Income Tax Appellate Tribunal - Pune
Corrosion Roadlines vs Deputy Commissioner Of Income Tax on 13 September, 2004
Equivalent citations: (2005)92TTJ(PUNE)631
ORDER
B.L. Chhiber, A.M.
1. The appeal in this case was decided by this Bench vide order dt. 21st Sept., 2001. [reported as Corrossion Roadlines v. Dy. CIT (2005) 92 TTJ (Pune) 625-Ed.] By this application, the assessee has pointed out the following two mistakes ;
(i) Ground No. 3--Disallowance of truck running expenses of Rs. 84,335.
2. The assessee is a transporter running tankers. During the year, the assessee incurred total expenditure of Rs. 3,37,341 under the head 'truck running expenses' out of which the AO disallowed the expenses of Rs. 84,335, i.e. 25 per cent of the total expenses. These expenses are incurred on escort, miscellaneous expenses and preventive expenses and are incurred by the drivers of the truck and for which the drivers give trip memos to the assessee. Details of these expenses were given on pp, 1-3 of the paper book. The details of expenses incurred on various trucks (total 5 in numbers) are given on p. 2 of the paper book. There are no external vouchers for these expenses. During the course of hearing before us, it was admitted that a part of the expenses under the head escort expenses, no doubt, is on giving some tips to octroi, police, etc. and these could be disallowed under the Explanation to Section 37 or for want of vouchers. But, it was further submitted-that the disallowance made by the AO is on a very high side and is not justified. For this purpose, there were two more facts brought out as under :
(i) On p. 3 of the paper book, in the reply to the CIT(A), it was mentioned that the profit shown by the assessee per truck was more than Rs. 2000 per month which is the yard stick laid down in Section 44AE and therefore, the expenditure incurred by the assessee should be considered to be reasonable and hence, this heavy disallowance was not warranted.
(ii) In the assessment for asst, yr. 1990-91, the AO did make a disallowance on account of these expenses which was to the tune of Rs. 3,000 per vehicle and the assessment order for that year was submitted in the course of hearing. Going by this yardstick, the disallowance for five trucks in this year should have been Rs. 15,000. All these type of expenses cannot be supported by vouchers and therefore, a token disallowance may be acceptable but such huge disallowance cannot be considered to be reasonable even after accepting the fact that a part of the expenses were on tips at the octroi naka, etc. This Tribunal in para 6 has held that disallowance of 25 per cent of such expenses is reasonable. It has been pointed out that the above finding has been given without discussing the above two facts of the assessee and it is not understood as to how this Tribunal has come to the conclusion when the AO himself in the past years had not made such a heavy disallowance. It has further been submitted that the fact that the expenses debited under this head were reasonable was amply clear from the profit shown by the assessee.
3. Dr. S,U. Pathak, the learned counsel for the assessee, submitted that the Tribunal has erred in confirming the disallowance of this amount as these important facts have not been considered. He, therefore, requested that on this issue the Tribunal may consider these facts and correct the mistake which is apparent from record.
4. Shri S.K. Rastogi, the learned Departmental Representative, submitted that the finding of the Tribunal is fair and reasonable and no further modification is called for.
5. After hearing both the parties, we find that some of the expenses are to be disallowed, but while deciding the issue, we have not taken into consideration the two important facts pointed out above which related to the past history of the case. In the asst. yr. 1990-91, the AO did make a disallowance to the tune of Rs. 3,000 per vehicle and the assessment order for that year was submitted before us during the course of hearing. Going by this yardstick, disallowance for five trucks in this year should have been Rs. 15,000 which fact has been ignored by us. After hearing both the sides, we hold that keeping in view the past history of the case, the disallowance will be restricted to Rs. 20,000. To that extent, our above order stands modified.
