Pearl Agencies vs Inspecting Assistant ...
1989 Latest Caselaw 329 Del

ORDER ON SECOND MISCELLANEOUS APPLICATION

Per Aggarwal, J. M. - After hearing the parties the aforesaid appeals were decided by a Bench of this Tribunals vide order dated 10-1-89. The assessed then moved an application dated 22-2-1989 purporting to be u/s 254(2) of the Income-tax Act (the Act). The same was dismissed by a Bench of this Tribunal vide order dated 1-3-1989 by a reasoned order, though without giving the assessed an opportunity of personal/oral hearing. The Bench after very careful examination of the order and the record did not find any apparent mistake in its order.

2. The assessed has now moved another application dated 20-3-1989 praying that the aforesaid order dated 1-3-1989 be recalled because it is an order non est in law, as it was passed without giving an opportunity of bearing to the assessed petitioner. For the contention that the order is non est for the aforesaid reason, the petitioner has, in the petition, stated that Amrit Narain, In re [C. W. No. 1077 of 1988] the Honorable Delhi High Court has passes the following order :

"By this petition the petitioner prays for quashing the order dated 9th November, 1987 passed by the Income-tax Appellate Tribunal.

It appears that this order was passed without giving an opportunity of hearing to the petitioner. The order is thus violative of principles of natural justice. In our view the order is liable to be quashed. We accordingly quash the order and direct the Income-tax Appellate Tribunal to decide the application made by the petitioner afresh after giving him an opportunity of being heard. There is no order as to costs."

3. The question, therefore, before us is whether the order passed by us deciding the miscellaneous application of the assessed under sec. 254(2) of the Act without giving it an opportunity of personal hearing is non est in law. According to the assessed, this Tribunal has violated the principles of natural justice in not giving an opportunity of hearing to the assessed. The question, therefore, is what the principles of natural justice require in the particular case before us and whether the Tribunal has violated any such principle.

4. Rules of natural justice are not embodied rules. In Nagendra Nath Bora v. Commissioner of Hills Division AIR 1958 SC 398 the Honorable Supreme Court has observed that, "the rules of natural justice vary with the varying constitution of statutory bodies and the rules prescribed by the Act under which they function; and the question whether or not any rules of natural justice had been contravened, should be decided not under any pre-conceived notions but in the light of the statutory rules and provisions. In the instant case, no such rules have been brought to our notice, which could be said to have been contravened by the Appellate Authority. Simply because it viewed a case in a particular light which may not be acceptable to another independent Tribunal, is no ground for interference either under Art. 226 or Art. 227 of the Constitution.

5. In Chairman, Board of Mining Examination v. Ramjee AIR 1977 SC 965, the Honorable Supreme Court observed as under :

"Natural justice is no unruly horse, no lurking land mine, nor a judicial cure-all. If fairness is shown by the decision maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation no breach of natural justice can be complained of. Unnatural expansion of natural justice, without reference to the administrative realities and other factors of a given case, can be exasperating."

In this case consequent on an accident in a coal mine the Regional Inspector, after holding an enquiry, recommended the cancellation of certificate of the concerned shot firer and the shot firer sent his explanation in the form of an appeal to the Board. The Board on consideration of the Regional Inspectors report and the assesseds explanation, cancelled the certificate. It was contended that the Board passed the aforesaid order without hearing the shot firer and the Boards orders were, therefore, in violation of the principles of natural justice. It was in answer to such an argument that the aforesaid observations were made by Honorable the Supreme Court and it was held that the shot firer had been heard by the Board in the form of appeal and, therefore, it cannot be said that he was not heard.

6. In F. N. Roy v. Collector of Customs AIR 1957 SC 648, it was held that there is no rule of natural justice that at every stage a person is entitled to a personal hearing. In that case, an appeal was preferred to the Central Board of Revenue against the order of the Customs Authorities and the appeal being barred by time, was dismissed in liming without hearing the appellant. The appellant had contended before Honorable the Supreme Court that the order was invalid because he was not given an opportunity of being heard before rejecting the appeal as barred by time. It was in these circumstances that Honorable the Supreme Court observed that there was no rule of natural justice that entitled a person to personal hearing at every stage of the proceedings.

