Delhi H.C : The assessee had filed an appeal before the Tribunal primarily challenging the reopening of assessment under s. 147(a) for asst. yr. 1985-86.

Counsel Appeared

P.N. Monga with Manu Monga & Navneet Negi, for the Petitioner : R.C. Pandey with Ms. Prem Lata Bansal, for the Respondent

JUDGMENT

ARIJIT PASAYAT, C.J. :

By this petition under Arts. 226 and 227 of the Constitution of India, 1950 (in short the Constitution), the petitioner, hereinafter referred to as the assessee, calls in question legality of order dt. 31st Jan., 2001, passed by a Bench of Income-tax Appellate Tribunal, New Delhi (in short the Tribunal), in purported exercise of powers under s. 254(2) of the IT Act, 1961 (in short the Act).

2. Factual position which is almost undisputed is as follows : The assessee had filed an appeal before the Tribunal primarily challenging the reopening of assessment under s. 147(a) for asst. yr. 1985-86. By order dt. 24th Nov., 1993, a Bench of the Tribunal consisting of the President Shri Ch. G. Krishnamurthy and Shri Vimal Gandhi, Member, allowed the appeal. We are not very much concerned with various issues which were examined by the Tribunal for allowing the appeal in view of certain factual aspects with which we shall deal infra. Subsequently, the Revenue filed an application for reference under s. 256(1) of the Act praying for a reference to this Court which was numbered as RA 915/Del/1996. An application for rectification under s. 254(2) was also filed on 20th Oct., 1994. Assessee filed an objection to the prayer made in the said application on the ground that the nature of relief sought for cannot be granted in an application under s. 254(2) of the Act. The application was numbered as MA 163-D/94 and was disposed of by a Bench consisting of Shri M.A. Bakshi and Miss. Moksh Mahajan by order dt. 25th July, 1995. The relevant portion of the order reads as follows : “Thus on verification of records it is clear that the Court proceedings which were held to be vital information in para 33 of the order were not filed by the assessee before the AO at the time when original assessment was framed. Therefore, as the Court proceedings were not there before the AO while framing the original assessment proceedings the finding/observation of the Tribunal giving the impression that Court proceedings contrary to record and thus constitute a mistake apparent from the record. To this extent the order of the Tribunal would stand rectified.” Revenue filed an application under s. 256(1) of the Act in respect of the said order passed in RA/915/Del/1996. This was stated to be a modified reference application. Assessee also filed an application for reference under s. 256(1) in respect of the order in Misc. Appln. 163/Del/1994. Revenue again filed another application under s. 254(2) of the Act on 10th April, 1997. Prayer, inter alia, was to recall/review the original order dt. 24th Nov., 1993, passed in ITA 1356/Del/63 in the light of the aforesaid quoted portion of the order in MA 163/Del/1994. Same was originally heard by a Bench consisting of M/s Nathu Ram and UBS. Bedi. Though a copy of the order passed is available on record, one of the members Mr. Bedi did not sign the order and noted as follows : “There are certain reservations and other member had since retired, it may be fixed before a Bench”. File was released on 1st June, 1999. Therefore, the Departmental Representative placed the matter before the Vice President to consider whether it was to be treated as de-heard and fixed for fresh hearing or to be treated as a case of difference of opinion between the two members. Vice President observed that the AM to whom the case was allotted had dictated the order and if the JM had a difference of opinion on any point, he was to express it judicially and in a proper manner. He further observed that the remarks of the JM cannot be said to be judicial order in terms of s. 255 (4) and, therefore, the case was not to be referred to President for disposal. The file was directed to be placed before JM for passing judicial order by him for taking necessary action. Finally the matter was heard by a Bench consisting of M/s UBS Bedi and Sikander Khan and the impugned order was passed, by which the order passed, in appeal has been recalled and registry has been directed to put up the appeal for fresh adjudication, Direction so far as relevant read as under : “After considering the submissions made before us by both the sides, the materials on the file and various decisions cited by both the sides, we are of the view that there was mistake apparent from the record in both the orders dt. 24th Nov., 1993, in the appeal and order dt. 25th July, 1995, in the first miscellaneous application passed by the Tribunal. After making observations in the order dt. 25th July, 1995, in the first miscellaneous application accepting the Revenue’s plea that there was mistake apparent from record insofar as the Tribunal’s order dt. 24th Nov., 1993, in the appeal was concerned Tribunal should have recalled the order dt. 24th Nov., 1993, for fresh adjudication. Therefore, as the Court proceedings were not there before the AO while passing the original assessment proceedings the findings/observations of the Tribunal giving the impression that Court proceedings were filed in the original assessment proceedings are contrary to record and thus constituted a mistake apparent from record. To this extent the order of the Tribunal would stand rectified. In the above view of the matter we recall the Tribunal’s order dt. 24th Nov., 1993, in ITA No. 1356/Del/1992 for the asst. yr. 1985-86 and direct the Registry to post the appeal for fresh hearing and fresh adjudication.” Mr. P.N. Monga, learned counsel for the assessee, submitted that the course adopted by the Tribunal is unknown. Order purported to have been passed under s. 254(2) is clearly misconceived in law, considering the limited scope of rectification permissible. It is submitted that there is no power to recall and review the order which the Tribunal has done. Shri R.C. Pandey, learned counsel for Revenue, on the other hand, contended that the order is perfectly in order and this petition should not be entertained. According to him, order in MA/1993/Del/94 was to be given effect and only possible course to be adopted was to recall the order and to have a fresh hearing so that the factual position could be duly taken note of and then an order could be passed in the appeal itself on merit. A bare look to s. 254(2) of the Act makes it clear that a “mistake apparent from the record”, is rectifiable. In order to attract the application of s. 254(2), a mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. “Mistake” means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error : a fault, a misunderstanding, a misconception. “Apparent” means visible, capable of being seen, easily seen, obvious, plain. A mistake which can be rectified under s. 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. The language used in s. 254(2) makes it clear that only amendment to the order passed under s. 254(1) is permissible when it is brought to the notice of the Tribunal that there is a mistake apparent from the record. In our view amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order. Where an error is far from self-evident, it ceases to be an apparent error. It is no doubt true that a mistake capable of being rectified under s. 254(2) is not confined to clerical or arithmetical mistakes. On the other hand, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by the apex Court in Master Construction Co. (P) Ltd. vs. State of Orissa (1966) 17 STC 360, an error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on question of fact of law. A similar view was also expressed in Satyanarayan Laxminarayan Hedge vs. Mallikarjun Bhavanappa Tirumale, AIR 1960 SC 137. It is to be noted that the language used in O. 47, r. 1 of the CPC, 1908, is different from the language used in s. 254(2) of the Act. Power is given to various authorities to rectify any mistake “apparent from record”. In the CPC, the words are “an error apparent on the face of the record”.

