Income Tax Appellate Tribunal - Chandigarh
Paras Cold Storage And Ice Factory vs Assistant Commissioner Of Income-Tax on 8 August, 2002
Equivalent citations: [2003]84ITD108(CHD)
ORDER
D.R. Singh, Judicial Member
1. This application under Section 254 dated 11-6-2001 of Income-tax Act arising out of ITA No. 1119/Chd./96 relating to Block Period 1986-87 to 1996-97 decided by the ITAT, Chandigarh Bench, consisting of Hon'ble Vice President, Shri R.M. Mehta and Hon'ble Judicial Member, Shri B.S. Saluja has been filed before this Bench by the assessee for recalling the order of the Bench dated 29-10-1999 for rectifying the mistake, having crept in the order by hearing the appeal afresh.
2. The impugned appeal was heard by the Tribunal on 12-11-1998 and the order was passed on 29-10-1999. In the present application the grievances of the assessee are that the assessee had argued before the Bench:
(i) that the conditions envisaged in clauses (a), (b) and (c) of Sub-section (1) of Section 132 of IT Act, were not satisfied. So the search operation conducted by the department was illegal.
(ii) that the assessee had argued before the Tribunal that the whole search proceedings initiated against the assessee were vitiated in view of the violation of Section 132(8) and 132(9A) of IT Act by the Department but the Tribunal has not mentioned anything regarding violation of the provisions of Section 132(8) of IT Act in its order and decided the point against the assessee which was a mistake apparent from record.
(iii) that the Ground No. 2 of the appeal, w.r.t. addition of Rs. 2,08,250 on account of alleged storage charges on the basis of alleged entries in the Document No. 3, was decided by the Bench without considering the following submissions made by the assessee before the Tribunal:
that the Document No. 3 did not constitute regular books of account. The same was denied as belonging to the partners or the Accountant-cum-Manager of this firm. Hence the contents of the same could not be relied upon and the onus of its authorship and its relevance in the assessment proceedings shifted on the revenue. The revenue failed to bring any evidence whatsoever to prove the authorship of the said note book including transactions having taken place beyond regular books of account of the asses-see-firm. Hence, no adverse inference could be drawn against the assessee-firm in view of the fact that gate register, stocks register and regular books of account of the firm fully tallied even the regular books of account have not been rejected by the Assessing Officer under Section 145(2) either in the regular proceedings or in the proceedings for the block period.
It was submitted that 'Palledars' working in the cold storage of the applicant-appellant firm during the relevant period were also working in other cold storages simultaneously and some of the entries pertaining to the applicant firm could also be entered in the said small note book belonging to the 'Palledars'. It was also argued that some of the 'Palledars' were well educated and were in this job due to extreme un-employment and were thus, competent to write in a way an educated person does. This aspect has not been taken care of in proper perspective leading to miscarriage of justice.
The Hon'ble Tribunal has totally misconstrued the judgment in the case of LK. Advaniv. C.B.I, brought to the notice of the Hon'ble Bench which was fully applicable to the case of the applicant firm which has also resulted in a mistake apparent from record.
The Hon'ble Bench has further mis-construed the under noted judgment and placing reliance on the assumptions and presumptions as per the following ruling at the time of passing the final orders, whereas:
(a) the judgment in the case of Pushkar Narain Sarraf v. CIT 183 ITR 388 (All.) does contemplate the availability of presumptions only at the time of passing orders under Section 132(5) of the Act and definitely laid down that no such presumption is available at the time of passing the final assessment order.
(b) the judgment in the case of Puran Mal v. Director of Inspection clearly provides for use of seized material, seized even during an illegal search subject to Law, i.e. subject to the provisions of Indian Evidence Act and impliedly meaning that no presumptions are available even for use of such material.
3. Since the submissions of the assessee escaped the notice of the Bench while adjudicating the issue it resulted into a mistake apparent on record. Hence the order of the Bench deserves to be recalled for fresh adjudication in this regard.
