Madhya Pradesh H.C : Whether the decision of the Tribunal in Misc. Application No. 6 (Jab) of 1982, dt. 2nd Sept., 1982, will not amount to review of its own order dt. 8th Dec., 1981, which is not permissible under s. 254 (2) ?

Counsel Appeared

H.S. Shrivastava, for the Assessee : B.K. Rawat, for the Revenue

N.D. OJHA, C.J.:

The Tribunal, Jabalpur Bench, Jabalpur, has referred the following question to this Court for its opinion, under s. 256(1) of the IT Act, 1961: “Whether the decision of the Tribunal in Misc. Application No. 6 (Jab) of 1982, dt. 2nd Sept., 1982, will not amount to review of its own order dt. 8th Dec., 1981, which is not permissible under s. 254 (2) ?”

The facts necessary for answering the aforesaid question are that in the assessment proceedings, the assessee had claimed exemption under s. 54 of the Act on the sale of a house at Bombay. This claim of the assessee was rejected by the Tribunal by its order passed in second appeal on 8th Dec., 1981. The Tribunal, in its order dt. 8th Dec., 1981, held that the house in question at Bombay was owned by a group of two owners which constituted an artificial juridical person. It also held that a considerable portion of the property in question was in the form of a vacant plot and there was no evidentiary value on record to show that the floor area in the assessee’s self- occupation exceeded the floor area in the occupation of a tenant named Shetty.

There was another question involved in the case as to whether the capital gain consequent on the sale of the house would be short-term capital gain or long-term capital gain. Aggrieved by these findings of the Tribunal, the assessee made an application for rectification being Misc. Application No. 6 (Jab) of 1982. After issuing notice on the said application and hearing counsel for the parties, the Tribunal allowed the said application, vide its order dt. 2nd Sept., 1982. The relevant portion in the earlier order dt. 8th Dec., 1981, containing the aforesaid findings was deleted and substituted by findings to the effect that the house in question initially was owned by the HUF comprising the assessee, his wife and a minor child and a partition took place in July, 1971, whereby the property was divided into three portions, referred to as sub-plots A, B & C. Whereas sub-plot B was taken by the wife of the assessee, sub-plots A and C were taken by the assessee and his son as tenants-in-common in equal shares. The Tribunal also recorded a finding that in holding that a considerable portion of the property was a vacant land, it had committed an error. It was pointed out that indeed the property was actually a palatial building and the tenant, Shetty, occupied only a portion of an outhouse. As regards the nature of the capital gain, the Tribunal held that it was a case not of a short-term capital gain but of a long-term capital gain.

On an application being made by the Department, the Tribunal referred the aforementioned question to this Court for its opinion. The short question which, therefore, falls for our consideration in the instant case is whether the deletion of the findings referred to above by the Tribunal from its order dt. 8th. Dec., 1981, and substituting those findings by the fresh findings mentioned above amounted to a review or to a rectification of a mistake as contemplated by s. 254 (2) of the Act. In this connection, what is significant to be noted is that the ITO as well as the CIT had recorded a finding that after the partition in the family in 1971, the assessee was holding the property in his individual capacity. These two officers had recorded a further finding that the capital gain in the instant case was a long-term and not a short-term capital gain. The fact that the house in question at Bombay was a palatial building also does not appear to have been disputed. Against the findings recorded by the ITO and the CIT, as aforesaid, no appeal was filed by the Department and the findings to the contrary which were deleted by the Tribunal from its order dt. 8th Dec., 1981, had been recorded by it on an appeal preferred by the assessee. The copy of the grounds of appeal filed by the assessee has been attached along with this reference and its perusal indicates that the assessee had nowhere challenged the correctness of the aforesaid findings. In this state of affairs, there can be no manner of doubt that the findings which had been recorded by the Tribunal in its order dt. 8th Dec., 1981, and were subsequently deleted, had been so recorded under some misapprehension or misconception. By deleting these findings and substituting them by other findings as pointed out above, the Tribunal has in substance endorsed the findings recorded in this behalf by the ITO and the CIT, against which no appeal had been preferred by the Department and the correctness of which, as indicated above, was not challenged even by the assessee in appeal preferred by him. It is, therefore, apparent that the Tribunal had committed a mistake apparent from the record in recording the findings in its order dt. 8th Dec., 1981, which were subsequently deleted and substituted by different findings as stated above. Sec. 254(2) of the Act, inter alia, provides that the 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 ITO. In the instant case, as indicated above, a mistake apparent from the record had been committed by the Tribunal. This mistake was brought to its notice within four years from the date of the order by the assessee and was rectified by the Tribunal by making necessary amendments in the earlier order. The case, therefore, squarely fell within the purview of rectification of mistakes as contemplated by s. 254(2) of the Act and it was not a case where the Tribunal could be said to have reviewed its earlier order.

In view of the foregoing discussion, our answer to the question referred to us is that the decision of the Tribunal in Misc. Application No. 6 (Jab) of 1982, dt. 2nd Sept., 1982, will not amount to a review of its order dt. 8th Dec., 1981, but it was an order of rectification of mistake which is permissible under s. 254 (2) of the Act. In the circumstances of the case, the parties shall bear their own costs.

[Citation : 171 ITR 586]