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Andhra Pradesh High Court
Judges : S.V.MARUTHI, V.SIVARAMAN NAIR
Commissioner of Income Tax - Appellant
Versus
Income-tax Appellate Tribunal - Respondent
Decided On : 03-12-93
INCOME TAX - RECTIFICATION OF MISTAKE - JURISDICTION OF TRIBUNAL - MISTAKE APPARENT FROM THE RECORD - INTERPRETATION OF SECTION 254 (2) OF THE INCOME-TAX ACT, 1961 - POWER OF TRIBUNAL TO RECALL ITS ORDER - SCOPE AND LIMITATIONS - DISTINCTION BETWEEN RECTIFICATION AND REVIEW OR REVISION - WRIT OF CERTIORARI - AVAILABILITY AGAINST ORDER UNDER SECTION 254 (2) OF THE ACT.
Fact of the Case:
The assessee, a dealer in dry fish, filed revised returns declaring higher income after a survey operation conducted by the Department revealed secret books of account. The Assessing Officer completed reassessments and levied penalties for concealment of income. The assessee's appeals to the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal (ITAT) were dismissed. The assessee filed a miscellaneous petition before the ITAT under section 254 (2) of the Income-tax Act, 1961, seeking rectification of the Tribunal's order on the ground that it had not discussed certain judgments and contentions raised by the assessee. The ITAT allowed the petition and recalled its earlier order. The Revenue filed a writ petition challenging the ITAT's order.
Finding of the Court:
The High Court held that the ITAT exceeded its jurisdiction in recalling its earlier order under section 254 (2) of the Act. The court found that the assessee's application did not point out a mistake apparent from the record but attempted to argue for a review or rewriting of the appellate order. The court held that the power of rectification under section 254 (2) is limited to correcting obvious and patent mistakes, and does not extend to reviewing or revising the order on merits. The court also held that an order under section 254 (2) is not subject to reference under section 256 (1) of the Act, and therefore, the Revenue was entitled to challenge the order by way of a writ petition.
Issues: 1. Whether the ITAT had jurisdiction to recall its earlier order under section 254 (2) of the Income-tax Act, 1961, based on the assessee's application? 2. Whether the mistake alleged by the assessee was a "mistake apparent from the record" within the meaning of section 254 (2) of the Act? 3. Whether an order under section 254 (2) of the Act is subject to reference under section 256 (1) of the Act?
Ratio Decidendi: 1. The power of rectification under section 254 (2) of the Income-tax Act, 1961, is limited to correcting obvious and patent mistakes, and does not extend to reviewing or revising the order on merits. 2. A mistake apparent from the record must be an obvious and patent mistake, and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. 3. An order under section 254 (2) of the Act is not subject to reference under section 256 (1) of the Act.
Final Decision: The High Court allowed the writ petition, quashed the ITAT's order recalling its earlier order, and restored the original order of the ITAT.
( 1 ) THE commissioner of Income-tax, Visakhapatnam, and the Assistant Commissioner of Income-tax, Circle-I, Vijayawada, are the petitioners. They have filed this writ petition, seeking the issue of a writ of certiorari to quash the order of the Income-tax Appellate Tribunal, B-Bench, Hyderabad, in Miscellaneous Petition No. 85, dated 29/04/1991, so as to restore the order of the Income-tax Appellate Tribunal in I. T. A. Nos. 756 to 759/ (Hyd) of 1986 dated 13/09/1990.
( 2 ) THE facts which led to the filing of the writ petition are the following : The second respondent was an assessee on the file of the second petitioner. For the assessment years 1977-78, 1978-79 and 1979-80 assessment orders were issued determining the income chargeable to tax of the second respondent as Rs. 1,01,470, Rs. 1,19,178 and Rs. 1,19,420, respectively. Those assessments were made virtually accepting the returns filed by the assessee. A survey operation conducted by the Department under section 133a of the Income-tax Act, 1961, on 11/09/1980, revealed some secret books of account of the second respondent. The Department thereupon issued notices under section 148 of the Income-tax Act calling upon the second respondent to file its returns. The second respondent filed returns declaring total incomes of Rs. 2,43,920, Rs. 4,01,050 and Rs. 3,52,870, respectively, for the above three assessment years. By order dated 30/11/1981, the Income-tax Officer completed the reassessments on the basis of the above returns. Simultaneously, he found the second respondent to have concealed its income and proposed penalties under section 271 (1) (c) of the Income-tax Act. The second respondent responded stating that it had voluntarily disclosed the income which was brought to tax in respect of the three years and the fact that there was difference between the income as returned originally and the income which was brought to tax in reassessment proceedings should not be a reason for imposing penalty. The Assessing Officer overruled those objections and levied penalty of Rs. 91,793, Rs. 1,96,043 and Rs. 1,49,571, respectively, for the above three assessment years.
( 3 ) AGAINST the above orders, the second respondent filed appeals before the Commissioner of Income-tax (Appeals), who, by order dated 24/01/1986, affirmed the penalty orders on a finding that the assessee had been maintaining duplicate sets of books and had concealed income which would have been subjected to tax. The second respondent then filed appeals before the Income-tax Appellate Tribunal, Hyderabad, in I. T. A. Nos. 757 to 759. (Hyd) of 1986 reiterating its earlier contentions. The appellate or its counsel did not appear at the hearing on 10/05/1989, even though counsel had filed an application for adjournment on 4/05/1989. By order dated 18/05/1989, the first respondent-Tribunal held that the assessee was guilty of concealment of its income and, therefore, the penalty was properly levied.
( 4 ) THE second respondent filed Miscellaneous Petitions Nos. 39 and 40/ (Hyd) of 1989 contending that it could not effectively represent its case before the Tribunal and the matter therefore may be heard afresh after recalling the previous order. The first respondent-Tribunal allowed the application by its order dated 27/02/1990, setting aside its earlier order dated 18/05/1989, and posted the appeals for hearing on 16/07/1990. After hearing the appeals afresh, the Tribunal dismissed the same again by its order dated 13/09/1990. The second respondent filed Miscellaneous Petition No. 85/ (Hyd) of 1990 contending that the Tribunal may recall its order dated 13/09/1990, for the reason that it had not discussed in the order the judgments of various High Courts cited by counsel not had the Tribunal given a finding on some of the contentions urged by the assessee. The petitioners contended that there was no "mistake apparent on the record" in the order of the Tribunal. It was submitted further that th
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