(ii) Ground No. 5-Addition of Rs. 4,51,924
6. The above addition has been discussed and confirmed in para 12 of our order. The assessee not only runs its own tankers but takes the tankers from other persons on commission basis which in the cases wherein the tanker is owned by that person comes to 10 per cent and wherein the tanker is of the assessee but the chassis is of third party, comes to 30 per cent. In all these cases, where the receipts are on account of the assessee's own tankers or they are taken on commission basis, the recovery of the dues is the responsibility of the assessee. During the course of hearing, an affidavit of Shri Mutha was filed which is placed on p. 37 of the paper book and the assessee claimed deduction of this amount of Rs. 4,51,924 as a deduction from the receipts on account of bad debts. The receipts shown by the assessee in the accounts were after deducting the above amount. The details of the parties to whom the above remissions were granted in respect of quite a few parties, the remissions were granted and the accounts were mutually settled. For example, in this chart, in respect of nuclear fuel complex as against the total receipts of Rs. 88,78,153, the amounts written off were to the tune of Rs. 39,616 and the accounts were settled. Such remissions/discount was in respect of the various parties and that too, on account of the trips of the trucks owned by the assessee or taken on commission basis because therein also, the recovery of the dues was the responsibility of the assessee. Hence, it was argued that, although deduction was styled as bad debts, that was in the nature of remission/discount. It was, further, contended that such part of the receipts are disputed by the customers mainly on account of the detention charges, shortages, etc. It was, further, contended that because the assessee takes up the burden of recovery on his head, the commission which is charged is on a higher side because otherwise, in this line of business, the commission for a transport agent runs from 1-3 per cent only as against 10 per cent in this case. The account extract in details in respect of Sudershan Chemicals Ltd., was also submitted to show that the billing is done by the assessee only in respect of his own tankers as well as the tankers taken on commission. Lastly, it was submitted that even if this amount or part thereof was considered as bad debts, in that event also the assessee's method of accounting of reducing the trading receipts directly by these bad debts is effectively same as the method of first taking the gross receipts and then deducting the bad debts therefrom, because the manner of making book entries does not matter. Reliance was placed on the decision of the Supreme Court in the case of Sutlej Cotton Mills Ltd. v. CIT (1979) 116 ITR 1 (SC) and in the case of A.V. Thomas & Co. Ltd. v. CIT (1963) 48 ITR 67 (SC). This Tribunal decided the whole issue in para 16 of its order which reads as under:
"We have considered the rival submissions and perused the facts on record. After perusing the orders of the authorities below, we find that the stand taken by them is factually correct and duly supported by the statement of accounts submitted by the assessee and accordingly, we do not find any infirmity in the remarks of the learned CIT(A) reproduced supra. We accordingly dismiss this ground."
7. Dr. Pathak submitted that, while deciding the issue, this Tribunal has committed the following mistakes which are apparent from the record :
(i) that, mainly the above amount constituted the discount/remission and the accounts were settled and for that purpose, the accounting entries as to whether the assessee reduced this amount directly from the receipts was not relevant at all and there is no reason to disallow such remission, because it is a genuine business loss.
(ii) That, even if part of the amount in question is considered as bad debts, by reducing from the trading receipts, they had entered the trading account, because the effect was the same and the debts were written off. The accounting entries could be passed in either manner, i.e., to take the gross receipts in trading account and then claiming bad debts or by reducing them straight from trading receipts directly and it is a well accepted principle of law that accounting entries do not lead to income or expenditure under IT Act. Thus, merely because the above amount is deducted directly from the receipts, there is no reason to disallow the claim of the assessee.
He, therefore, requested the Tribunal to consider these facts of the case and if these are considered, the finding of the Tribunal that these debts have not entered the trading receipts will not be a correct finding and the claim of the assessee would be allowable.
8. Shri S.K. Rastogi, the learned Departmental Representative, opposed the application on this issue and submitted that at best it can be an error of judgment on the part of the Tribunal and the same cannot be reviewed in a miscellaneous application,
9. We have considered the rival submissions and perused the facts on record. From the contents of the application and from the arguments of the learned counsel and from the brief finding of the Tribunal contained in para 16 (reproduced supra), we find that certain vital issues raised by the assessee during the course of hearing were inadvertently not considered by the Tribunal. From the perusal of our log book, we find that the contentions mentioned in the application and summarised above, were raised before us, but by mistake, the same were not considered. We accordingly, consider it as a mistake apparent from record and recall our order on this issue. This issue will be decided de novo after giving an opportunity of being heard to both the parties.
