High Court Of Delhi
CIT vs. Honda SIEL Power Products Ltd.
Section 254(2)
Vikramajit Sen & Dr. S. Muralidhar, JJ.
IT Appeal No. 735 of 2004
11th October, 2006
Counsel appeared
R.D. Jolly, for the Appellant : M.S. Syali with Saubhagya Agarwal & Asit Kr. Dash, for the Respondent
JUDGMENT
Dr. S. Muralidhar, J. :
This appeal is directed against the impugned order dt. 10th Sept., 2003 passed by the Income-tax Appellate Tribunal (‘Tribunal’) in MA No. 344/Del/2002 in ITA No. 5544/Del/1996 and ITA No. 5545/Del/1996. By the said impugned order, the application filed by the respondent-assessee under s. 254(2) of the IT Act, 1961 (‘Act’) was allowed and the earlier order dt. 2nd April, 2002 passed by the Tribunal in the said appeals was “rectified” and ground No. 2 of ITA No. 5544/Del/1996 and ground No. 3 of ITA No. 5545/Del/1996 was reconsidered and allowed.
2. In the first order dt. 2nd April, 2002, grounds 2 and 3 were dealt with by the Tribunal as under : “34. The learned Departmental Representative during the course of hearing submitted that as the actual payment as contained in s. 43A has not been paid after fluctuation of rate (of exchange), no benefit under s. 43 ought to have been passed on to the assessee. On the other hand, learned Authorised Representative relied upon the order of the authorities below. 35. A perusal of s. 43A leaves no room to doubt that the making of payment is a condition precedent for availing the benefit of the section and as the actual payment has not been made after fluctuation, the value of the asset could not be increased by adding the increase on account of fluctuation and thus, we feel that depreciation was not only wrongly claimed but also wrongly allowed by the CIT(A). The ground Nos. 2 and 3 of ITA Nos. 5544 and 5545/D/1996 are respectively allowed.”
3. Accepting the assessee’s application for rectification, the Tribunal by the impugned order dt. 10th Sept., 2003 recalled its earlier decision on the above grounds 2 and 3 and held : “Admittedly, a decision of the co-ordinate Bench was cited and placed on record but the same has escaped the attention of this Bench. The fact that a decision of co-ordinate Bench though cited but not considered when examined in the context of the judgment of the apex Court, referred to above, would make it clear that an error in writing the order which is an error within the meaning of s. 254(2) has crept in and, therefore, needs rectification and that the ground No. 2 of ITA No. 5544 and Ground No. 3 of ITA No. 5545/Del/1996 needs reconsideration and after considering the submission made at the Bar coupled with the judgments relied upon, we have no hesitation in accepting the application. As the issue raised in ground No. 3 of the application is covered by the order of the Tribunal in ITA No. 2352/Del/1996, the ground No. 3 of the application in these circumstances is allowed.”
4. The principal ground on which the impugned order dt. 10th Sept., 2003 is sought to be assailed by the Revenue is that in the garb of rectifying the earlier order dt. 2nd April, 2002 the Tribunal has in fact reviewed it. Mr. R.D. Jolly, learned counsel for the Revenue (appellant) submitted that that is impermissible in law and beyond the scope of the powers of the Tribunal under s. 254(2) of the Act. The further submission is that the reason given by the Tribunal for accepting the assessee’s application for rectification viz., “a decision of the co-ordinate Bench was cited and placed on record but the same has escaped the attention of this Bench”, was not a justifiable reason for rectification and that if the assessee was aggrieved by the finding rendered in regard to this ground in the main order dt. 2nd April, 2002, there was always a remedy available by way of an appeal. Mr. Jolly has placed reliance on the recent decision dt. 2nd June, 2006 passed by a Division Bench of this Court in CIT vs. ITAT (2006) 204 CTR (Del) 349 : (2006) 155 Taxman 378 (Del). Reliance has also been placed on the decision of this Court in CIT vs. Vichtra Construction (P) Ltd. (2004) 191 CTR (Del) 423 : (2004) 269 ITR 371 (Del) where it was held that the power to rectify a mistake under s. 254(2) of the Act cannot be used for recalling the entire order.
