Income Tax Appellate Tribunal - Ahmedabad
Puransingh M. Verma & Anr. vs Ito on 7 August, 1998
Equivalent citations: (2001)72TTJ(AHD)399
ORDER
S.L. Banerjee, V.P. These two miscellaneous applications filed by the assessee are disposed of by this common order for the sake of convenience. In these two applications the assessee submitted that the order of the Tribunal dated 18-11-1996, is to be rectified.
2. The first objection raised by the assessee was in respect of observation made in the impugned order of the Tribunal at para 4 wherein it has been mentioned that the learned Commissioner (Appeals) while disposing of the appeal for the assessment years 1978-79 and 1990-91, though fixed the date of hearing and allowed the presence of the assessees counsel, did not hear the appeals. The learned counsel for the assessee, in prosecuting these miscellaneous applications, pointed out that the real facts are different. In fact, he submitted that the argument led by the counsel at the time of hearing was that though the appellate order for assessment year 1986-87 was in favour of the assessee and that was filed before the learned Commissioner (Appeals) at the time of hearing it was not followed by him by bringing out some facts on the basis of certain facts and reasons for which no opportunity was given to the assessees counsel. He submitted that it was against the principle of natural justice or against the rule of audi alteram partem. The learned counsel, therefore, argued that the Tribunal has considered the issue in a wrong facet i.e. the department can go against the decision of earlier year if there are materials on record. He submitted that though the res judicata is not applicable in the case of tax proceedings but if the department wants to differ from the opinion expressed in the earlier assessment year it is incumbent on them to give opportunity to the assessee to explain and satisfy the department and pursuade them to follow the decisions of the earlier year which is in favour of the assessee. Another point he argued that the Tribunal has ignored some very important documents in the records of the Tribunal before giving its decision. He pointed out that there was a survey operation under section 133A in this case and in a report which is placed at para 23 of the paper book which shows that after the survey was conducted Inspectors in the report stated that they had visited the farm and it was stated that the income derived by the assessee falls within the meaning of "agricultural income". The learned counsel further adverted our attention to para 3 of the said report where the assessing officer has opined as follows :
"Even if the income is agricultural the assets acquired out of agricultural income are liable to wealth-tax subject to admissible deductions under the Wealth Tax Rules."
2.1. The learned counsel submitted that in unmistakable words the assessing officer had admitted that income derived by the assessee is nothing but agricultural.
2.2. The learned counsel further pointed out that on the directions of the Tribunal, two senior Departmental Representatives Shri Manoj Mishra and Shri R.K. Chaudhary also visited the land to check up whether the plants which are being sold at Ahmedabad depot are actually grown on the land at Baroda. The learned counsel has drawn our attention to Ext. C i.e. para 33 of the paper book filed with the miscellaneous application No. 67 a letter from counsel Shri J.P. Shah confirming such a visit.
2.3. He further pointed out that on the survey report under section 133A the inspectors have admitted that it was found that the income was derived from the agricultural process and therefore, it is within the meaning of "agricultural income". On the basis of this report the assessing officer had reported to the Inspecting Assistant Commissioner on 6-5-1986. The assessing officer appears to have accepted the opinion of the inspectors but only stated that the assets acquired out of agricultural income are liable to wealth-tax. This being the position, the learned counsel submitted that the Tribunal ignored this important piece of evidence and confirmed the order of the learned Commissioner (Appeals) on the basis of the materials which were based without giving proper opportunity to the assessee. He, therefore, pleaded that the order of the Tribunal should be rectified in favour of the assessee and in terms of the rectification petition.
3. The learned Departmental Representative submitted that any departure from the original view in the circumstances of the case will tantamount to review of an order which in unmistakable terms stated that the assessees income cannot be treated as agricultural income after considering the several decisions including the decisions of the High Courts in this respect. He, therefore, urged that the order of the Tribunal should not be rectified.
