In case of failure to issue proper notice to assessee, ITAT has right to review its own order

Brief of the case:

Madras High court in CIT Vs M/s Sea Rose Marines Pvt Ltd (Madras High Court) held that if the notice was not issued to the assessee properly then the ITAT had the right to review its own order. The ITAT had recalled the order and gave new decision after reviewing its own order by relying on the decision given in Rathore Brothers (2002 (254) ITR 656 (Mad).

Facts of the case:

The assessee was engaged in the business of exporting marine products and manufacturing cartoons and claimed exemption U/s 80HHC of the IT Act. The AO reworked the same and levied the tax accordingly aggrieved from the same the assessee filed an appeal with CIT(A) who ordered that the assessee was not entitled to any exemption u/s 80HHC of the IT Act, then the assessee field an appeal with ITAT who initially confirmed the order of the CIT(A) but latterly by reviewing its own order, it made decision in the favor of assessee.

Contention of the assessee:

Assessee was of the view that as he was not served the order properly so the order of ITAT should be recalled. In other words the appeal of revenue should be dismissed.

Contention of the Revenue:

Revenue argued that the ITAT had only the right to rectify its own order, it could not review its own order because reviewing authority could only be the higher authority from the authority who had passed the order. So in the above case as the ITAT had review its order which was against the law so the appeal of revenue should be allowed.

Held by the High Court:

High Court held that ITAT was right in recalling the matter by the virtue of rule 24 of the Appellate tribunal rules on the basis that the assessee was not noticed properly which was bought to the notice of the tribunal by way of miscellaneous applications. So the ITAT had the right to review its own order when the same was not issued properly to the assessee. Further ITAT was right in giving its decision by relying on the decision given in Rathore Brothers (2002 (254) ITR 656 (Mad) and remanded the issue to AO for fresh consideration.