4. In the main appeal, the first ground of appeal taken by the assessee related to completion of assessment in regard of legal provisions and violation of provisions of natural justice. The Bench, after considering the legal provisions, the documents relied upon by the assessee before the Bench and the detailed submissions put-forth by the assessee and by the ld. Departmental Representative, decided the ground of appeal against the assessee while passing the following order:
We have carefully considered the rival submissions and have perused the orders and various documents referred to by both the parties. We feel that the provisions of Section 132(9A) have to be examined in the light of the provisions of Section 158BD of Chapter XIV-B relating to special procedure for assessment of search cases. Under the provisions of Section 158BD the books of account, other documents or assets seized are required to be handed over to the Assessing Officer having jurisdiction over the assessee and that the Assessing Officer has to proceed against the assessee. Thus, the period of 15 days, as mentioned in Section 132(9A) is not strictly relevant. We feel that there has been no gross violation of principles of natural justice in this case which may lead to annulment of assessment order. We, therefore, reject this ground.
5. In a similar way, ground No. 2 of assessee's apeal relating to addition of Rs. 2,08,250 on account of search charges on the basis of entries in Document No. 3, was decided partly against the assessee by the Tribunal by making following conclusions :
We have carefully considered the rival submissions on the issue and have perused orders as also various documents placed in the paper book to which our attention has been invited during the course of hearing. It is not disputed that the notebook in question was found and seized from the joint residence of partners and Shri Dharam Pal partner was present at the time of seizure. We, therefore, feel that the presumption raised by the provisions of Section 132(4A) would apply in the case of the said notebook and the entries contained therein till the same is rebutted. We feel that the contentions of ld. counsel that the said notebook does not belong to the assessee and possibly belongs to 'Palledar' has no legs to stand as it is unthinkable that the persons like Palledars managing the cold storage or working therein would be making entries therein. It is also strange that if the Palledars had recorded the said entries, then how some of the receipts are also found recorded in the books. It seems well-neigh impossible that the Palledars would also be making entries in the books. We also feel that the decision in the case of L.K. Advani (supra), as relied on by the Id. counsel, is not applicable as the notebook has been found from the residence of the partner. In view of the foregoing, we feel that the contentions of Id. counsel have no force and that the Assessing Officer has rightly proceeded to make the impugned addition. However, it is observed from the notification dated 15-5-1995 issued by the Agrl. Department of Govt. of Haryana that maximum storage charges for potatoes have been specified at Rs. 47 per bag weighing upto 85 kg. or part thereof. In view of the said notification, we find some merit in the plea of ld. counsel that though the rates of charges have been mentioned at Rs. 50 per bag in the said notebook, the same should be taken at Rs. 47 per bag and balance Rs. 3 represent labour of the labourers employed at the cold storage. We, therefore, direct the Assessing Officer to allow appropriate relief to the assessee by recalculating the charges per bag at Rs. 47.
6. In this light of the background, we proceed to decide the present application filed by the assessee mainly on the point that violation of provisions of Section 132 by the Department, though argued before the Bench, was not decided and secondly that the submissions of the assessee, have not been considered by the Tribunal while passing order and hence this mistake apparent from record has occurred in the order of the Bench and so, the same requires to be rectified.
7. In support of his contention, ld. AR for the assessee relied upon the following cases:
(i) Anil Rai v. State of Bihar JT [2001] (6) SC 515;
(ii) Popular Engg. Co. v. ITAT [2001] 248 ITR 577 : 119 Taxman 51 (Punj. & Har.);
(iii) CIT v. Ramesh Chand Modi [2001] 249 ITR 323 : 116 Taxman 123 (Raj.);
(iv) Karan & Co. v. ITAT [2002] 253 ITR 131 : [2001] 118 Taxman 473 (Delhi);
(v) Rahulkumar Bajaj v. ITO [1999] 69 ITD 1 (Nag.) (SB);
(vi) Munibyrappa v. CIT [2001] 119 Taxman 204 (Kar.);
(vii) Asstt. CIT v. Shri Ramesh Chand Modi [2002] 17 ITR 372 (ITAT Jodh.) (NOC).