5. In reply Mr. M.S. Syali, the learned senior counsel appearing for the respondent-assessee, submits that the impugned order is nothing but an order by way of rectification of the earlier order dt. 2nd April, 2002 as is evident from the fact that the entire order dt. 2nd April, 2002 has not been recalled or reviewed but only in respect of two grounds, the said decision has been varied. Referring to the proviso to s. 254(2) of the Act, Mr. Syali submits that pursuant to an application for rectification, the Tribunal could pass an order, amending the earlier order that has the effect of “enhancing an assessment” or “reducing a refund” or “increasing the liability of the assessee”. The only requirement is that this should not be done without notice to the assessee. A reasonable opportunity of being heard should also be afforded to the assessee. As regards the meaning to be attributed to the expression “mistake apparent from the record”, Mr. Syali seeks to distinguish this from the expression “mistake on the face of the record” occurring in order 47 r. 1 CPC. He submits that the expression in s. 254(2) of the Act is wider in nature and permits the Tribunal to look into the entire record. Reliance is placed on the judgments in CIT vs. ITAT (1992) 102 CTR (Ori) 281 : (1992) 196 ITR 640 (Ori) which was followed in Smt. Baljeet Jolly vs. CIT (2000) 164 CTR (Del) 37 : (2001) 250 ITR 113 (Del), Karan & Co. vs. ITAT (2001) 169 CTR (Del) 361 : (2002) 253 ITR 131 (Del), Shaw Wallace & Co. Ltd. vs. ITAT (1999) 155 CTR (Cal) 502 : (1999) 240 ITR 579 (Cal) and CIT vs. McDowell & Co. Ltd. (2004) 188 CTR (Kar) 518 : (2004) 269 ITR 451 (Kar) and of the Hon’ble Supreme Court in ITO vs. Asoka Textiles Ltd. (1961) 41 ITR 732 (SC). As regards the consequential orders that can be passed upon discovering the apparent mistake from the record, Mr. Syali relies upon the decision of the Gujarat High Court in Asstt. CIT vs. Saurashtra Kutch Stock Exchange Ltd. (2003) 183 CTR (Guj) 364 : (2003) 262 ITR 146 (Guj). Referring to the judgment of this Court in CIT vs. K.L. Bhatia (1990) 84 CTR (Del) 152 : (1990) 182 ITR 361 (Del), Mr. Syali submits that there is no bar to the Tribunal rehearing the matter on merits but only within the purview of the s. 254(2). He also refers to the decision in J.N. Sahni vs. ITAT (2002) 174 CTR (Del) 367 : (2002) 257 ITR 16 (Del) in support of his submission that the Tribunal has the power to amend its orders.
6. In conclusion, Mr. Syali submits that there are at least three instances where exercise by way of rectification could result in an order completely different from the previous one and that this was permissible within the scope of s. 254(2). According to him, these are recognised in the decisions in M.K. Venkatachalam, ITO vs. Bombay Dyeing Manufacturing Co. Ltd. (1958) 34 ITR 143 (SC), S.A.L. Narayan Row vs. Ishwarlal Bhagwandas (1965) 57 ITR 149 (SC), and Karamchand Premchand (P) Ltd. vs. CIT (1993) 200 ITR 268 (SC).