10. In the result, the application is allowed pro tanto.
U.B.S. Bedi, J.M. 23rd April, 2002
11. After having gone through the proposed order of the learned AM, I find it difficult to agree with the findings and conclusions as drawn by him and my reasons for being so are as under.
12. As regards ground No. 3 of the appeal of the assessee, the disallowance of Rs. 84,335 out of total expenditure of Rs. 3,37,341, incurred under the head 'truck running expenses' has been upheld by the learned CIT(A) which has been confirmed by this Bench while deciding the issue and the assessee has pleaded in misc. application that the disallowance made by the AO is very much on the higher side and not justified which requires to be reduced and for this purpose, one additional fact was brought out by filing photocopy of the assessment order for the asst. yr. 1990-91, at the time of hearing of the present application to contend that since in the asst. yr. 1990-91 similar type of addition was restricted to Rs. 3,000 per vehicle, therefore, same yardstick should be applied here and addition may be restricted accordingly.
13. To support the contention as raised in the application and to substantiate the claim made, the learned counsel for the assessee further submitted that the Tribunal has erred in confirming the disallowance of this amount, as these important facts have not been considered. It was, therefore, submitted that on this issue, the Tribunal has omitted to consider these important facts with regard to Department itself allowing substantially the claim of the assessee. It was thus urged to correct the mistake which is apparent from record and restrict the addition to Rs. 15,000, as has been done for the asst. yr. 1990-91.
14. Shri S.K. Rastogi, the learned Departmental Representative, strongly opposed the move of the assessee and pleaded that the finding of the Tribunal is fair and reasonable and no further modification is called for. It was contended that firstly, the assessment order for the asst. yr. 1990-91 was not on record at the time of deciding the appeal and secondly even as per the said assessment order, the dispute was with regard to the allowability of expenditure on account of repairs and maintenance which included expenses on petrol and diesel, but the point at issue in the case in hand relates to the expenses incurred on escort, misc. expenses and preventive expenses which includes the payment on account of each trip, loading and unloading, tier puncture, misc. expenses and such other preventive expenses. It is also not clear from the said assessment order as to what was the quantum of these expenses claimed by the assessee. So, the same cannot be made the basis for allowing the relief. It was also contended that reasonableness of expenses is out of the purview of rectification. So, it was pleaded for dismissal of the assessee's misc. application.
15. Similarly, with regard to ground No. 5, the assessee seeks to recall the order of the Tribunal with respect to confirmation of addition of Rs. 4,51,924. The plea taken and arguments advanced by both the sides are not being repeated for the sake of brevity as the same have already been brought out in the proposed order. The plea of the assessee is that the finding of the Tribunal with regard to this ground is very brief wherein the Tribunal had not discussed the issue in detail. So, the order should be recalled in this respect and issue may be re-adjudicated afresh whereas the learned Departmental Representative's contention is that the review/recall is not permissible under Section 254(2). So, the request of the assessee is liable to be dismissed. Even if it is an error of judgment, the same is also outside the purview of rectification and no interference is called for. Therefore, the application of the assessee in this regard is liable to be dismissed.
16. I have heard both the sides and gone through the application of the assessee and relevant provisions of law, Before adverting to the facts of the present case, it would be relevant first to discuss the provisions relating to Section 254(2). A bare look at Section 254(2) of the Act makes it amply clear that a 'mistake apparent from the record' is rectifiable. In order to attract the application of Section 254(2), a mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. "Mistake" means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error; a fault, a misunderstanding, a misconception. "Apparent" means visible; capable of being seen; easily seen; obvious; plain. A mistake which can be rectified under Section 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. The language used in Section 254(2) is permissible where it is brought to the notice of the Tribunal that there is any mistake apparent from the record. Accordingly, the amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order which is not permissible under the provisions of Section 254(2). Further, where an error is far from self-evident, it ceases to be an apparent error. It is, no doubt, true that a mistake capable of being rectified under Section 254(2) is not confined to clerical or arithmetical mistakes. On the other hand, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by the Supreme Court in Master Construction Co. (P) Ltd. v. State of Orissa (1966) 17 STC 360, an error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. A similar view was also expressed in Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale AIR 1960 SC 137. It is to be noted that the language used in 0. 47, Rule 1 of the CPC, 1908, is different from the language used in Section 254(2) of the Act. Power is given to various authorities to rectify 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". Mistake is an ordinary word, but in taxation laws, it has a special significance. It is not an arithmetical or clerical error alone that comes within its purview. It comprehends errors which, after a judicious probe into the record from which it is supposed to emanate, are discerned. The word "mistake" is inherently indefinite in scope, as what may be a mistake for one may not be one for another. It is mostly subjective and the dividing line in border areas is thin and indiscernible, It is something which a duly and judiciously instructed mind can find out from the record. In order to attract the power to rectify under Section 254(2), it is not sufficient if there is merely a mistake in the orders sought to be rectified. The mistake to be rectified must be one apparent from the record. A decision on the debatable point of law or undisputed question of fact, is not a mistake apparent from the record. The plain meaning of the word "apparent" is that it must be something which appears to be so ex facie and it is incapable of argument or debate. It, therefore, follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification.