The two provisions do not mean the same thing. The power of the Tribunal in s. 254(2) to rectify “any mistake apparent from the record” is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of “an error apparent on the face of the record”. [See T.S. Balaram, ITO vs. Volkart Bros (1971) 82 ITR 50 (SC) : TC 53R.165]. Mistake is an ordinary word, but in taxation laws, it has a special significance. It is not an arithmetical or clerical error alone that comes within its purview. It comprehends errors which, after a judicious probe into the record from which it is supposed to emanate, are discerned. The word “mistake” is inherently indefinite in scope, as what may be a mistake for one may not be one for another. It is mostly subjective and the dividing line in border areas is thin and indiscernible. It is something which a duly and judiciously instructed mind can find out from the record. In order to attract the power to rectify under s. 254(2) it is not sufficient if there is merely a mistake in the orders sought to be rectified. The mistake to be rectified must be one apparent from the record. A decision on a debatable point of law or disputed question of fact is not a mistake apparent from the record. The plain meaning of the word “apparent” is that it must be something which appears to be so ex facie and it is incapable of argument or debate. It, therefore, follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification. This position was highlighted by us in Smt. Baljeet Jolly vs. CIT (2000) 164 CTR (Del) 37 : (2001) 250 ITR 113 (Del).

5. The scope and ambit of an 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 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 re-adjudication 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 of r. 24 of the ITAT 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 as highlighted by one of us (Justice Arijit Pasayat, Chief Justice) in CIT & Anr. vs. ITAT & Anr. (1992) 102 CTR (Ori) 281 : (1992) 196 ITR 640 (Ori) : TC 8R.1329. Judged in the above background the order passed by the Tribunal is indefensible.

6. We may take note of the preliminary objection raised by Mr. Pandey, learned counsel for Revenue, about the maintainability of the writ petition in the presence of statutory remedy. Rule relating to exhaustion of statutory remedy is essentially a rule of prudence and not one of law. There are several exceptions to the salutary requirement of the exhaustion of statutory remedy. One of them is lack of jurisdiction of the authority who has passed the order impugned. As indicated above. Tribunal had no jurisdiction to pass the impugned order in the absence of any statutory prescription. We find no substance in the plea of Mr. Pandey that the assessee should have availed of the statutory remedy. *****

7. In the result, the impugned order, Annexure A is quashed. Needless to say that the applications filed under s. 256(1) shall be dealt with and disposed of by the Tribunal in accordance with law.

[Citation : 253 ITR 131]