8. On the other hand the main thrust of the arguments of ld. D.R. before us was that the reasons mentioned in the application of the assessee for rectifying the impugned order, are not pointing towards any mistake apparent from order of the Tribunal for rectification of the same but suggest the recall of the order simply with a view for reviewing the same and which is not permissible under the provisions of Section 254(2) of IT Act, so, the application of the assessee is liable to be rejected. In support of these contentions, ld. Departmental Representative, Smt. Rachna Singh relied on the following case law:
(i) T.S. Balaram v. Volkart Brothers [1971] 82 ITR 50 (SC);
(ii) ITO v. 774 7 [1987] 168 ITR 809 : 31 Taxman 330 (Raj.);
(iii) CIT v. 77,4 7[1992] 198 ITR 188 : 64 Taxman 212 (Ori.);
(iv) CIT v. Ramesh Electric & Trading Co. [1993] 203 ITR 497 : [1994] 77 Taxman 43 (Bom.);
(v) CITv. ITAT [1994] 210 ITR 397 (Ori.);
(vi) CIT v. Suman Tea & Plywood Industries (P.) Ltd. [1997] 226 ITR 34 : 94 Taxman 305 (Cal.);
(vii) ITO v. ITAT [1998] 229 ITR 651 (Pat.);
(viii) CIT v. Ballabh Prasad Agarwalla [1998] 233 ITR 354 : [1997] 90 Taxman 1283 (Cal.);
(ix) Popular Engineering Co. s case (supra);
(x) Karan and Co. 's case (supra).
9. We have considered the rival submissions of both the parties, perused the record and carefully gone through the order of the Tribunal and the case law cited by both the parties.
10. In this case we are required to resolve the issue - whether in the facts and circumstances of the case of the assessee, there exists any power with the Tribunal within the scope and ambit of provisions of Section 254(2) of IT Act for recalling the previous order of the Tribunal for rectification by giving a fresh hearing.
11. A perusal of Section 254 shows that under Sub-section (1) of Section 254, appellate Tribunal, after hearing the parties, passed such orders as it thinks fit.
11.1 Sub-section (2) of Section 254 empowers the Appellate Tribunal to amend any order passed by it under Sub-section (1) of section with a view to rectify any mistake apparent from record.
(i) In the case of T.S. Balaram, ITO (supra) the Apex Court held:
A mistake apparent on 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.
(ii) In the case of ITAT (supra), Hon'ble Rajasthan High Court held that a bare perusal of Section 254(2) of Income-tax Act, 1961 makes it clear that it does not empower the Appellate Tribunal to review its own order and recall its earlier order under the garb of rectification, the Tribunal cannot exercise the power of recall and review its earlier order.
(iii) In the case of ITAT (supra), the Hon'ble Orissa High Court held that even assuming that the original conclusion of the Tribunal was erroneous, it could not be characterised as a mistake rectifiable under Section 254(2).
(iv) Hon'ble High Court of Bombay in the case of Ramesh Electric & Trading Co. (supra) held that it is an accepted position that the Appellate Tribunal does not have any power to review its own orders under the provisions of Act. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order. The power of rectification under Section 254(2) can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. Failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment.
(v) In ITAT's case (supra) the Hon'ble Orissa High Court held:
The Appellate Tribunal has power under Sub-section (2) of Section 254 of the Income-tax Act, 1961 to rectify a mistake apparent from the record once such mistake is brought to the notice of the Tribunal either by the assessee or by the ITO. But this power does not clothe the Tribunal with the jurisdiction to review its earlier decision or to rewrite a fresh judgment.
(vi) In Suman Tea and Plywood Industries (P.) Ltd. 's case (supra), Hon'ble Calcutta High Court has held:
By Section 254(4) of Income-tax Act, 1961 an order which has been passed by the Tribunal reaches, finality the moment the same is passed: it cannot be touched thereafter. By Section 254(2) of the Act, the Tribunal, however, has been authorised to rectify mistakes in its orders, which are apparent on the face of the records. The expression 'mistake apparent on the record' means a mistake either clerical or grammatical or arithmetical or of like nature, which can be detected without there being any necessity to reargue the matter or to reappraise the facts as appearing from the records.
