2008 Supreme(SC) 1374

2008(6) Supreme 637
SUPREME COURT OF INDIA
(From Gujarat High Court)
C.K. Thakker and Lokeshwar Singh Panta, JJ.
Assistant Commissioner, Income Tax, Rajkot — Appellant
versus
Saurashtra Kutch Stock Exchange Ltd. — Respondent
Civil Appeal No. 1171 of 2004
Decided on : 15-09-2008

Important Point
Non-consideration of a decision of Jurisdictional Court or of the Supreme Court is a “mistake apparent from the record”.

Headnote:(a)Income Tax Act, 1961 – Section 11 – A ‘trust’ could claim exemption u/s 11. (Para 14)

       (2000) 246 ITR 188 – Referred.

       C. A. Nos. 4305-06 of 2002 – Relied upon.

       (b)Judicial Propriety – Tribunal passing an order in ignorance of High Court judgment which was binding on it – The order being per incuriam, no illegality committed in recalling the same, more so because the appellant was not prejudiced by it. (Para 15)

       (2000) 246 ITR 188 – Referred.

       (c)Income Tax Act, 1961 – Section 254(2) – If there is a ‘mistake apparent from the record’ and the assessee brings it to the notice of the Tribunal, it must exercise power u/s 254(2). (Para 24)

       (d)Code of Civil Procedure, 1908 – Order XLVII, rule 1 – There is no inherent power of review with the adjudicating authority if it is not conferred by law. (Para 26)

       (1971)3 SCC 844 – Relied upon.

       (1988) 174 ITR 579 (Ker) – Referred.

       (e)Constitution of India – Article 32 and 226 – “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” – No error can be said to be apparent on the face of the record if it is not manifest or self-evident and requires an examination or argument to establish it. (Paras 30 and 31)

       (1971) 2 SCC 526; (1955)1 SCR 1104; ILR 1953 Bom 191 : AIR 1953 Bom 133; (1960) 1 SCR 890; (1964)5 SCR 64 – Relied upon.

       (f)Income Tax Act, 1961 – Section 254(2) – Non-consideration of a decision of Jurisdictional Court or of the Supreme Court is a “mistake apparent from the record”. (Para 40)

       (1999) 237 ITR 834 (Guj) – Cited with approval.

       (g)Jurisprudence – Well-settled that a judicial decision acts retrospectively – Judges do not make law, they only discover or find the correct law – Doctrine of prospective overruling is an exception to the general doctrine of precedent. (Para 41, 42 and 44)

       (1967)2 SCR 762 – Relied upon.

       (h)Income Tax Act, 1961 – Section 254(2) – Rectification of an order is exercised to remove the error and to disturb the finality – No illegality in impugned judgment. (Paras 45 and 47)

       1993 Supp (4) SCC 595 – Relied upon.

       Facts of the case :

       1.Saurashtra Kutch Stock Exchange Ltd.-respondent herein is an assessee under the Income Tax Act, 1961. It is a Company registered under Section 25 of the Companies Act, 1956. As a ‘Stock Exchange’, it is a ‘charitable institution’ entitled to exemption under Sections 11 and 12 of the Act from payment of income-tax. The assessee, therefore, made an application on February 10, 1992 for registration under Section 12A of the Act. The Commissioner of Income Tax, Rajkot registered it on July 8, 1996.

       2.The assessee filed its return of income on October 29, 1996 for the assessment year 1996-97 declaring its total taxable income as ‘Nil’, claiming exemption under Section 11 of the Act although the assessee had not been registered under Section 12A of the Act. The return was processed under sub-section (1)(a) of Section 143 of the Act.

       3.On November 7, 1997, a notice was issued to the assessee by the Commissioner of Income Tax under Section 154 of the Act to show cause why exemption granted under Section 11 of the Act should not be withdrawn.

       4.Meanwhile, the Commissioner of Income Tax on February 20, 1998 granted registration to the assessee on condition that the eligibility regarding exemption under Section 11 of the Act would be examined by the Assessing Officer for each assessment year.

       5.By an order dated December 3, 1999, the Assessing Officer assessed the income of the assessee under sub-section (3) of Section 143 of the Act and rejected the claim of exemption under Section 11 of the Act.

       6.Being aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Rajkot who rejected all the contentions of the assessee and held that the assessee was not entitled to exemption.

       7.The Tribunal, however, held that the authorities were right in not granting exemption and in holding the assessee liable to pay tax. Accordingly, it dismissed the appeal on October 27, 2000.

       8.On November 13, 2000, the assessee filed Miscellaneous Application under sub-section (2) of Section 254 of the Act in the Tribunal to rectify the error committed by the Tribunal in the decision rendered by it in appeal. The Tribunal, by an order dated September 5, 2001, allowed the application and held that there was a ‘mistake apparent from the record’ which required rectification. Accordingly, it recalled its earlier order passed in appeal on October 27, 2000.

       9.The Revenue filed a writ petition which was dismissed by the High Court.

       Finding of the Court :

       No case made out for interference.

       Result : Appeal dismissed.