7. In order to appreciate the above submissions, we may first refer to the provisions of s. 254 of the Act, the relevant portion of which reads 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 subs. (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the AO : 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 subsection 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…….” A plain reading of the above provision indicates that in order to exercise the power vested in it under s. 254(2) of the Act, the Tribunal has to ensure that the following factors are present : (a) The application is made within 4 years from the date of the order sought to be rectified. (b) There is a mistake apparent from the record which is brought to its notice by either the assessee or the AO. As regards the procedure to be followed, if the amendment sought has the effect of enhancing the assessment or reducing a refund or increasing the liability of the assessee, the Tribunal has to give prior notice to the assessee and also allow the assessee a reasonable opportunity of being heard. It is plain that the power to rectify a mistake is not equivalent to a power to review or recall the order sought to be rectified. Rectification is a species of the larger concept of review. Although it is possible that the pre-requisite for exercise of either power may be similar (a mistake apparent from the record), by its very nature the power to rectify a mistake cannot result in the recall and review of the order sought to be rectified. Otherwise, what cannot be done directly by seeking a review of an order can be achieved indirectly, by seeking a rectification of that order. This is even more significant in light of the fact that under the Act there is no express power given to the Tribunal to review its own orders. A reference may be made to the observation of the Hon’ble Supreme Court in S. Nagaraj vs. State of Karnataka (1993) Supp 4 SCC 595 that “rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and not for disturbing finality.” The first significant decision in this regard is CIT vs. K.L. Bhatia (supra). The facts of that case were that the assessee filed an application before the Tribunal under s. 254(2) of the Act stating that certain material facts were not correctly noted by the Tribunal in its order dt. 27th June, 1985 in which it concluded that the property claimed by the assessee as belonging to his wife, in fact belonged to him and that the wife was only a benamidar. The Tribunal accepted this application and came to the conclusion that there was a mistake in the earlier order dt. 27th June, 1985 and as such the order was required to be recalled. One of the questions raised in the appeal before this Court was whether the Tribunal had any power to recall its earlier order.
This Court categorically held that the Tribunal had no power to recall its order on merits in exercise of its powers under s. 254 of the Act. This Court held as under (ITR p. 367) : “As we have already observed, the Tribunal is a creation of the statute. It is an admitted case, and it is now well-settled, that though the Tribunal has no inherent power of reviewing its order on merits, the Tribunal has incidental or ancillary powers which can be exercised by it. But such power cannot be invoked to rehear a case on merits. The Tribunal can, after disposing of the appeal under s. 254(1), rehear the matter on merits only within the purview of s. 254(2). The Supreme Court has held in Patel Narshi Thakershi vs. Pradyumansinghji Arjunsinghji AIR 1970 SC 1273, that the power to review is not an inherent power. It must be conferred by law either specially or by necessary implication. It does not stand to reason that, if the power of review is not present with the Tribunal, it, nevertheless, can exercise such power indirectly when it cannot do so directly. If the contention of learned counsel for the respondent is correct, then it could mean that, even on merits, the Tribunal can recall its earlier order and then hear the case afresh and pass a different order. If this is so, it would amount to the Tribunal exercising power of review when it does not have any such power. To give an example, under the provisions of the CPC, Order 47 provides the circumstances in which a judgment may be reviewed. If the contention of learned counsel for the respondent is correct, then, applying the same analogy to a civil case, it would be open to a Court to recall its judgment in a case where the provisions of Order 47 are not applicable, and then to rehear the case. With respect, we see no warrant for this in legal jurisprudence. The appellate Court can hear a case and decide it on merits, once for all, and cannot keep on rehearing the same appeal over and over again. Full effect has to be given to the provisions of s. 254(4) which specifically provides that a decision of the Tribunal passed in appeal is final. This decision is final not only for the assessee but also final as far as the Tribunal itself is concerned.”
In the course of the judgment in K.L. Bhatia (supra) it was observed (ITR pp. 364-65) :
“The IT Act is a self- contained code. The Tribunal is a creation of the statute and its powers are circumscribed by the provisions of the Act. Appeals are filed before it under s. 253 of the Act. Sec. 254(1) contemplates disposal of the said appeal after giving an opportunity to both the parties of being heard. Sub-s. (2) of s. 254 enables the Tribunal to rectify any mistake apparent from the record. Sub-s. (4) of s. 254 specifies that save as provided in s. 256, the order passed by the Tribunal on appeal are final. A reading of s. 254 shows that the orders which are passed under s. 254 are final except under two circumstances : (1) if a rectification is called for, then such an order can be passed under s. 254 (2), and (2) a reference can be made on questions of law arising out of this order under the provisions of s. 256. As far as the Tribunal is concerned, s. 254(4) provides that the orders passed by it on appeal are final.”