(vii) In ITAT's case (supra) Hon'ble Patna High Court held that the Tribunal has veritably sat in appeal over an order passed by its predecessor members and has plainly exceeded its jurisdiction. Section 254(2) of Income-tax Act, 1961 empowers the Tribunal to amend any order passed by it under Sub-section (1) with a view to rectify a mistake apparent from the record. But it was an order passed on reappraisal of the material facts and circumstances and on a fresh application of the legal position. The order passed by the Tribunal, was, therefore, liable to be set aside and unsustainable. In this very order, Hon'ble High Court also observed that it is well settled that Section 254(2) does not authorise the Tribunal to review its order or even worse, to sit in appeal over its earlier order. (See CIT v. Krishna Rana (Dr.) (Mrs.) [1987] 167 ITR 652 (Pat.). In this case, we are satisfied that the impugned order does not amount to an amendment of an earlier order with a view to rectify a mistake apparent from the record, but it is an order passed on a reappraisal of the material facts and circumstances and on a fresh application of the legal position.
(viii) In the case of Ballabh Prasad Agarwalla (supra) the Hon'ble Calcutta High Court at relevant page 358, while giving the meaning of word 'review' observed :
It is not in dispute that the Tribunal or a statutory body has not inherent power of review, the power of review must be expressly conferred by the statute. Review of an order means re-examination or to give a second view of the matter for the purpose of alteration or reversal of the view already taken after changing the earlier opinion or view.
(ix) In the case of Popular Engineering Co. (supra) Hon'ble jurisdictional High Court of Punjab & Haryana observed:
A perusal of Section 254 of Income-tax Act, 1961 that under Sub-section (1) of Section 254 the appellate Tribunal can, after hearing the parties to the appeal, pass such orders as it thinks fit. Subsection (2) of Section 254 empowers the Appellate Tribunal to amend any order passed by it under Sub-section (1) with a view to rectify any mistake apparent from the record. In the exercise of powers vested in it under Section 254(2) the Tribunal cannot review or revise an order made under Section 254(1) though it may amend such order for rectifying a patent mistake which may have crept in, in such order, on account of non-consideration of an important piece of evidence or plea raised by the aggrieved party. The absence of adequate reasons in an order passed under Section 254(1) cannot per se be regarded as a mistake apparent within the meaning of Section 254(2). Likewise, the possibility of forming different opinion than the one expressed in the order passed under Section 254(1) cannot be treated as a ground for entertaining an application under Section 254(2).
(x) In the case of Ramesh Chand Modi (supra), Hon'ble Rajasthan High Court held :
Where the Tribunal fails to decide the some of the questions raised before it inadvertently or by oversight, the only appropriate method of correcting such mistake is to recall the order and make a fresh order after affording an opportunity of hearing to such party. In all cases, ordinarily the court or Tribunal acts ex debito justitiae to prevent abuse of process even in the absence of any power.
Once a mistake on the face of the record is established what order should follow to correct that mistake shall always depend on the facts and circumstances required to rectify the mistake. If the mistake is one which requires determination of some undecided issue because it has not been decided though raised, the procedure that would follow the discovery of such mistakes is to recall the order and decide the case afresh or to decide that issue after affording an opportunity to the parties concerned and pass a fresh order in the light of finding on such issue. The order under Section 254(2) of the Income-tax Act, 1961, is not confined to arithmetical or clerical mistakes, nor only to correct substantive mistakes but also procedural mistakes.
(xi) In Karan & Co. 's case (supra), Hon'ble Delhi High Court held:
"Recalling an appellate order passed by the Tribunal under Section 254(1) is not permissible under Section 254(2) of the Act. Recalling an order automatically necessitates rehearing and readjudication 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 Rule 24 of IT (AT) 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.
