Allahabad H.C : Whether, on the facts and circumstances of the case, the Tribunal was justified in reviewing its earlier order.

High Court Of Allahabad

CIT vs. Mool Chand Shyam Lal

Section 254

Asst. Year 1973-74

R.K. Agrawal & K.N. Ojha, JJ.

IT Ref. No. 2 of 1983

29th July, 2004

Counsel Appeared

A.N. Mahajan, for the Revenue : S.N. Singh, for the Assessee

JUDGMENT

By the court :

The Tribunal, Delhi, has referred the following question of law under s. 256(2) of the IT Act (hereinafter referred to as the Act) for opinion to this Court :

“Whether, on the facts and circumstances of the case, the Tribunal was justified in reviewing its earlier order.”

2. Briefly stated, the facts giving rise to the present reference are as follows : The respondent-assessee is a registered firm. The year of assessment involved is 1973-74, for which the previous year ended 5th Nov., 1972. The ITO in the course of the assessment proceedings noticed that the assessee had claimed a sum of Rs. 94,232 under the head ‘stores account’. The ITO after scrutinizing the stores account found that a sum of Rs. 2,34,479 was debited under this head. As against this, the assessee had credited a sum of Rs. 35,624 as closing stock and Rs. 4,623 as sales of certain items of stores. The ITO also found that under this head the assessee had made substantial claims for purchases of spare rolls and kali chaddar, for example, a sum of Rs. 38,120 had been debited on 24th June, 1972 on account of purchase of spare rolls from M/s Polymex, Poland and another sum of Rs. 47,495 had been debited on 25th Aug., 1972 and the narration for this entry had been made as “purchased kali chaddar from Calcutta for the use in the pipe of the machinery”. Similarly, a sum of Rs. 2,994 had been debited on 5th June, 1972, for ball bearing, Rs. 1,191 on 25th Aug., 1972, for spare rolls, etc. The ITO was of the view that the facts are exactly similar to those pertaining to the asst. yr. 1970-71. The Tribunal in that year had upheld the addition made by the Department. Thus, the ITO estimated a sum of Rs. 25,000 as capital expenditure and disallowed the same under the stores account. The ITO directed that the depreciation would be allowed on this figure. Before the AAC, it was submitted on behalf of the assessee that the system followed by the appellant was that whatever purchases were made were claimed as revenue expenses although they might not be utilized in the same year. However, as and when they were required they were taken out from the stores and used. The. learned counsel further contended that the unconsumed stocks were not shown in the closing stock of the appellant even if they were not used. The AAC after considering the aforesaid facts and the finding of the Tribunal in earlier years sustained the addition.

Before the Tribunal, on behalf of the assessee it was contended that the AAC was wrong in sustaining the addition of Rs. 25,000. The assessee had furnished details of store accounts before the ITO. According to him, the amount had been spent on spare rolls, was of revenue nature and was an admissible expenditure. Out of purchases of kali chaddar amounting to Rs. 35,495 kali chaddar worth Rs. 35,624 had been shown in the closing stock. Thus, it was contended that the ITO was wrong in adding a sum of Rs. 25,000 as capital expenditure. The Departmental Representative contended that the facts of this year are identical with the facts of the asst. yr. 1970-71. In that year the Tribunal sustained the addition of Rs. 25,000. In this year it is not the case of the assessee that the facts of this year are not identical with the facts of the asst. yr. 1970-71. The Tribunal gave consideration to the above arguments and perused the evidence on record and upheld the above addition of Rs. 25,000 by observing as under :

“We have heard the parties and perused the entire evidence on record. It is correct that the assessee has purchased kali chaddar worth Rs. 35,624 and the same was disclosed in the closing stock but the authorities below found other facts also. According to the assessment order the assessee has claimed a sum of Rs. 94,232 under the head ‘stores account’ as revenue expenditure. The ITO after going through the stores account found that, in fact, a sum of Rs. 1,34,489 was debited under this head. As against this, the assessee had credited a sum of Rs. 35,624 as closing stock and Rs. 4,624 as sales of certain items of stores. The ITO pointed out other facts also in the assessment order.”