17. Now, dealing with the issues raised in the application against ground No. 3 of the appeal, the assessee mainly relies upon the assessment order for the asst. yr. 1990-91, photocopy of which was filed at the time of hearing of the appeal. It is, however, found from the record that neither the assessee has specifically relied upon the assessment order for asst. yr. 1990-91 before the AO nor before GIT(A) or even before this Bench at the time of hearing of the appeal. It is also not found to be part of the record before the lower authorities or before this Bench upto stage of hearing of the appeal. Moreover, there is no application/request for admission of this document as provided under Rule 29 of the ITAT Rules, 1963 and this Bench of the Tribunal has seen this document for the first time while hearing the application filed under Section 254(2) of the Act. Therefore, in view of facts and circumstances of the present and in the light of discussions made, I am of the considered view, this photocopy of the assessment order for asst. yr. 1990-91 cannot be taken as part of the record and as such, the same is ignored for the purposes of present proceedings. Now the only plea left is that part disallowance made/confirmed is unreasonable and has unjustifiably been confirmed by passing a brief order which tantamounts to a mistake which is apparent from record and should be rectified to restrict the addition to a lesser amount.
18. As is apparent from the discussions held in preceding paragraphs, that a rectification application can lie only with regard to an error on the face of the record which has not been pointed out or emerged from the material on record and moreover, reasonableness of expenditure cannot be subject-matter of rectification and in this regard Kerala High Court in the case of CIT v. Ram Bahadur Thakur Ltd. (1999) 237 ITR 217 (Ker) held as under:
"That, therefore, the Tribunal was not right in having reviewed its earlier order exercising power under Section 254(2) of the Act. Section 254(2) could not be resorted to rectify every mistake, but could be taken recourse only to rectify a mistake apparent from the record. Entering into reasonableness of the expenditure claimed by the assessee in connection with the transfer could not be said to be a mistake apparent from the record."
Therefore, in my considered view, neither there is any mistake which could be said to be apparent from record in respect of ground No. 3 of the appeal nor reasonableness of the expenses could be subject-matter of rectification. Even otherwise also, in the absence of other relevant facts and details about total claim of expenditure and also as to what happened to such type of claim for the years 1991-92 to 1996-97 restricting of expenses at a particular amount, cannot be made the basis for reducing the disallowance made, under rectification proceedings, As such no rectification could be carried out. Hence, this objection raised by the assessee being without merit is dismissed.
19. As regards ground No. 5, I find that assessee seeks to get recalled the order of the Tribunal in order to have rehearing of the issue which would involve long drawn process of reasoning and reconsideration of the entire issue which is legally not permissible. Support in this regard, can be taken from the Hon'ble Supreme Court decision in the case of T.S. Balaram, ITO v. Volkart Brothers (1971) 82 ITR 50 (SC) which is a mother decision held as under:
"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."