7. In I. Venugopala Reddi v. Amora Venkata Narasimhulu AIR 1962 AP 863 the Honorable Andhra Pradesh High Court held that rules of natural justice had to be inferred from the natural of the Tribunal, the scope of its enquiry and the statutory rules of procedure laid down by the law for carrying out the objectives of the statute. The Honorable High Court has cited the following passage from the speech of Lord Shaw, R. v. Local Government Board 1915 AC 120 at page 138 :

"The words natural justice occur in arguments and sometimes in judicial pronouncements in such cases. When a central administrative board deals with an appeal from a local authority it must do its best to act justly and to reach just ends by just means. If a statute prescribes the means it must employ them. If it is left without express guidance it must still act honestly and by homes means. In regard to these, certain ways and methods of judicial procedure may very likely be limited; and lawyer like methods may find especial favor from lawyers. But the judiciary should presume to impose its own methods on administrative or executive officers is a usurpation, and the assumption that the methods of natural justice are ex necessitate those of courts of justice is wholly unfounded. This is expressly applicable to steps of procedure or forms of pleading. In so far as the terms natural justice means that a result or process should be just, it is harmless though it may be a high sounding expression; in so far as it attempts to reflect the old jus natural it is a confused and unwarranted transfer into the ethical sphere of a terms employed for other distinctions; and, in so far as it is resorted to for other purposes, it is vacuous."

8. In Suresh Koshy George v. University of Kerala AIR 1969 SC 198, it was observed that the rules of natural justice are not embodied rules and the question whether the requirements of natural justice have been met by the procedure adopted in a given case must depend, to a great extent, on the circumstances of the case in point, the constitution of the Tribunal and the Rules under which it functions. The same view was taken earlier in the case of New Prakash Transport Co. Ltd. v. New Suwarna Transport Co. Ltd. AIR 1957 SC 232.

9. In Union of India v. Jyoti Prakash Mitter AIR 1971 SC 1093 the Honorable Supreme Court observed that in a proceeding of a judicial nature the basic rules of natural justice must be followed but it is not necessarily an incident of the rules of natural justice that a personal hearing must be given to a party likely to be affected by the order.

10. In "Natural Justice" by G. A. Flick, Butter Worths Practical Law Series, 1979 Edition, the learned author observes, "Although one who is entitled to the protection of the audi alteram partem rules is prima facie entitled to an oral hearing, it is not necessarily a denial of natural justice for a Tribunal to receive and rely upon written representations. Nor is it necessarily a denial of due process. Provided a party is given a fair and adequate opportunity to present his case, it should be within the discretion of a Tribunal whether it proceeds by way of an oral or written hearing.... As suggested above, written representations can be used either as an alternative to an oral hearing or as an adjunct to such procedures". Thus, an opportunity of hearing can be given to a party either by hearing him orally or by considering his written submissions. This has also been so held by the Honorable Supreme Court in the case of Ramjee (supra), in which it was held that when the written representation of the shot firer had been considered by the Board, it could not be said that he had not been heard.