(xii) In the case of Rahulkumar Bajaj (supra) cited by the Id. AR for the assessee, Spl. Bench of ITAT Nagpur has held :
Section 254(2) specially empowers the Tribunal to rectify any apparent mistake in an order passed by it. Even without such specific provisions, the Tribunal has inherent power to set aside an order deciding an appeal on wrong grounds. The inherent power to rectify a wrong committed by itself, by a Court or a Tribunal is not readily speaking a power to review. It is the atonement to the wronged party by the Court or the Tribunal for the wrong that it has itself committed. The two powers operate in different fields and are different in essential quality or nature. It is the basic principles of jurisprudence that if there is a mistake committed by the Court or the Tribunal, if needs to be rectified as no one should suffer or come to grief on account of the mistake committed by the Court. Even the rules of procedure and technicalities should not come in the way in rendering the justice to parties by correcting the mistakes committed by the Court or the Tribunal. Rectification of an order stamps from the fundamental principle that justice is above all. It is exercised to remove error and not for disturbing finality.
The purpose of the Tribunal is to render justice and not to negate it. In the instant case it was true that three issues were before the Tribunal. The first issue, i.e., reopening of assessment, was the paramount/nodal issue and the other two issues were subsidiary/ alternative issues. The first issue was admittedly decided by the Tribunal in favour of the assessee. Once the jurisdictional issues were decided in favour of the assessee there was no requirement/ necessity to decide the other issues. Even otherwise, the Tribunal had proceeded to decide the alternate issue without referring to the written submissions of the assessee. Had there been considered, perhaps the order of the Tribunal would have been different. Therefore, latter part of the order of the Tribunal suffered from patent mistake which had resulted in miscarriage of justice to the assessee on account of the adverse remarks damaging the reputation of the assessee who was one of the outstanding and reputed industrialists of the country. Such mistake, therefore, needed to be rectified in view of the Supreme Court judgment in S. Nagaraj v. State of Karnataka [1993] Suppl. (4) SCC 495.
In view of the above the Tribunal order was rectified accordingly.
(xiii) In Munibyrappa's case (supra) by the Id. AR while answering the following question, Hon'ble High Court held :
Section 254(1) of the Income-tax Act, 1961 - Appellate Tribunal -Orders of assessment years 1978-79 to 1986-87 - Whether quality of order passed by Tribunal and cavalier manner in which it had glossed over important issues such as matters concerning Supreme Court judgment that were cited, in a one sentence statement that those judgments were distinguishable could not be approved -Held, yes - Whether it is essential to record what judgments in question are or a brief summary of contentions raised and to record findings thereon and it is not permissible to merely brush aside important legal issues or to disregard them as it would be impossible for next higher authority to be able to decipher as to what was ground on which Tribunal rejected particular contention - Held, yes - Whether, therefore, proceedings had to be remanded to Tribunal for fresh hearing - Held, yes.
(xiv) In Shri Ramesh Chand Modi's case (supra). The Tribunal observed as under:
Section 254(2) - Powers of the Appellate Tribunal to recall the judgment already passed - Some issues raised by the appellant not considered by ITAT while passing that judgment - Whether it will tantamount to review which power is not vested in the Tribunal - Held, no - Recalling an order for correcting an apparent mistake in procedural aspect cannot be equated with review -Where a Tribunal fails to notice a question raised before it inadvertantly under any misapprehension, correcting such error by recalling the order for deciding such question, which goes to the root of the matter, appropriately falls in such category of procedural mistake which the Tribunal must correct ex-debit justice, even in the absence of any express power.
12. The contention put forth by the ld. counsel is founded on the premise that recalling of the order for making a fresh order amounts to rectification and not review of the order. In order to support this contention, he submitted that while referring to the decision of Apex Court delivered in the case of Anil Rai (supra), that, in the instant case of the assessee, arguments were heard by the Tribunal on 12-11-1998 but the order was delivered on 29-10-1999 which resulted into miscarriage of justice as certain submissions and arguments escaped the notice of the Tribunal while adjudicating the appeal.