4. We have considered the rival submissions, facts and materials on record. It cannot be denied that in the order of the Tribunal we have not considered the survey reports as well as opinion of the assessing officer in respect of the operations of the assessee and nature of its income. It is luculent that during the course of proceedings before the Tribunal the matter was confined to the percentage of income shown by the assessee to be treated as agricultural income, because, some of the activities of the assessee was trading activities, e.g. selling the pots and some of the items which are sold after purchase i.e. not rearing at the assessees own gardens. In our view, the impugned order of the Tribunal should be recalled, to give proper justice to the arguments and evidence placed before the Tribunal. There are, of course plethora of contradictory decisions in respect of the powers of the Tribunal for recalling its own order. On the hand the Honble Orissa High Court in the case of CIT v. ITAT (1992) 196 ITR 640 (Ori) an another case of same title reported in CIT v. ITAT & Anr. (1992) 196 ITR 683 (Ori) had held that the Tribunal has no power of recalling, as such, the order passed under section 154(1), on the other hand, the Honble Allahabad High Court in the case of Laxmi Electric Corporation Ltd. v. CIT (1992) 188 ITR 398 (All) had opined that in a case where Tribunal fails or omits to deal with an important contention affecting maintainability/merit of appeal, it must be deemed to be a mistake apparent from record, which empowers the Tribunal to reopen the appeal and rectify the same if it is so satisfied. The Honble Madhya Pradesh High Court in the case of CIT v. Umeshchand K. Patel (1997) 225 ITR 1050 (MP) opined that when the Tribunal had recalled its earlier order because it found a factual mistake had been made in it and no adverse final order had been passed against the revenue inasmuch as the Tribunal had merely directed hearing of the appeal, no question of law arose from the order of the Tribunal. We find that the Supreme Court in a Special Leave Petition against the order of the Honble Delhi High Court in the case of CWT v. Ila Dalmia (1987) 59 CTR (Del) 283 impliedly approved the powers of the Tribunal to recall its own earlier order. The decision of the Supreme Court is reported in 191 ITR (St) 76. The Honble Madhya Pradesh High Court in the case of CIT v. Mithalal Ashok Kumar (1986) 158 ITR 755 (MP) where it has been held that a direction for hearing of the appeal does not amount to a review in the strict sense of the term. In any case, even if there are differences in views in this matter we feel that the view in favour of the tax-payer should be adopted on the principle laid down by the Supreme Court in the case of CIT v. Vegetable Products Ltd. (1973) 88 ITR 192 (SC), Needless to say here that in the impugned order of the Tribunal as pointed out earlier it totally ignored the material which has been placed on the record obtained at the behest of the Tribunal itself i.e., the inspection report which is the main plank of the miscellaneous application of the assessee. It may be that in all cases the Tribunal is not required to give opinion on all evidences or facts on record and it can ignore certain facts or evidence which according to it is not relevant for the purpose of giving decision but when the evidence has been obtained at the behest of the Tribunal itself then according to us, that should not be ignored while passing the order; otherwise it will be an unceremonious disposal of an appeal. The Registry is directed to fix the case within a month of this order as the matter is old and have got serious repercussion for the other nurseries also. It may be noted that we are told that on the basis of the order of the Tribunal no action is taken against any nursery to draw them in the tax net.
5. The miscellaneous applications are allowed.
B.L. Chhibber, A.M. 2nd February, 1998 Regreting my inability to persuade myself to the view taken in the order of my learned Brother (Vice-President), I proceed to write a dissenting order.
2. The main plank of the miscellaneous applications of the assessee is that the Tribunal has totally ignored the material which has been placed on record obtained at the behest of the Tribunal itself i.e. the inspection report.
3. Two vital issues before this Tribunal were whether income from nursery business would belong to Shri Puran Singh M. Verma (HUF) and secondly whether exemption should be allowed in that case under section 10(1) of the Act (income from agriculture).
4. After hearing both the sides at length this Tribunal held that the income earned by the assessee is not agricultural income as defined in section 2(1A) of the Income Tax Act, 1961, and hence not exempt under section 10(1) of the Income Tax Act. In respect of the status whether Hindu Undivided Family or Association of Persons this Tribunal sent back the matter to the assessing officer to decide the issue afresh. Obviously on the issue of status the assessee has no grievance as there is no mention of such grievance in the miscellaneous applications.