20. Moreover, this Bench of the Tribunal has passed an elaborate order discussing each and every aspect of the matter and no apparent mistake has been pointed out. Besides this, since the orders of the authorities below have been agreed to by the Tribunal, therefore, to my mind, the Tribunal need not meticulously and minutely discuss all the points as the same have already been discussed in length at the original stage. This view finds support from the Gujarat High Court decision in the case of CIT v. Gnan Ganga Science Institute (1999) 238 ITR 473 (Guj) wherein it has been held as under:
"When the appellate authority particularly agrees with the views taken by the authority below, he need not meticulously and minutely discuss on the points at the same length as the original authority".
So far as the so-called inaccuracy is concerned, the Delhi High Court in the case of Smt. Baljeet Jolly v. CIT (2001) 250 ITR 113 (Del) held as under :
"In order to attract the power to rectify under Section 254(2) of the IT Act, 1961, it is not sufficient if there is merely a mistake in the order sought to be rectified. The mistake to be rectified must be one apparent from the record. A decision on a debatable power of law or disputed question of fact is not a mistake apparent from the record. The plain meaning of the word "apparent" is that it must be something, which appears to be, so ex facie, is incapable of argument or debate.
Held that, where an error was far from self-evident, it ceased to be an apparent error. The so-called inaccuracies or wrong recording of facts as alleged were not patent mistakes, which constitute the sine qua non for exercise of power under Section 254(2) of the Act. The questions proposed dealt with conclusions of facts giving rise to no question of law."
20A. In the light of the foregoing discussions and above decisions of various Courts, I find that the assessee has not been able to make out a case for rectification and in case request of the assessee is accepted, it would tantamount to review of the order of the Tribunal which is not permissible under the law. Under rectification proceedings, the Tribunal is not empowered to review the order passed earlier. It has further been held by the Calcutta High Court in the case of Shaw Wallace & Co. Ltd. v. ITAT and Ors. as under :
Absolute obliteration of its earlier order is not within the jurisdiction of the Tribunal. It cannot totally recall its order under Section 254(2) of the IT Act and proceed to rehear the matter on de novo arguments. The words of the said subsection refer to amendment or rectification and not a total recall. Invocation of Section 254(2) is not proper where the matter needs long drawn arguments".
21. Similar situation arose before Orissa High Court in the case of CIT and Anr. v. ITAT and Anr., (1992) 198 ITR 188 (On) wherein it was held as under:
Tribunal-Powers of Tribunal-Power to rectify its order-Tribunal holding that arbitration expenses not allowable as a separate item as fixed percentage of award money taken as profit of contract business-Tribunal cannot allow arbitration expenses in rectification proceeding--IT Act, 1961- Section 254(2).
In yet another case, the Calcutta High Court in the case of CIT v. Gokul Chand Agarwal (1993) 202 ITR 14 (Cal), has dealt with the same and opined as under:
"Section 254(2) of the IT Act, 1961, empowers the Tribunal to amend its order passed under Section 254(1) to rectify any mistake apparent from the record either suo motu or on an application. The jurisdiction of the Tribunal to amend its order thus depends on whether or not there is a mistake apparent from the record. If, in its order, there is no mistake, which is patent and obvious on the basis of the record, the exercise of the jurisdiction by the Tribunal under Section 254(2) will be illegal and improper. An oversight of a fact cannot constitute an apparent mistake rectifiable under Section 254(2). This might, at the worst, lead to perversity of the order for which the remedy available to the assessee is not under Section 254(2) but a reference proceeding under Section 256. The normal rule is that the remedy by way of review is a creature of the statute and, unless clothed with such power by the statute, no authority can exercise the power. Review proceedings imply proceedings where a party, as of right, can apply for reconsideration of the matter already decided upon after a fresh hearing on the merits of the controversy between the parties. Such remedy is certainly not provided by the IT Act, 1961, in respect of proceedings before the Tribunal".
In similar situation, while dealing with the rectification, the Hon'ble Andhra Pradesh High Court in the case of CIT and Anr. v. ITAT and Anr., (1994) 206 ITR 126 (AP) has held as under:
"The Tribunal, being a creature of the statute, has to confine itself in the exercise of its jurisdiction to the enabling or empowering terms of the statute. It has no inherent power. Even otherwise, in cases where specific provision delineates the powers of the Court or Tribunal, it cannot draw upon its assumed inherent jurisdiction and pass orders as it pleases. The power of rectification which is specifically conferred on the Tribunal has to be exercised in terms of that provision. It cannot be enlarged on any assumption that the Tribunal has got an inherent power of rectification or review or revision. It is axiomatic that such power of review or revision has to be specifically conferred, it cannot be inferred. Unless there is a mistake apparent from the record in the sense of patent, obvious and clear error or mistake, the Tribunal cannot recall its previous order, If the error or mistake is one which could be established only by long drawn arguments or by a process of investigation and research, it is not a mistake apparent from the record."