13. We have gone through the case and find that the case of Anil Rai (supra) was a criminal case in which the Apex Court made observations mentioned hereinabove by us in our order whereas the issue - Whether we can recall the order which had been passed by the Tribunal in an appeal after a period of about one year from the date of conclusion of arguments, is required to be decided by us in a case which was decided under the IT Act, wherein, from the ratio of the decision of various High Courts, the power of Tribunal for recalling the order under Section 254(2) is confined to amending the order passed by the Tribunal only under Sub-section (1) with view to rectify the mistake in its order which are apparent on the face of the record. In Suman Tea & Plywood Industries (P.) Ltd. (supra) decided by the Hon'ble Calcutta High Court, the expression of 'mistake apparent on record' was held to mean by a mistake either clerical or grammatical or arithmetical or likewise which could be detected without there being any necessity to argument the matter or to apprise the facts as appearing from the record. Similarly, the Apex Court in the case of T.S. Balaram, ITO (supra) held 'a mistake apparent on record' must be 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'. In the instant case, the Id. Counsel for the assessee has not been able to point out any mistake apparent from order of the Tribunal either patent or which could be established without a long drawn process of reasoning because the order passed by the Tribunal though after a delay of about one year from the arguments, is not violative of any express provisions of the IT Act. We are also of the opinion that suppose we recall the order passed by the Tribunal on the basis of the inordinate delay in delivering the order, the same cannot be passed afresh without there being long drawn process of reasoning after hearing the parties again for re-appraisal of the facts of the case. It would certainly be against the ratio of the decision of Apex Court in the case of T.S. Balaram, ITO (supra) and other decisions of various High Courts cited hereinabove in our order where the words 'mistake apparent on record' has been defined in recalling the orders only for reviewing the mistake apparent on record conferring power on the Tribunal under Section 254(2) of IT Act and not beyond that. Hence we find no merits in the arguments of Id. AR for the assessee for recalling the order merely on the basis of inordinate delay in the delivery of the order of the Tribunal. Since it is not within the scope of powers of the Tribunal conferred under Section 254(2) of IT Act.
14. In the instant case of the assessee, we would like to mention that, in the entire order of the Tribunal dated 29-10-1999 the Id. counsel has neither been able to point out any patent mistake or an obvious mistake of clerical, grammatical or arithmetical or like nature for rectification which could be done without hearing the re-arguments of the parties on the points mentioned by the assessee in its application or without re-appraisal of the facts from the records of the case. We may further mention that ld. counsel has not been able to point out any ground taken by the assessee before the Bench in the appeal or any issue arising therefrom which remained un-decided by the Tribunal in its order. The only thrust of the arguments of ld. counsel hinges around the point that the arguments advanced before the Bench, have not been taken care of in the order by the Tribunal for deciding ground No. 2 of the appeal of the assessee. Secondly, that the search operations being violative of Section 132 of IT Act were argued before the Bench but the same have not been decided by the Bench in the impugned order.
15. In this regard we would like to observe that 'the search operation conducted by the Department under Section 132 of IT Act was illegal'. No such specific ground was taken before the Bench by the assessee in its appeal because the only specific ground taken by the assessee before the Bench was ground No. 1 which related to completion of assessment and disregard of legal provisions of violation of principles of natural justice and the same had been decided by the Bench after detailed discussion while referring to the relevant provisions of Sections 132(9A) and 158BD of IT Act.
16. In order to appreciate the above mentioned contentions of the assessee for recalling the order of the Bench, we are to refer to the cases cited by ld. Departmental Representative wherein various High Courts opined as under :
(i) In ITAT's case (supra) the Hon'ble Orissa High Court held that even assuming that the original conclusion of the Tribunal was erroneous, it could not be characterised as a mistake rectifiable under Section 254(2).
(ii) In ITAT's case (supra) relevant page 656, Hon'ble Patna High Court while concluding the order observed :
In this case, it is not needed nor do we express any opinion as to which of the two orders passed by the Tribunal is founded on the correct legal position. In this case what we are concerned with is whether the Tribunal had any jurisdiction to recall an earlier order passed by it and to fix the case for rehearing. On a careful consideration of the material facts and circumstances of the case, we are of the opinion that the Appellate Tribunal plainly exceeded its jurisdiction in passing the impugned order, which is wholly unsustainable in law.