5. This Tribunal after duly and thoroughly considering the lengthy arguments of both the sides and relying on the decision of the Honble Supreme Court in the case of CIT v. Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC) (hereinafter referred to as the Sahas Roys case);the judgment of the Honble Allahabad High Court in the case of H.H. Maharaja Vibhuti Narain Singh v. State of Uttar Pradesh (1967) 65 ITR 364 (All) held in clear terms that the income from nursery business was not in the nature of agricultural income. The learned counsel of the assessee Shri J.P. Shah had relied upon the decision of the Tribunal Jaipur Bench in the case of Balwant Singh v. Income Tax Officer (1995) 55 ITD 363 (Jp) and this case has also been discussed by the Tribunal in para 7 of its order. After discussing the above case the Tribunal held that "it is a trite law that a decision of the High Court should be preferred to the decision of Tribunal". After discussing the entire case law on the issue putforth before the Tribunal by both the sides this Tribunal gave a clear finding in para 7.1 as follows :
"In the light of above discussion, we hold that the income earned by the assessee is not agricultural income as defined in sections 2(1) and 2(1A) of the Income Tax Act, 1961 and hence not exempt under section 10(1) of the same Act. We accordingly allow the grounds raised on this cardinal issue by revenue in ITA Nos. 2753 & 2754/Ahd/1990 and dismiss the grounds raised by the assessee in ITA Nos. 1888 & 1889/Ahd/1994."
In para VI on para 8 of the application the learned counsel of the assessee has pointed out that on the direction of the Tribunal, two senior Departmental Representatives Shri Manoj Misra and R.K. Chaudhary also visited the land to check up whether the plants which are sold at Ahmedabad Depot are the ones which are actually grown on the lands at Baroda. I do not find any veracity in this statement. I have perused the order sheet and find that at no point of time any Bench of the Tribunal gave a direction to Shri Manoj Mishra and Shri R.K. Chaudhary. Finally when the case was heard by the Bench consisting of the then J.M. and now Honble Vice-President and myself, we never gave any such direction to any of the Departmental Representative or any official of the Tribunal to inspect the assessees lands. Accordingly, in my opinion this Bench was not obliged to consider the so-called report by two senior Departmental Representative which is nothing but an extraneous piece of evidence now being brought to the notice of the Tribunal by way of two miscellaneous applications. Whether a particular income is agricultural income or business income is a question of law and this Tribunal after taking into consideration the various judicial pronouncements (referred to supra) and the definition of agriculture as given in Chambers 29th Century Dictionary New Edition (discussed at page 6 of the Tribunals order), held in very clear terms that the income derived by the assessee from nursery was not agricultural income and hence not exempt under section 10(1) of the Income Tax Act. Even if the said view were held to be erroneous, it could not be said to be a mistake apparent from the record, specially when the assessee has challenged the above view before the Honble Gujarat High Court by way of writ petition registered as Special Civil Appln. No. 29 of 1997. It will be relevant to quote the following paragraphs from the said writ petition :
"The observation of the Tribunal in para 5 of its order that the Supreme Court did not hold any income where there is a cultivation will be essentially an agricultural income, is against the Supreme Court decision. The Supreme Court in most unambiguous terms held as follows at p 495 of its judgment I agricultural operations are thus defined by them to be operations where there was some measure of cultivation of the land, some expenditure of skill and labour upon it. If the conditions are satisfied in regard to any particular land, then such land can be said to be used for agricultural purposes and income derived therefrom constitute agricultural income". The Tribunal erred in not following the Supreme Court decision and also not following the Jaipur Bench decision and instead following wrongly an Allahabad High Court decision as against the assessee, which, on the contrary, was in favour of the assessee as the petitioner has stated above.