11. Having stated the law on the subject of natural justice, let us now look to the provision of the Income-tax Act. The application moved by the assessed was under section 254(2) of the Income-tax Act, 1961, which provides that the Tribunal may with a view to rectifying any mistake apparent from the record, amend any order and shall make such amendment if the mistake is brought to its notice by the assessed or the Income- tax Officer. Sub-section (2), thus, only authorises the assessed or the ITO to bring a mistake apparent from the record to the notice of the Tribunal. It does not provide that for that purpose an application shall be made or that any one would have to be heard in support of such application. The proviso to sub-section (2) of section 254 says that where an amendment has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessed, such amendment shall not be made unless the Appellate Tribunal has given notice to the assessed of its intention to do so and has allowed the assessed a reasonable opportunity of being heard. Thus, sub-section (2) of section 254 makes a hearing mandatory only in cases where as a result of the proposed amendment some additional financial loss is going to occur to the assessed. Such was not the case of the present assessed because the amendments, that were being sought, were not to result in any financial loss to the assessed and the Tribunal did not intend to amend its order in any manner whatsoever as it did not find any apparent mistake therein. The provisions of section 254(2), thus, clearly indicate that an opportunity of personal hearing has been excluded by the Legislature except in cases covered by the proviso. Section 254(1), on the other hand, relates to the hearing of an appeal and specifically says that the appeal shall be disposed of after giving both the parties to the appeal an opportunity of hearing. This variation in the provisions of section 254(1) and section 254(2) is material. We are, therefore, of the opinion that the Legislature has excluded personal hearing in applications under section 254(2) unless the Tribunal proposes to amend the order in a manner prejudicial to the assessed. The reason why the Legislature has not provided for an opportunity of oral hearing in every case under section 254(2) is not far to seek. Under section 254(2) only mistakes apparent on record can be rectified. A mistake should be obvious and the Tribunal has never been hesitant to rectify such mistakes. The Honorable Supreme Court in T. S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 observed that a mistake apparent on record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning. Where is, therefore, the need for an advocate to present oral arguments to show that there is such an obvious and apparent mistake in the Tribunals order ?

12. It is settled law that it is open to the Legislature to provide that rules on natural justice should not be observed in certain cases Ramjibhai Ukabhai Parmar v. Manilal Purshottam Solanki AIR 1960 Guj. 19. This is also clear from the various judgments of Honorable the Supreme Court, in which it has been held that what should be the form of natural justice shall depend upon the facts of each case and the relevant statutory provisions. In the case before us there is no provision in section 254(2) for affording a personal hearing in cases where no order prejudicial to the assessed is proposed. Therefore, an opportunity of personal hearing is by necessary implication excluded by the Legislature. It has to be remembered that a petition like the one under section 254(2) is materially different from an appeal. In an appeal the grounds of appeal have to be set forth concisely without any argument or narrative (See Rule 8 of the Appellate Tribunals Rules). Therefore, while hearing an appeal the concise grounds have to be elaborated and that is why a personal hearing is necessary and is invariably provided to every party. In a petition under section 254(2), on the other hand, there are no such restrictions and a party moving the application, can explain its case inasmuch detail as it thinks fit.

13. As has already been stated, an opportunity of hearing can be given to a party by allowing him to make written representation. In the case before us the assessed had moved a detailed application running into four pages. The said application was quite argumentative and was patently settled by the assesseds counsel, who had earlier argued the appeal. It contained all submissions that could be made at an oral hearing. The Tribunal in its order dated 1-3-1989 has stated that the assesseds application as well as the order, against which the same was directed, had been carefully perused and the Bench passed a reasoned order rejecting the assesseds application. It cannot, therefore, be said that the assessed was not given a hearing. Patently the assessed had availed of a written hearing by making a detailed application stating all what it had to say.

14. As regards the order said to be of Honorable the Delhi High Court, which has been quoted in the body of the present petition, a certified copy of the order has not been filed and we are unable to ascertain the fact and circumstances in which the said order has been passed. This order, however, must be taken as restricted to the particular facts of that case. The relevant statutory provisions, under which this Tribunal exercised jurisdiction, have not been considered nor is there anything which may indicate that the Honorable High Court was laying down a principle that in every application under section 254(2) a personal hearing has to be granted to the applicant and the respondent. May be, that was a case in which the proviso to section 254(2) was operative. The Honorable High Courts order, therefore, cannot help the assessed.

15. For the above reasons we hold that there is no statutory rule under which a party may be entitled to a personal hearing on every application under section 254(2), and there is no rule of natural justice which may entitle an applicant under section 254(2) to a personal hearing even though no order prejudicial to the assessed is proposed. We further hold that in the present case no rule of natural justice had been violated and the assessed had been heard in the form of his application, in which detailed written submissions had been made and had been carefully considered by the Tribunal. Giving a personal hearing on an application, which is quite elaborate and argumentative, would amount to giving a second opportunity of hearing, which is not warranted by law and would result in avoidable waste of judicial time. We have to endeavor to conserve judicial time lest the judicial process in this Tribunal is allowed to be abused. There is, therefore, no cause for us to recall our order dated 1-3-1989 and the present application is accordingly rejected.