Similarly, the Hon'ble Bombay High Court in the case of CIT v. Ramesh Electric & Trading Co. (1993) 203 ITR 497 (Bom) has held as under:
"Under Section 254(2) of the IT Act, 1961, the Tribunal may, "with a view to rectifying any mistake apparent from the record" amend any order passed by it under Sub-section (1) within the time prescribed therein. It is an accepted position that the Tribunal does not have any power to review its own orders under the provisions of the 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. The Tribunal cannot, in the exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion"
22. Therefore, the plea of the assessee for rectification with respect to ground No. 5 of appeal is found to be without merits. Thus, in view of the facts and circumstances of the case; and the discussions held in the light of the case law cited, I am of the considered view that it is not a fit case for rectification and reject the objection raised by the assessee.
23. As a result, the misc. application of the assessee gets dismissed.
REFERENCE UNDER SECTION 255(4) OF THE IT ACT, 1961 U.B.S. Bedi, J.M. 23rd April, 2002 As there is a difference of opinion between the Members on the Bench, following points of difference are being referred to Hon'ble President for hearing on such points or for nominating the Third Member or to pass such orders as the Hon'ble President may deem fit and proper:
"In view of facts and circumstances of the case,
(a) Whether addition on account of disallowance out of truck running expenses to the extent of Rs. 84,355 at 25 per cent could be further reduced to Rs. 20,000 on the basis of copy of assessment order for the asst. yr. 1990-91 filed at the time of hearing of rectification application in the absence of any other detail or material, or nothing could be done under rectification proceedings?
(b) whether order with respect to ground No. 5 of appeal could be recalled and issue could be reheard or re-adjudicated upon without pointing out mistake apparent from record in the light of various decisions including that of jurisdictional High Court decision in the case of CIT v. Ramesh Electric & Trading Co. (1993) 203 ITR 497 (Bom)?"
B.L. Chhibber, A.M. 1st May, 2002 As there is a difference of opinion between the Members on the Bench, following point of difference is being referred to Hon'ble President for hearing on such point or for nominating the Third Member or to pass such orders as the Hon'ble President may deem fit and proper:
"(a) Whether, on the facts and circumstances of the case, the order of the AM allowing assessee's miscellaneous application is correct or whether the order of the JM dismissing the assessee's miscellaneous application is correct?"
B.L. Chhibber, AM.
12 Sept. 2002 As there is a difference of opinion between the Members of the Bench, following point of difference is being referred to Hon'ble President for hearing on such point or for nominating the Third Member or to pass such orders as the Hon'ble President may deem fit and proper:
"Whether on the facts and circumstances of the case, order of AM or JM is justified?"
M.K. Chaturvedi, Vice President (Third Member) 1st Sept ,2004
1. This miscellaneous application came before me as a Third member, to express my opinion on the following question :
"Whether on the facts and in the circumstances of the case, order of AM or JM is justified?"
2. I have heard the rival submissions in the light of material placed before me and precedents relied upon. It was prayed before the Tribunal that mistake has crept in regard to ground No. 3 apropos the disallowance of truck running expenses of Rs. 84,355 and in relation to ground No. 5 in regard to the addition of Rs. 4,51,924. The learned AM accepted the prayer on both the counts. The learned JM held that as there is no error apparent from the face of the record, as such, the provisions of Section 254(2) of the IT Act, 1961, (hereinafter called the Act) cannot be resorted to.
3. In regard to the disallowance of truck running expenses of Rs. 84,355, the learned AM held that the past history of the case was not considered, as such mistake has crept into the order. Dr. Pathak, learned counsel for the assessee fairly conceded that there is no apparent error which could be rectified under Section 254(2) of the Act on this count. As such, he did not press this ground.