In the submission of the petitioner, the Tribunals decision is patently wrong on facts as also in law and, therefore, it is in the fitness of things that the Tribunals order must be set aside and this Honble court be pleased to hold in no uncertain terms that doing horticultural activity on more than 30 acres of land is agricultural and that there is no room for any doubt left on this point after the Supreme Court decision, as held by Jaipur Bench of the Tribunal.
The Tribunal also went patently wrong when it said that an objection of not hearing by Commissioner (Appeals) for assessment years 1989-90 and 1990-91 is an afterthought and there is nothing to indicate that in the grounds of appeal when there is enough in the grounds of appeal pointing that out plus the statement at the Bar of the same advocate who also appeared before the Commissioner (Appeals)."
Ultimately in para 20 of the writ petition the assessee has made the following prayers to the Honble High Court :
"a. This Honble Court be pleased to issue a writ of certiorari of any other appropriate writ, order or direction, quashing the order of the Tribunal at Exh. K. b. This Honble Court be pleased to issue a writ of mandamus or any other writ, order or direction, asking the Tribunal to hold that the impugned income of the petitioner is agricultural income.
c. This Honble Court be pleased to quash the orders of respondent No. 1 at Exts. B Cl and C2 for the assessment years 1986-87, 1989-90 and 1990-91 and be pleased to ask him to hold that the impugned income is agricultural income and, therefore, not taxable in the hands of the petitioner."
6. In the light of the above discussion it is evident that the issue is one which is highly debatable. In my considered opinion in the guise of rectification of a mistake apparent from the record the lengthy (9 paged) miscellaneous petition is in effect seeking for the review of the order of the Tribunal which is not permissible under the law. In this connection, it would be relevant to refer to the Andhra Pradesh High Court in the case of CIT v. ITAT (1994) 206 ITR 126 (AP), the Honble High Court, while considering the power of Tribunal under section 254(2) held as under :
"We are of the opinion that 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 a 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."
7. The Honble Orissa High Court in CIT v. ITAT (1992) 196 ITR 590 (Ori) has held that 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. A similar view was expressed by the Orissa High Court in the case of CIT v. ITAT (1994) 210 ITR 397 (Ori).
8. To sum up, the assessee through these two miscellaneous applications requires the Tribunal to review their well-reasoned orders which is not permissible under the provision of section 254(2) which gives only limited powers to the Tribunal in this regard. Accordingly, the miscellaneous applications of the assessee are rejected.
9. In the result, the miscellaneous applications are dismissed.
Reference Under section 255(4) of the Income Tax Act, 1961 20th March, 1998 A difference of opinion having arisen between us, the two Members who heard the miscellaneous application originally, we state the point of difference as under :
"Whether, on the facts and in the circumstances of the case, the impugned order of the Tribunal should be recalled or not?"
Submitted for further necessary action to the Honble President of the Income Tax Appellate Tribunal.
M.A. Bakshi, J.M. (T.M.) 7th August 1998 The Ahmedabad Bench B of the Tribunal had disposed of the appeals of the assessee in ITA Nos. 1888 & 1889/Ahd/1990, assessment years 1989-90 & 1990-91 and those of the revenue in ITA Nos. 2753 & 2754/Ahd/1990, for assessment year 1986-87, vide consolidated order dated 18-11-1996. The assessee filed a Miscellaneous Application No. 67/Ahd/1997 on 11-4-1997, claiming certain mistakes in the order. Later on another application was filed on 21-7-1997, as Miscellaneous Application No. 127/Ahd/1997. These two applications were heard together by a Bench constituted of Vice President as J.M. and the A.M. The J.M./Vice President had proposed to recall the order of the Tribunal accepting the claim of the assessee that there were certain mistakes in the appellate order. However, the learned A.M. differed with learned Vice President by holding that there was no mistake in the appellate order justifying recalling of the order.
2. The President of the Tribunal, in exercise of the powers under section 255(4), has been pleased to nominate me as a Third Member in respect of the following point of difference :
"Whether, on the facts and in the circumstances of the case, the impugned order of the Tribunal should be recalled or not?"
3. I have heard the rival contentions and perused the records. Before dealing with the miscellaneous applications, it may be relevant to give the brief facts of this case.