Importantly this Court in K.L. Bhatia (supra) drew a distinction between the power under s. 35 of the IT Act, 1922 (‘1922 Act’) (which was the corresponding provision relating to rectification of orders) and the present s. 254 of the 1961 Act. Referring to the judgment of the Hon’ble Supreme Court in CIT vs. MTT.AR.S. AR. Arunachalam Chettiar (1953) 23 ITR 180 (SC), this Court in K.L. Bhatia (supra) observed as under (ITR p. 366) : “MTT.AR.S. AR. Arunachalam Chettiar’s case (1953) 23 ITR 180 (SC), was one where the Supreme Court decided that, if an application had not been decided under the provisions of s. 39(4) of the IT Act, then a reference under s. 66(1) of the Indian IT Act, 1922, was not maintainable. The Supreme Court did not, in that case, hold whether the miscellaneous application had been filed and decided under the provisions of s. 35 of the Indian IT Act, 1922, or not. The reason for that was that from an order passed under s. 35 of the 1922 Act, no reference application could be filed under s. 66 of the 1922 Act. The position in law has now changed with the enactment of the 1961 Act where even from an order of rectification, a reference application under s. 256 can be filed.”
10. The next important decision is Ms. Deeksha Suri vs. ITAT (1998) 146 CTR (Del) 576 : (1998) 232 ITR 395 (Del). In the said case, the assessees had moved an application under r. 29 of the Income-tax (Appellate Tribunal) Rules, 1963 (‘Rules’), seeking admission by way of additional evidence before the Tribunal. The Tribunal, after hearing the appeal on merits, dismissed it by order dt. 3rd Jan., 1997. On 5th Feb., 1997 the assessees moved an application under s. 254(2) stating that very serious errors or mistakes had crept into the final order of the Tribunal. They pointed out that the Tribunal had overlooked its earlier order dt. 23rd Oct., 1996 directing the application under r. 29 to be disposed of first. The Tribunal rejected the rectification application observing : “It was indeed the duty of the counsel to address this Bench first on the r. 29 application if at all the same was desired to be pressed or argued. Admittedly not having done so it cannot now be attributed as a mistake apparent from record to the Tribunal.” The Tribunal concluded (ITR p. 406) : “14.7 In the circumstances, the appellants having argued on merits, not having highlighted/argued petition under r. 29 and the Tribunal in its order having dealt with in extenso the letter dt. 21st Feb., 1995, there is no mistake apparent from record calling for rectification under s. 254(2) of the Act and restricting the appellant to the material on record sans additional evidence, was in order and not a mistake apparent from record. We, therefore, find no merit in these applications and dismiss the same.” Before this Court, the question that again arose was whether the Tribunal had erred in rejecting the applications for rectification. This Court formulated the question and answered it as under (ITR p. 415) : “Could any relief have been allowed to the petitioners in exercise of jurisdiction conferred by s. 254 (2) of the Act amending the order passed by the Tribunal with a view to rectify any mistake apparent from the record? The language of the provisions is clear. The foundation for exercising the jurisdiction is ‘with a view to rectify any mistake apparent on the record’ and the object is achieved by ‘amending any order passed by it.’ The power so conferred does not contemplate a rehearing which would have the effect of rewriting an order affecting the merits of the case. Even there would be no distinction between a power to review and a power to rectify a mistake. What is not permitted to be done by the statute having deliberately omitted to confer review jurisdiction on the Tribunal, cannot be indirectly achieved by recourse to s. 254(2) of the Act.” Following the decision in K.L. Bhatia (supra), this Court in Deeksha Suri (supra) dismissed the appeals of the assessee holding that the Tribunal was right in dismissing the rectification application.