(iii) In Ramesh Electric & Trading Co. (supra) Division Bench of Bombay High Court, while concluding the order observed :
Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment.
(iv) In ITAT's case (supra) Hon'ble Orissa High Court has held that there cannot be any dispute with the proposition that the power under Sub-section (2) of Section 254 is to rectify a mistake apparent from the record once such mistake is brought to the notice of the Tribunal either by the assessee or by the ITO. But that power does not clothe the Tribunal with the Tribunal with the jurisdiction to review its earlier decision or to rewrite a fresh judgment.'
17. It is important to mention here that the decision of Delhi High Court in the case of Karan & Co. (supra) has been relied upon by both the parties in order to support their rival submissions. In order to canvass his point, ld. counsel relied upon the following portion of the headnote of the citation (supra) :
On a rectification application under Section 254(2) of Income-tax Act, 1961, on 20-10-1994 filed by the Department, the Appellate Tribunal allowed this application, observing that since the vital information in the form of court proceedings was not before the Assessing Officer the observation made in its appellate order dated 24-11-1993 without appreciating this position constituted a mistake apparent from the record. Accordingly, it held that 'to the extent the order of the ITAT would stand rectified'. The Department filed another application under Section 254(2) of the Act, praying, inter alia, for the recall/review of the original order dated November 2.4, 1993. The Tribunal recalled the order dated 24-11-1993 for posting the appeal for fresh hearing and adjudication.
Whereas ld. Departmental Representative for the revenue relied upon complete headnote wherein it was further mentioned that on a writ petition filed by the assessee, Hon'ble Court held :
(i) that the petition was maintainable as the petition was based on lack of jurisdiction of the authority which passed the order impugned;
(ii) that the Tribunal had no jurisdiction to pass the impugned order recalling the appellate order.
Recalling an appellate order passed by the Tribunal under Section 254(1) is not permissible under Section 254(2) of Act. Recalling an order automatically necessitates rehearing and readjudication 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 Rule 24 of IT (AT) 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.
18. In order to contend that even in those facts and circumstances of the case (supra) Hon'ble High Court has held that recalling an appellate order passed by the Tribunal under Section 254(1) was not permissible under Section 254(2) because it automatically necessitates rehearing and readjudication of the entire subject matter of the appeal. Ld. D.R. further contended that the ratio of this decision (supra) is fully applicable in favour of the revenue if the same is applied to the facts and circumstances of the instant case of the assessee.
19. We fully agree that in fact on the entire reading of headnote as well as the complete judgment of the Hon'ble Delhi High Court (supra) we find that the decision was not in favour of the assessee but was in favour of the revenue because Hon'ble High Court has not upheld the order of the Tribunal, challenged before it, recalling its order for posting appeal for fresh hearing and adjudication because, according to Hon'ble High Court it amounted to rehearing and readjudication of entire subject matter of the appeal and the dispute no longer remains restricted to any mistake so to be rectified. Even in the instant case of the assessee, we reiterate that recalling of the order on the points detailed in the petition of the assessee would necessitate rehearing and readjudication of the entire subject matter of the appeal. So, the dispute no longer remains restricted to any mistake sought to be rectified and the same was held to be not permissible under Section 254(2) of IT Act by the Hon'ble Delhi High Court. In this view of the matter, even this contention of the ld. counsel has no merit and the same is rejected.
20. In the case of Ramesh Chand Modi (supra) relied upon by the Id. counsel we find that it does not apply to the facts of the instant case of the assessee because in that case decided by the Hon'ble High Court, the Tribunal had not decided Ground Nos. 31 to 42 of the appeal raised before it. In those circumstances, High Court held that the Tribunal was justified in recalling its order for hearing the appeal afresh for deciding the grounds in accordance with law whereas the assessee has not been able to point out any ground of appeal taken by the assessee or any issue arising therefrom, which remained undecided by the Tribunal in the appeal of the assessee. Hence the ratio of this decision too, does not apply to the instant case of the assessee and the same does not render any help to the assessee.