4. The assessee carried on business of running a nursery at Ahmedabad under the name of "Roses Garden" and at Baroda under the name of "Baroda Nursery". Pursuant to a survey operation under section 133A, a notice under section 148 had been issued to the assessee in response to which Nil returns had been filed claiming exemption in respect of the entire income earned from nursery business on the ground that it was agricultural income within the meaning of section 2(1) read with section 10(1) of the Income Tax Act, 1961. The assessing officer while making assessment for assessment year 1986-87 held that the income of the assessee from running the nursery business is not agricultural income and accordingly he denied exemption claimed under section 10(1) read with section 2(1) of the Income Tax Act, 1961.
5. In the return of income the assessee had claimed Nil status. However, by a separate letter, during the course of assessment proceedings, it was claimed that the nursery business belongs to Hindu Undivided Family of late Shri Puransingh M. Verma which after his death in 1988 comprised of his wife and three sons, i.e. Shri Zaverilal. P. Verma, Shri Chimanlal P. Verma and Shri Chandulal M. Verma and their respective family members. The assessing officer did not accept the claim of the assessee in regard to the status as that of Hindu Undivided Family. It was held that Shri Puransingh M. Verma along with his three sons constituted an association of persons (AOP) with indeterminate shares in the income from nursery business. He accordingly assessed the income in the name of Baroda Nursery and Roses Garden in the status of AOP at maximum marginal rate.
6. The assessing officer had also issued notice under section 148 to Shri Puransingh M. Verma, Ahmedabad and the return of income was filed in the name of Baroda Nursery in response to the said notice. In the said return the assessee claimed the status of Hindu Undivided Family and the total income of Rs. 4,99,760 was claimed as exempt under section 10(1) of the Income Tax Act, 1961. The assessing officer assessed the entire income in the status of Hindu Undivided Family on protective basis.
7. The assessee appealed to the Commissioner (Appeals) and the later accepted the same by holding that the income from nursery business belonged to Shri Puransingh M. Verma, Hindu Undivided Family, and the assessee was entitled to exemption under section 10(1) of the Income Tax Act, 1961. The revenue did not accept the decision of the Commissioner (Appeals) and accordingly appealed to the Tribunal against the decision. Separate appeals were also filed in the case of Shri Puransingh M. Verma, Hindu Undivided Family.
8. In the meantime, the assessing officer made assessments for assessment years 1989-90 and 1990-91. The claim of the assessee that the income derived from nursery business was agricultural income was again rejected by the assessing officer on the ground that the Commissioner (Appeals)s decision for assessment year 1986-87 was not accepted by the revenue and the appeal was pending before the Tribunal. The assessee appealed to the Commissioner (Appeals) against the decision of the assessing officer. The Commissioner (Appeals) took a contrary view for assessment years 1989-90 and 1990-91 than the view taken by his predecessor for assessment year 1986-87. The assessee appealed to the Tribunal against the decisions of the Commissioner (Appeals) for assessment years 1989-90 and 1990-91. The Tribunal disposed of an the four appeals, two by the revenue for assessment year 1986-87 and one each by the assessee for assessment years 1989-90 and 1990-91 by a consolidated order. The decision of the Commissioner (Appeals) regarding the nature of income of nursery business for assessment year 1986-87 was reversed and the decision for assessment years 1989-90 and 1990-91 approved. However, the issue regarding the status in which the assessment should be made was set aside to the file of the assessing officer. Thereafter, the assessing officer has vide order dated 17-3-1997, accepted the claim of the assessee that the income should be taxed in the hands of Shri Puransingh M. Verma, Hindu Undivided Family, on substantive basis. In other words, the claim regarding the status made by the assessee as of today stands accepted.
9. With these facts, I now proceed to consider the miscellaneous applications. Before I express my opinion about the disputed issues, it would be fruitful to refer to various decisions on the subject.
10. In the case of CIT v. ITAT & Anr. (1997) 227 ITR 443 (All), their Lordships of the Allahabad High Court held that the power exercisable by the Tribunal under section 254(2) of the Income Tax Act, 1961, is confined to rectifying any mistake apparent from the record.
