso to section 18 in a literal or mechanical way.

…….. where the rights of a person are affected by any order and limitation is prescribed for the enforcement of the remedy by the person aggrieved against the said order by reference to the making of the said order, the making of the order must mean either actual or constructive communication of the said order to the party concerned. (Emphasis added]

13. A similar question had again come up for consideration before the Hon'ble Supreme Court in Madan Lal (supra). In this case, the Hon'ble Supreme Court was dealing with the starting point of limitation for the purpose of filing of an appeal under the Indian Forest Act, 1927. Section 17 of the Indian Forest Act prescribes a time-limit of three months "from the date of order for presenting the appeal". The Hon'ble Supreme Court interpreted the said expression in the following manner:-

"The Act we are concerned with does not state what would happen if the Forest Settlement Officer made an order under section 11 without notice to the parties and in their absence. In such a case, if the aggrieved party came to know of the order after the expiry of the time prescribed for presenting an appeal from the order, would the remedy be lost for no fault of his ? It would be absurd to think so. It is a fundamental principle of justice that a party whose rights are affected by an order must have notice of it. This principle is embodied in Order 20, Rule I of the Code of Civil Procedure; though the Forest Settlement Officer adjudicating on the claims under the Act is not a court, yet the principle which is really a principle of fair play and is applicable to all tribunals performing judicial or quasi- judicial functions must also apply to him. The point has been considered and decided by this Court in Raja Harish Chandra Raj Singh v. The Deputy Land Acquisition Officer. This was a case under the Land Acquisition Act, 1894 and the Court was considering the question of limitation under the proviso to sec. 18 of that Act. Under sec. 18 of the Land Acquisition Act a person who has not accepted the Collector's award can apply to the Collector requiring him to refer the matter for the determination of the court. This application has to be made within Six months from the date of the Collector's award in the case where person interested was not present or represented before the Collector at the time when he made his award or had received no notice from the Collector of the award. Construing the expression "the date of the award" this Court observed:

"The knowledge of the party affected by the award, either actual or constructive, being an essential requirement of fairplay and natural justice the expression "the date of the award" used in the proviso must mean the date when the award is either communicated to the party or is known by him either actually or constructively. In our opinion, therefore, it would be unreasonable to construe the words "from the date of the Collector's award" used in the proviso to s. 18 in a literal or mechanical way where the rights of a person are affected by any order and limitation is prescribed for the enforcement of the remedy by the person aggrieved against the said order by reference to the making of the order must mean either actual or constructive communication of the said order to the party concerned."

The High Court in the case before us was therefore right in holding that the impugned order should be deemed to have been passed on April 24, 1956 when the Forest Department came to know of the order and "the right of appeal granted to the Department should he determined on that very basis."

14. In an another judgment, the Hon'ble Supreme Court in D. Saibaba (supra), while interpreting the expression "sixty days from the date of the order" used in section 48AA of the Advocates Act, 1961, observed as under:-

"So far as the commencement of period of limitation for filing the review petition is concerned we are clearly of the opinion that the expression 'the date of that order' as occurring in section 48AA has to be construed as meaning the date of communication or knowledge of the order to the review-petitioner. Where the law provides a remedy to a person, the provision has to be so construed in case of ambiguity as to make the availing of the remedy practical and the exercise of power conferred on the authority meaningful and effective. A construction which would render the provision nugatory ought to be avoided. True, the process of interpretation cannot be utilized for implanting a heart into a dead provision; however, the power to construe a provision of law can always be so exercised as to give throb to a sinking heart." [Emphasis added]

In this case the Hon'ble Supreme Court has referred to the judgment of Raj Kumar Dey v. Tarapada Dey [1987] 4 SCC 398, wherein the Hon'ble Supreme Court had made following observations:-

"Raj Kumar Dey & Ors. v. Tarapada Dey & ors., [1987] 4 SCC 398, this Court pressed into service two legal maxims guiding and assisting the Court while resolving an issue as to calculation of the period of limitation prescribed, namely, (i) the law does not compel a man to do that which he could not possibly perform, and (ii) an act of the court shall prejudice no man. These principles support the view taken by us hereinabove. Any view to the contrary would lead to an absurdity and anomaly. An order may be passed without the knowledge of anyone except its author, may be kept in the file and consigned to record room or the file may lie unattended, unwittingly or by carelessness. In either case, the remedy against the order would be lost by limitation though the person aggrieved or affected does not even know what order has been passed. Such an interpretation cannot be countenanced."

15. Similar view has been taken by the Allahabad High Court in Vijay Kumar Ruia (supra) and the Jurisdictional High Court in Petlad Bulakhidas Mills Co. Ltd. (supra), as referred to by the learned Counsel.

16. From the principles and maxims laid down by the Hon'ble Supreme Court in catena of cases as referred to above, it is amply clear that the "date of order" should be construed and reckoned with the date of knowledge of the order i.e., when the order has been communicated to the party. The legal maxim behind this is, how a person concerned or a person aggrieved is expected to exercise the right of remedy conferred by the Statute, unless the order is communicated or known to him either actual or constructively. The underlying principles is of fair play and recognition of legal rights of remedy in a constructive manner and not to give any construction or interpretation so as to defeat the purpose for which the legal remedy has been enacted in the provisions relating to limitations. It is a fundamental principle of justice and fair play that parties, whose rights are affected by an order must have a knowledge or notice of it, otherwise, the legal rights to remedy is lost to the party, even when he is not at fault.

17. Now coming to the Special Bench decision of the Tribunal in Arvindbhai H. Shah (supra), it is noticed that the Special Bench, in Para-32, has clearly observed that they are not expressing any opinion on the issue whether the period of limitation should be counted from the service of the order when the rectification is sought. Therefore, the decision of Special Bench as relied upon by the learned Departmental Representative will not be applicable in the present case.

18. Thus, looking to the facts of the case, we hold that the date of order, as envisaged in section 254(2) should be construed to mean the date when the order is received or communicated to either party. In this case, when the Assessee has received the order on 17th February 2012, the Assessee is well within the limitation to file the present miscellaneous application within the scope of section 254(2) of the Act, for recalling of the ex parte order.

19. Since the order sought to be recalled has been passed ex parte, applying the decision of Multiplan India (P.) Ltd. (supra), and has not been adjudicated on merits, therefore, we recall the order dated 4th August, 2006, as the assessee was prevented by a reasonable and sufficient cause for not putting up the appearance on the date fixed for hearing. Therefore, in the interest of natural justice, we recall the order for hearing of the appeal on merits. The Registry is directed to fix the appeal on out-of-turn basis within a period of three months. The Registry is also directed to serve the notice at the changed address of the assessee, as given in the Affidavit filed along with the present miscellaneous application.