4. Coming now to the rectification in relation to the addition of Rs. 4,51,924, Dr. Pathak submitted that the error has crept in because the Tribunal did not consider all the grounds of appeal. The facts of the case were not appreciated in the right perspective and the decision rendered by the Tribunal was not a possible decision.
5. Shri Satya Prakash, learned Departmental Representative, submitted that it is not correct that the Tribunal did not consider all the grounds. It is palpable from the perusal of the submissions made by Dr. Pathak before the Tribunal that he objected as to not considering some of the contentions. There is difference between contentions and grounds. It is not clear what contentions the assessee did raise which were not considered at the time of hearing. But at the time of hearing, it was not pointed out before the Tribunal that which ground was not considered. The statement that the facts of the case were not considered also does not appear to be correct. It was not pointed out that which particular fact was not considered. Whether it was pointed out before the Bench at the time of hearing? No affidavit in this regard was filed. It is incumbent on the assessee to file the affidavit as per Rule 10 of the ITAT Rules, if he wants to allege something which is contrary to the records. This was not done. The contention that the decision of the Tribunal is not possible is also not correct. The Tribunal decided the issue after taking into consideration the rival submissions. No specific error was pointed out.
6. An oversight of a fact cannot constitute an apparent mistake rectifiable under Section 254(2) of the Act. This view was taken in the case of CTT v. Gokul Chand Agarwal (1993) 202 ITR 14 (Cal). Similarly, failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent from the record, although it may be an error of judgment. The same cannot be rectified under Section 254(2) of the Act, in view of the decision of the jurisdictional High Court rendered in the case of CIT v. Ramesh Electric & Trading Co. (1993) 203 ITR 497 (Bom). The reason is that merely because the Tribunal has considered and has not allowed a claim, even if the conclusion is wrong, that will be no ground for moving an application under Section 254(2), unless it can be said that there is a mistake apparent from the face of the record. In the garb of an application for rectification, it is not open for the assessee to reopen and reargue the whole matter. Unless there is manifest error which is obvious, clear and self-evident, the provisions of Section 254(2) of the Act cannot be resorted to. What can be rectified under Section 254(2) of the Act is a mistake which is apparent and patent. The mistake has to be such for which no elaborate reasons or inquiry is necessary. What is not permitted to be done by the statute having deliberately omitted to confer review jurisdiction on the Tribunal, cannot be indirectly achieved by recourse to rectification proceedings contained under Section 254(2) of the Act.
7. Now, the question arises what is apparent mistake? Various precedents are available on this issue. It is laid down by the Orissa High Court in the case of CIT v. ITAT, (1992) 196 ITR 564 (On) that the apparent mistake must be one for the discovery of which no elaborate reasoning or enquiry is necessary. It must be visible and patent. Whether the Tribunal has committed an error of judgment, the same would not be sufficient to exercise power of rectification under Section 254(2) of the Act. Thus, the correctness of a conclusion of facts cannot be the subject-matter of an application for rectification.
8. Invocation of Section 254(2) of the Act is not proper where the matter needs long drawn arguments. Absence of adequate reasons in an order was not considered to be a mistake apparent from record in the case of Popular Engineering Co. v. ITAT (2001) 248 ITR 577 (P&H).
9. In the case of Smt Baljeet Jolly v. CIT (2001) 250 1TR 113 (Del) it was held that where an error was far from self-evident, it ceased to be an apparent error. The so-called inaccuracies or wrong recording of facts as alleged were not patent mistakes which constitute the sine qua non for exercise of power under Section 254(2) of the Act.
10. Testing the case of the assessee on the touchstone of precedents discussed hereinbefore, I find that no apparent mistake has crept into the order of the Tribunal. As such, I am inclined to agree with the view taken by the learned JM.
11. The matter will now go before the regular Bench for deciding the miscellaneous application in accordance with the opinion of the majority.
H.L. Karwa, J.M. 13th Sept, 2004 The learned Third Member by his opinion dt. 1st Sept., 2004, having concurred with the view of the learned JM and in accordance with the majority view, the miscellaneous application of the assessee is dismissed.