A.S.ANAND, J. - (1.) THIS writ appeal is directed against the judgment of a learned judge of this Court in Writ Petition No. 13800 of 1990.
(2.) THE appellant is an income -tax assessee. During the year ending 31st March, 1981, he filed a return of income on 5th Nov., 1982. The appellant was a partner through its Karta in a firm called M/s Muthukumaraswamy Chetty and Co. The firm carried on business in marketing of edible oil. The partnership -firm gave an interest -free loan to the minor son of the appellant who is also a member of the HUF. The appellant made a recurring deposit with Thanjavur Permanent Bank Ltd. out of the amount taken as loan from the firm. The deposits matured and a sum of Rs. 40,000 including interest was returned on 22nd July, 1980. That amount was credited to the loan account standing in the name of the son of the appellant. During the asst. year 1981 -82, the appellant filed his return of income. It was pleaded that the provisions of S. 64 of the IT Act, 1961, were inapplicable and that the interest income out of the recurring deposit could not be subjected to tax in the hands of the appellant inasmuch as the income belonged to the minor son. That plea was rejected by the ITO. Aggrieved by the said order, the appellant preferred an appeal before the AAC. The appeal failed and the appellant preferred a second appeal before the Tribunal. By an order dt. 26th Oct., 1989, the Tribunal dismissed the appeal. The appellant, thereafter, filed an application which is available at page 8 of the typed set of papers seeking recalling or modification of the order dt. 26th Oct, 1989, on the ground that certain mistakes had crept in the order of the Tribunal. By a communication dt. 29th May, 1990, from the Asstt. Registrar of the Tribunal, the appellant was informed, in response to his letter dt. 24th Jan., 1990, that his request to recall or modify the order of the Tribunal dt. 26th Oct., 1989, stood dismissed. Aggrieved, the appellant filed a writ petition which was dismissed by the learned single Judge. Hence, this appeal. Learned counsel for the appellant had submitted before the learned single Judge that the application filed by the appellant under S. 254(2) of the IT Act was dismissed without any hearing and, relying upon the judgment of the Delhi High Court in Smart (P.) Ltd. vs. ITAT (1990) 82 CTR (DEL)(FB) 34 : (1990) 182 ITR 384 (Del)(FB) : TC8R.1263, had argued that the dismissal of that application, for recalling or modification of the earlier order dt. 26th Oct., 1989, by the Tribunal, without granting any opportunity of hearing to him, violated the principles of natural justice, thereby vitiating the order. The learned single Judge, however, found that since there had been no variation of the tax liability, by the rejection of the application, there was no necessity to provide an opportunity to the appellant and thus there had been no violation of the principles of natural justice. Learned counsel for the appellant has questioned that finding and has reiterated the same plea which had been advanced before the learned single Judge.
(3.) TO appreciate the argument of learned counsel, it is desirable to first notice the provisions of s. 254(2) of the IT Act, 1961, and that section reads as follows: "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 - s. (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub - section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard.";