Income Tax Appellate Tribunal - Allahabad
Commissioner Of Income-Tax vs M.P. Sugar Mill Co. (P.) Ltd. on 25 May, 1987
Equivalent citations: [1987]23ITD6(ALL)
ORDER
O.P. Jain, Judicial Member
1. The Commissioner of Income-tax (Central), Kanpur, by his application under Section 256(1) of the Income-tax Act, 1961, requires the Tribunal to refer to the Hon'ble High Court of Judicature at Allahabad, the following question, said to be a question of law, arising out of the Tribunal's order in M.A. No. 143 (Alld.) of 1986, dated 22nd December, 1986 :
Whether in law and on facts of the case the Tribunal was right in rejecting the miscellaneous application filed by the Department relying upon its own order dated 26-9-1986 in the case of Champaran Sugar Company Ltd. and in holding that there is no mistake apparent from records ?
2. It has been submitted by the Ld. Departmental Representative that the aforesaid question is a question of law and, therefore, the statement of the case may be drawn up for reference as applied for. We have heard the learned counsel for the assessee as well and have perused the order of the Tribunal together with the connected record. Briefly speaking the facts of the case were as under.
3. The assessee brought an appeal before the Tribunal regarding its liability for gratuity on the basis of actuarial valuation. The claim was denied by the authorities below on the ground that the Wage Board Award had not been filed. When the matter came up in appeal before the Tribunal, it had allowed the assessee's claim and in doing so, it had followed its earlier order dated 18-5-1976 in the case of Standard Co. (P.) Ltd. [IT Appeal No. 965 (All.) of 1975-76].
4. The revenue had filed a Miscellaneous Application for rectification stating that in view of the decision of the Hon'ble Supreme Court in the case of Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585, the decision of the Tribunal on the above point requires to be modified, amended or recalled because the point was covered by the said case law. When the miscellaneous application came up for hearing, the learned Departmental Representative had also relied on the Tribunal's order in the case of Champaran Sugar Co. Ltd. [IT Appeal No. 2284 (All.) of 1982, dated 25-9-1986]. After hearing both sides, the Tribunal had noted that in the case of Champaran Sugar Co. Ltd. (supra) it had found that the provision for accrued gratuity could be allowed only if there was entry in the accounts and provision was made on the basis of actuarial valuation. It was also observed that in that case, the assessee's claim was disallowed because there was no entry in the account books. It also observed that in the case of the present assessee, it was seen that it was not the case of the revenue that the assessee did not make entry in the account books in respect of the estimated liability on the basis of actuarial valuation and that point had not been raised either before the CIT(A) or the Tribunal. It, therefore, concluded that it would not be appropriate for it to investigate that point in the miscellaneous application because the scope of the miscellaneous application is limited. It did not find any mistake apparent from record. The miscellaneous application was, therefore, rejected. Hence the present Reference Application.
5. After hearing both sides, we are of the opinion that the Reference Application is not maintainable. It is undisputed that a Reference Application to the Tribunal lies only under Section 256(1) of the IT Act. In order to appreciate the point involved, that Section is reproduced hereunder :-
256. (1) The assessee or the Commissioner may, within sixty days of the date upon which he is served with notice of an order under Section 254, by application in the prescribed form accompanied where the application is made by the assessee by a fee of two hundred rupees require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and, subject to the other provisions contained in this Section. Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application, draw up a statement of the case and refer to the High Court:
Provided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period hereinbefore specified, allow it to be presented within a further period not exceeding thirty days.
A reading of Section 256(1) makes it clear that a reference application can lie only against an order under Section 254. Therefore, the question that arises for determination is whether an application refusing to amend, rectify or recall of an order passed in appeal by the Tribunal can be said to be an order under Section 254. For the purpose of ready reference, Section 254 is reproduced below :-
254. (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.
(2) The Appellate 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-section (1) and shall make such amendment if the mistake is brought to its notice by the assessee or the Income-tax Officer :
Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this Sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard.
(3) The Appellate Tribunal shall send a copy of any orders passed under this Section to the assessee and to the Commissioner.
(4) Save as provided in Section 256, orders passed by the Appellate Tribunal on appeal shall be final.
A reading of the aforesaid Section would indicate that in the matter before us, we are not concerned with Sub-sections (1), (3) & (4) of Section 254, because an. application for rectification of mistake apparent from the record lies under Sub-section (2) of Section 254. In case the original order of the Tribunal passed in the appeal is amended or modified as laid down in Sub-section (2) of Section 254 then the order so passed would undoubtedly be an order passed under Section 254(2) of the Act. But where the application for rectification of the mistake or amendment is dismissed, then the effect of that order would be that the original order would remain intact. In such circumstances, we are of the opinion that such an order i.e., the order dismissing the application for rectification, amendment or recalling the order would not be an order under Section 254 of the Act. We are fortified in this view from Popular Engg. Co. v. CIT [1983] 140 ITR 398 wherein the M.P. High Court had held that no reference in respect of such an order is tenable.
6. For the reasons stated above, we hold that the application is not maintainable and is liable to be rejected. Even on merits, we find no force in the application. As already mentioned earlier, it was never the case of the revenue that the assessee did not make entry in its books of account in respect of the estimated liability on the basis of actuarial valuation. That point had not been raised either before the CIT(A) or the Tribunal at the time of hearing of the appeal. Therefore, the Tribunal had observed, while dismissing the miscellaneous application that it would not be appropriate for it to investigate that point in the miscellaneous application because the scope of the miscellaneous application is very limited. The Tribunal did not find any mistake apparent from record. In our view, the aforesaid question is not referable as no interpretation of law or principle of law was involved. The Tribunal had dismissed the miscellaneous application on the basis of the findings of fact. Hence, we decline to draw up a statement of the case as applied for.
7. In the result, the Reference Application is rejected.