11. In the case of CIT & Anr. v. ITAT & Anr. (1994) 206 ITR 126 (AP), their Lordships of the Andhra Pradesh High Court held that 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. 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 way of process of investigation and research, it is not a mistake apparent from the record. If two views are possible on a point of law, and one of the alternatives is accepted in its previous order, it cannot be held that the mistake is apparent from the record. It further held that unless there are manifest errors which are obvious, clear and self-evident, the Tribunal cannot recall its previous order in an attempt to rewrite the order.
12. In the case of CIT v. Ramesh Electric & Trading Company (1993) 203 ITR 497 (Bom), their Lordships of the Bombay High Court held that 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 required 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. Their Lordships further held that the Tribunal cannot redecide the matter and that it has no power to review its order.
13. In the case of CIT v. K.L. Bhatia (1990) 182 ITR 361 (Del), their Lordships of the Delhi High Court held that the Tribunal is a creature of the Income Tax Act and that the Tribunal has no inherent power of reviewing its order on merits.
14. In the case of V.P. Minocha, Income Tax Officer v. ITAT & Anr. (1977) 106 ITR 691 (Guj) their Lordships of the Gujarat High Court held that the Tribunal has no power to rectify a decision on debatable point of law as the same cannot be said to be a mistake apparent from the record. The mistake that can be rectified should be a mistake apparent from the record.
15. In the case of CIT v. Globe Transport Corpn. & Ors. (1992) 195 ITR 311 (Raj), their Lordships of the Rajasthan High Court, Jaipur Bench held that the power of review is not inherent in a court or Tribunal. It is a creature of the statute. A court or Tribunal cannot review its own decision unless it is permitted to do so by statute. The courts having general jurisdiction like Civil Courts have inherent power. But the courts or Tribunal of limited jurisdiction created under special statutes have no inherent power.
16. In the case of CIT v. Suresh Kumar (1990) 186 ITR 114 (P&H), their Lordships of the Punjab & Haryana High Court held that even the High Court has no power to review in the matter of income-tax references.
17. The Madhya Pradesh High Court in the case of CWT v. R.S. Seth Ghisalal Modi Family Trust (1988) 169 ITR 530 (MP) held that the High Court does not have inherent power merely on the ground of wrong application of a decision in arriving at its earlier order.
18. In the case of Jose T. Mooken v. CIT (1979) 117 ITR 921 (Ker), their Lordships of the Kerala High Court held as under :
"Though it is well settled that the High Court as a "Court" has inherent jurisdiction to act ex debito justitiae if the circumstances of a case so demand and such inherent jurisdiction or power is inherent in the High Court because it is a court and is unrelated to and independent of the nature of its jurisdiction, in regard to the power of review, unless it is expressly conferred, the power cannot be exercised. The power of review is not conferred on the High Court in the matter of a reference under the Income Tax Act and in the absence of specific conferment of power, the High Court cannot exercise that power."
19. In the case of ITO v. Volkart Brothers & Ors. (1971) 82 ITR 50 (SC), their Lordships of the Supreme Court had the occasion to consider the meaning of a mistake apparent on the record. Their Lordships held that 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. In the case of CIT v. Mithalal Ashok Kumar (1986) 158 ITR 755 (MP), their Lordships of the Madhya Pradesh High Court held as under :
"Though the Tribunal has no power to review its own order, yet it can certainly correct its mistakes by rectifying the same in case it is brought to its notice that the material which was already on record before deciding the appeal on merits was not considered by it. Therefore, what would be the effect of rectifying a mistake and thereby amending its original order would always depend on the facts of each case. The mistakes have not to be strictly considered according to the provisions of order 47, rule 1, CPC, 1908, but have got to be taken into consideration depending on the facts of each case which may vary as also the points involved."