11. The third important decision is J.N. Sahni vs. ITAT (supra), again by a Division Bench of this Court. In that case, the Tribunal entertained the applications filed by the Revenue seeking rectification of an order on the ground that there were certain mistakes apparent from the record. The Tribunal then proceeded to recall the entire order and fixed the appeals for rehearing. The assessee then moved this Court by way of an appeal and placing reliance upon the decisions in Deeksha Suri (supra) and K.L. Bhatia, urged that the Tribunal had exceeded its jurisdiction under s. 254(2) of the Act and could not have possibly recalled the entire order. After referring to the case law, this Court reiterated that the power entrusted under s. 254(2) could not be used to recall the order itself. Reference was made to the decision in Smt. Baljeet Jolly vs. CIT (supra) where it was categorically held that “amendment of an order does not mean obliteration of an order originally passed and its substitution by a new order.” This Court expressly dissented from the decision of the Rajasthan High Court in CIT vs. Ramesh Chand Modi (2000) 163 CTR (Raj) 424 : (2001) 249 ITR 323 (Raj) where it had been held that where the Tribunal fails to decide some of the questions raised before it inadvertently or by oversight, it could exercise the power under s. 254(2) to rectify such a mistake. This Court in J.N. Sahni (supra) observed (ITR, pp. 21-22) : “With utmost respect we are unable to subscribe to the aforementioned view. The Tribunal in the absence of any express power cannot be said to have a power of substantive review. The Tribunal has merely the power to amend its order. While exercising the said power it cannot recall its order. The expression ‘amendment’ must be assigned its true meaning. While an order of amendment is passed, the order remains but when an order is recalled it stands obliterated. It is well settled that what cannot be done directly, cannot be done indirectly. The review of its own order by the Tribunal is forbidden in law, it cannot be permitted to achieve the same object by exercising its power under sub-s. (2) of s. 254. The Tribunal does not have an inherent power of review.”
12. In CIT vs. Vichtra Construction (P) Ltd. (supra), the Tribunal decided to recall the earlier order in its entirety while accepting the application for rectification. This Court held that such an order by the Tribunal was beyond the scope of the s. 254(2). It was held as under (ITR p. 374) : “In view of the provisions and judicial pronouncement indicated hereinabove, we are of the view that the power to rectify a mistake under s. 254(2) cannot be used for recalling the entire order. No power of review has been given to the Tribunal under the IT Act. Thus, what it cannot do directly, cannot be allowed to be done indirectly. If the assessee was aggrieved, it was open for him to approach the appropriate forum but the Tribunal could not have reviewed the entire judgment delivered by it earlier in the garb of exercising its power under s. 254(2). Accordingly, the answer is required to be given in favour of the Revenue and against the assessee.”
13. Recently, in CIT vs. ITAT (supra) a Division Bench of this Court was considering a case where the Tribunal had recalled the earlier order on the ground that it had failed to note of a decision rendered by a three member Bench of the Tribunal at Allahabad. The Revenue in appeal before this Court contended that this could hardly be a ground for the recall of the entire order in terms of s. 254(2) of the Act. In paras 6 and 7 this Court in CIT vs. ITAT (supra) held as under (Taxman, pp. 381-82) : “6. It is evident from the above that the power available to the Tribunal is not in the nature of a review as is understood in legal parlance. The power is limited to correction of mistakes apparent from the record. What is significant is that the section envisages amendment of the original order of the Tribunal and not a total substitution thereof. That position is fairly well-settled by two decisions of this Court in Ms. Deeksha Suri vs. ITAT (1998) 146 CTR (Del) 576 : (1998) 232 ITR 395 (Del) : (1998) 100 Taxman 573 (Del) and Karan & Co. vs. ITAT (2001) 169 CTR (Del) 361 : (2002) 253 ITR 131 (Del) : (2001) 118 Taxman 473 (Del). This Court has in both these decisions held that the foundation for the exercise of the jurisdiction lies in the rectification of a mistake apparent from the record which object is ensued by amending the order passed by the Tribunal. The said power does not, however, contemplate a rehearing of the appeal for a fresh disposal. Doing so would obliterate the distinction between the power to rectify mistakes and the power to review the order made by the Tribunal. The following passage from the decision of this Court in Karan & Co.’s case (supra) elucidates the difference between review and rectification of an order made by the Tribunal :