21. Further we have also taken into consideration the decision of Karnataka High Court in the case of Munibyrappa (supra), the order of the Jodhpur Bench of ITAT in the case of Ramesh Chand Modi (supra) and the case of Rahulkumar Bajaj (supra). In the absence of complete facts of the Karnataka High Court and the case of Jodhpur Bench relied upon by the assessee (copies filed) we are unable to appreciate the ratio of those decisions - whether they apply to the instant case or not. So, we are of the opinion that in this view even those citations are of no help to the assessee.
22. As far as the Rahulkumar Bajaj case (supra) relied upon by the assessee, is concerned, the same is distinguishable on facts and secondly that in that order of the Bench the judgment of Hon'ble Apex Court in the case of T.S. Balaram, ITO (supra) was not considered we find that in the other decision of the High Courts (supra) while laying down the ratio, not only the judgment of T.S. Balaram, ITO (supra) was considered but even the other recent judgments of the Apex Court relevant for deciding the issue involved, were considered. Hence we are of the opinion that in plethora of decisions, including the judgment of Hon'ble Punjab & Haryana High Court in the case of Popular Engg. Co. (supra), as mentioned in subsequent para 23, discussed hereinabove, the predominant view is against the assessee. Accordingly, in our opinion the decision of Special Bench, Nagpur (supra) is also of no help to the assessee.
23. The case of Popular Engg. Co. (supra) decided by the Hon'ble jurisdictional High Court of Punjab & Haryana, relied upon by both the parties, however, canvassing their different point, the assessee relied upon the observation of High Court that order can be amended by the Tribunal for rectifying a mistake which may be have occurred in any such order on account of non-consideration of an evidence or plea raised by the aggrieved party. Whereas ld. D.R. relied upon the observation of Hon'ble High Court in order to canvass that in the garb of rectification, the Tribunal cannot review its order by referring to the following observations made in the order of Hon'ble High Court:
(i) 'that in the exercise of powers vested in the provisions of Section 254(2) though it may amend such order for rectifying patent mistake which may have crept in such order.
24. Now according to the assessee, the arguments raised by its counsel before the Tribunal have not been considered by the Tribunal in its order so in view of the ratio of the decisions in the case of Popular Engg. Co. (supra) impugned order of the Bench can be recalled whereas on the other hand ld. Departmental Representative relied upon the ratio of the decision (supra) to contend that since the assessee has not been able to point out any mistake apparent from record in the impugned order of the Bench, so, recalling of the order on the ground that the arguments advanced by the assessee, were not considered by the Tribunal, would amount to reviewing of initial order passed by the Bench constituting the members who are not the Members constituting present Bench for deciding this application arising out of that order. There is nothing on record which can be brought to the notice of the Bench to show that the arguments alleged to have been not considered by the erstwhile Bench were urged before the Bench at the time of hearing. We agree with these submissions of ld. Departmental Representative that in the existing facts and circumstances of the instant case of the assessee, the ratio of the decision of jurisdictional High Court of P&H in the case of Popular Engg. Co. (supra) cannot be applied in favour of the assessee because in the instant case of the assessee, there is no such evidence which has not been considered by the Bench or there is no such pleas on record on the basis of which we can arrive at the conclusion that the same have not been considered by the Bench.
25. We may reiterate that the ld. counsel has not been able to point out from record any such arguments being advanced before the Bench and the same have not been considered by the Bench otherwise too, the Hon'ble Bombay High Court in the case of Ramesh Electric & Trading Co. (supra) clearly held that failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record although it may be an error of judgment, is fully applicable to the instant case of the assessee.
26. As a result of our detailed discussion made hereinabove in this order and respectfully following the decisions of Apex Court and various High Courts, discussed hereinabove, we have come to the conclusion that in the existing facts and circumstances of the case, no mistake apparent from record, has occurred in the order of the Tribunal. Hence, recalling of the order of the Tribunal would amount to reviewing the order which is beyond the scope of power of rectification provided under Section 254(2) of IT Act. Hence we find that the application filed by the assessee is devoid of any merits and accordingly the same is rejected.
27. In the result, application filed by the assessee is dismissed.