The Tribunal had further found that the AAC on behalf of the assessee it was contended that whatever purchases were made were claimed as revenue expenditure although they might not be utilized in the same year. It was also explained that as and when they were required they were taken from the stores and used. The learned counsel for the assessee admitted that the unaccounted stocks were not shown in the closing stock even if they were not used. The learned counsel for the assessee could not produce any convincing evidence either before the ITO or AAC showing that unused stock was not of capital nature. From the admission of the assessee’s counsel, it became clear that there was unconsumed stock and the same was not shown in the closing stock. Such stock was estimated by the ITO as capital asset and in his opinion such expenditure of Rs. 25,000 was not allowable. It was not the case of the assessee before us that this expenditure was excessive. Looking to the aforesaid facts and the finding of the Tribunal in the asst. yr. 197071, the addition was quite reasonable and no interference was called for. After the aforesaid decision of the Tribunal the assessee filed miscellaneous application bearing No. 60/Del/1979. It was contended therein that in view of p. 138 of the assessee’s paper book, the Tribunal had relied on irrelevant facts in para 34 of the order. It was, therefore, submitted that the addition of Rs. 25,000 as sustained came to be made on the basis of the wrong facts. The said application was resisted by the Revenue and it was urged that the miscellaneous application was misconceived. The Tribunal, after considering the above arguments, recalled its order in the matter of the said addition of Rs. 25,000 for disposal afresh in accordance with law by observing as under : “After hearing both the parties and perusing the contents of the miscellaneous application we find that the contention of the learned counsel for the assessee is correct because para 34 of the Tribunal’s order does contain factual inaccuracy which has led to the inference as drawn by the Tribunal. In that view of the matter, we respectfully following the ratio of the decision laid down in Mangat Ram Kuthiala (Decd) & Ors. vs. CIT & Anr. (1960) 38 ITR 1 (Punj), exercising our inherent right, recall the order of the Tribunal to our file for afresh disposal in accordance with law.”

We have heard Sri A.N. Mahajan, the learned standing counsel for the Revenue, and Shri S.N. Singh who has filed his appearance on behalf of the respondent-assessee. The learned counsel for Revenue submitted that under the IT Act there is no provision which permits the Tribunal to review its order and in the absence of any such provisions the Tribunal was not justified in reviewing the order dt. 27th Jan., 1979. He referred to a Division Bench decision of this Court in the case of Laxmi Electronics Corpn. Ltd. vs. CIT (1992) 102 CTR (All) 293 : (1991) 188 ITR 398 (All) wherein this Court has held that the Tribunal has no power to review. Its only power is one of the rectification conferred by sub-s. (2) of s. 254 of the Act. He also relied upon a decision of the Hon’ble Supreme Court in the case of Patel Narshi Thakershi & Ors vs. Pradyumansinghji Arjunshinghji AIR 1970 SC 1273, wherein the apex Court has held that the power to review is an inherent power and it must be conferred by law either specifically or by necessary implication. In the case of Dr. Smt. Kuntesh Gupta vs. Management of Hindu Kanya Mahavidyalaya & Ors., the apex Court has held that it is now well established that a quasi-judicial authority cannot review its own order, unless the power of review is expressly conferred on it by the statute under which it derives its jurisdiction.

5. Thus, it is now well settled that in the absence of any specific power conferred by the statute or inferred by implication, the Tribunal which has been constituted under the Act cannot exercise any power of review. No such power can be inferred by implication nor there is any specific provision in the Act providing for review. However, if an error falls within the provisions of s. 254(2) of the Act, then surely the Tribunal can exercise the power conferred under the said Act and rectify its mistake. It is well settled that, if the facts of a particular case has been recorded incorrectly or some error has crept in, which does not require any debate and is apparent on the record, such a mistake can be corrected in exercise of powers under s. 254(2) of the Act. The present one is one of such cases where the Tribunal had incorrectly recorded certain factual aspect in its order which, upon an application being made, it had deleted such portion and restored the appeal to its file to be decided afresh. The Tribunal cannot be said to have committed any illegality as the mistake was apparent on the face of record which falls within the provision of s. 254(2) of the Act. In view of the foregoing discussion we answer the aforesaid question of law referred to us by observing that the case was not of review but of a rectification. The reference is disposed of. However, the parties shall bear their own costs.

[Citation : 273 ITR 160]

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