The scope and ambit of application of s. 254(2) is very limited. The same is restricted to rectification of mistakes apparent from the record. We shall first deal with the question of the power of the Tribunal to recall an order in its entirety. Recalling the entire order obviously would mean passing of a fresh order. That does not appear to be the legislative intent. The order passed by the Tribunal under s. 254(1) is the effective order so far as the appeal is concerned. Any order passed under s. 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining unamended is the effective order for all practical purposes. The same continues to be an order under s. 254(1). That is the final order in the appeal. An order under s. 254(2) does not have existence de hors the order under s. 254(1). Recalling of the order is not permissible under s. 254(2). Recalling of an order automatically necessitates rehearing and readjudication of the entire subject-matter of appeal. The dispute no longer remains restricted to any mistake sought to be rectified. Power to recall an order is prescribed in terms or r. 24 of the IT (Appellate Tribunal) Rules, 1963, and that too only in cases where the assessee shows that it had a reasonable cause for being absent at a time when the appeal was taken up and was decided ex parte. This position was highlighted by one of us (Justice Arijit Pasayat, Chief Justice) in CIT vs. ITAT (1992) 102 CTR (Ori) 281 : (1992) 196 ITR 640 (Ori). Judged in the above background the order passed by the Tribunal is indefensible.’ (p. 136)
7. That being the legal position, the Tribunal was not in our opinion justified in recalling the order passed by it in toto and setting the matter down for a fresh hearing. Just because a pronouncement made on the subject either by the Tribunal or by any other Court was not noticed by the Tribunal while taking a particular view on the merits of the controversy may constitute an error that would call for correction in an appropriate appeal against the order. Any such error may however fall short of constituting a mistake apparent from the record within the meaning of s. 254 (2) of the Act. More importantly just because a point is debatable (which is one of the reasons given by the Tribunal in the instant case) would hardly provide a justification for recalling the order and fixing the appeal for a de novo hearing. While doing so, the Tribunal has no doubt made certain observations in regard to the levy of interest under s. 158BFA being statutory in nature with no power vested in any authority or Tribunal to condone the same, but the very fact that the Tribunal has made those observations would not render valid the order of recall passed by it. The net result of the order made by the Tribunal continues to remain the same viz., the appeal has to be heard again simply because one of the issues decided by the Tribunal is debatable or the Tribunal has not noticed an earlier decision rendered by another Bench. Both these reasons were insufficient to justify the order of recall made by the Tribunal.” (emphasis, italicised in print, supplied) Turning to the facts of the present case, we are of the considered view that it makes no difference whether the entire order is sought to be recalled or the order passed by the Tribunal on individual grounds is sought to be recalled in entirety. In other words, if the Tribunal has given its decision on say grounds 3 and 4 in a particular way in its first order while dealing with ten separate grounds and pursuant to a rectification application, it recalls its decision on grounds 3 and 4 and gives a completely different decision on the said grounds, then it would certainly amount to recall and review of its entire order in respect of those grounds. We are unable to persuade ourselves to accept the submission of Mr. Syali that what the decision in K.L. Bhatia (supra) and other decisions that have followed it, forbids is only a recall of the Tribunal’s entire decision on all the ten grounds and not to the recall and review of only two out of the ten grounds. There is no basis for such a distinction either from the language of s. 254(2) of the Act or of the decisions of this Court in the numerous cases noticed hereinabove.
The decisions cited by Mr. Syali in M.K. Venkatachalam’s case (supra), S.A.L. Narayan Row vs. Ishwarlal Bhagwandas and Karamchand Premchand (P) Ltd.’s case (supra) turned on their own facts. M.K. Venkatachalam pertained to the power under s. 35 of the 1922 Act. As observed by Division Bench of this Court in K.L. Bhatia (supra), s. 35 of the 1922 Act did not provide for a further reference to the High Court against the decision thereunder whereas under the present Act a reference under s. 256 is permissible in respect of a decision under s. 254. In S.A.L. Narayan Row (supra) a subsequent legislative change related back to the assessment period covered by the assessment order in question necessitating its recall. This was not an instance of a mistake on record. Karamchand Premchand (P) Ltd. (supra) involved s. 256(1) [sic–(3)] of the Companies (Profits) Surtax Act and not s. 254(2) of the IT Act, 1961. Not surprisingly, therefore, the said decision in Karamchand Premchand (P) Ltd. (supra) does not refer to any of the decisions discussed hereinabove and is therefore distinguishable on that ground itself. Mr. Syali placed considerable reliance on the decision of the Gujarat High Court in Asstt. CIT vs. Saurashtra Kutch Stock Exchange Ltd. (supra) where it was held (ITR p. 155) :
“The proposition that a contention raised but not dealt with by the Tribunal should be held to have been negatived is correct only up to a stage. Once a party brings to the notice of the Tribunal that an important point or contention raised by the party has not been dealt with, it would be within the jurisdiction and powers of the Tribunal to decide whether the same constitutes a mistake apparent from the record and thereafter, if necessary, reopen the appeal. Such a power is inherent in the Tribunal, as a party has suffered prejudice due to a lapse on the part of the Tribunal and not on account of any fault of such a party. An act of the Tribunal should not prejudice a party so as to force the party into unwarranted litigation.” It was further observed in the above decision that “after the mistake is corrected, consequential order must follow, and the Tribunal has power to pass all necessary consequential orders.” Mr. Syali accordingly advocates for a similar wider interpretation of the scope of the power under s. 254(2) of the Act by this Court, in the peculiar facts of this case.
17. We are unable to agree with this submission of Mr. Syali. One instance of a mistake apparent from the record is indicated in r. 24 of the Income-tax (Appellate Tribunal) Rules and that mistake is permissible to be corrected by recalling the order. However, in order to invoke the power under s. 254(2) the mistake would have to be shown to be a mistake apparent from the record. The Tribunal, in the present case records in para 5 of the impugned order dt. 10th Sept., 2003 that “admittedly, a decision of the co-ordinate Bench was cited and placed on record but the same has escaped the attention of this Bench.” We have already held this can hardly be construed as a mistake apparent from the record. As pointed out by this Court in CIT vs. ITAT (supra), this might be a good ground for an appeal but not for a rectification. A distinction as rightly been drawn in several decisions of this Court between the scope of the power of review and recall and that of rectification. In the circumstances we are, with respect, unable to subscribe to the broad-brush approach of the Gujarat High Court. We may add that under s. 254(2) the limitation for filing an application for rectification is an unusually long period of four years. Contrasted with far lesser periods of limitation for filing appeals, it underscores the need for the Tribunal to be circumspect about the instances where it will entertain applications for rectification. It must be remembered that this is not a power of review but is restricted to rectifying mistakes “apparent from the record.” A liberal approach might constitute an invitation to parties to allow the period for filing an appeal to expire, anticipate a change of coram of the Bench that heard the appeal in the first instance, and then at their own sweet will “take a chance” by filing a rectification application on any fancy imagined “mistake apparent from the record” at any time before the expiry of four years. The likelihood of ingenuous lawyering resulting in the abuse of the provision cannot be ruled out. In the circumstances, we would caution against the Tribunal interpreting the narrow power of rectification wider than what it is. In conclusion, we are of the view that the impugned order of the Tribunal dt. 10th Sept., 2003 by which it recalled and reversed its earlier decision dt. 2nd April, 2002 on grounds 2 and 3, is impermissible and unsustainable in law. We reiterate that in the facts of the present case it makes no difference whether the entire order is sought to be recalled or the order passed by the Tribunal on individual grounds is sought to be recalled in its entirety. Neither is permissible under the garb of “rectification”. For all the aforementioned reasons, the impugned order dt. 10th Sept., 2003 of the Tribunal is set aside and appeal is allowed with no order as to costs.
[Citation : 293 ITR 132]