21. In the case of Income Tax Officer v. ITAT (1965) 58 ITR 634 (All), it was held by the Allahabad High Court that where in a judgment or order of the Tribunal an error has crept in, not as a result of any fault of the assessee, but attributable entirely to the Tribunal in having lost sight of a material fact at the time of writing its order or judgment, which fact was duly brought to its notice by the assessee, there would be an error apparent from the record which could be rectified.
22. The meaning of words "mistake apparent from record" : As per Chambers Concise Dictionary mistake means to think or understand wrongly, to take for another thing or person, to be wrong about. It also means omission made not by design but by mischance. The word apparent refers to something which is obvious, conspicuous and self-evident. Thus mistake apparent from records would mean mistakes or errors which are glaring and obvious and not such errors which can be determined by arguments or debate.
23. On the analysis of the aforementioned decisions, following principles emerge :
(1) That the power of the Tribunal under section 254(2) is confined to rectifying any mistake apparent from the record.
(2) That the Tribunal does not have inherent power of rectification or review or revision. Unless there is mistake apparent from the record in the sense of patent, obvious, clear error or mistake, the Tribunal cannot recall its previous order.
(3) If the error or mistake is one which could be established only by long-drawn arguments or by way of process of investigation and research, it is not a mistake apparent from the record.
(4) Unless there is manifest errors which are obvious, clear and self-evident, the Tribunal cannot recall its previous order in an attempt to rewrite the same.
(5) 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.
(6) The Tribunal cannot in exercise of its power of rectification look into some other circumstances which would support or not support its conclusion. The Tribunal cannot redecide the matter and it has no power to review its order.
(7) That the Tribunal has no power to rectify a decision on debatable point of law.
(8) Whereas the courts having general jurisdiction like Civil Courts have inherent power, the Tribunal does not have the power to review its own decision except what is authorised under section 254(2).
(9) Whereas the High Court has inherent power of review, in the matter of income-tax references even the High Court cannot exercise that power.
(10) A decision on debatable point of law is not a mistake apparent from the record.
(11) Where the Tribunal has overlooked the relevant material on record, there would be an error apparent from record which can be rectified by setting aside the order for fresh consideration.
(12) That where a material fact brought to the notice of the Tribunal has been lost sight of, the Tribunal has the power to rectify the mistake so committed, provided the material fact has an important bearing on the ultimate decision.
24. I now proceed to consider the miscellaneous applications of the assessee in the light of the aforementioned principles of law.
25. The first point brought out by the applicant in the miscellaneous application is : "That for assessment year 1986-87 the Commissioner (Appeals) had decided the issue in favour of the assessee. In assessment years 1989-90 and 1990-91 the assessing officer had followed his earlier order by stating that the decision of the Commissioner (Appeals) has not been accepted. The assessee had taken specific grounds before the Tribunal that the Commissioner (Appeals) did not allow proper opportunity of being heard. The Tribunal has dealt with this issue in the appellate order and rejected the claim of the assessee by holding that the accusation of not giving a fair hearing to the assessee has not been brought out either in the statement of facts or in the grounds of appeal filed before the Tribunal." This is claimed to be a mistake in the order.
26. In my view, there is no mistake in the order of the Tribunal in this regard. The issue has been decided by the Tribunal against the assessee on the ground that there was no such accusation. In the grounds of appeal for assessment years 1989-90 and 1990-91, I find that the assessee had raised a ground before the Tribunal that the Commissioner (Appeals) was not justified in not following the decision of his predecessor for assessment year 1986-87 without confronting the assessee with specific reasons for not following the earlier order. The Tribunal has decided this issue against the assessee. The question in the present proceedings is not whether the decision taken by the Tribunal in regard to this ground of appeal is a decision on which there could possibly be two opinions. In proceedings under section 254(2), the limited scope is to consider as to whether there is a mistake apparent from record which can be rectified. In my view, there is no such mistake in regard to this issue, falling within the ambit of section 254(2).
27. The second issue raised by the assessee is that the Tribunal had relied upon the decision of the Bombay High Court in the case of Burmah Shell Refineries Ltd. v. Income Tax Officer (1966) 61 ITR 493 (Bom) to hold that "the Income Tax Officer can reopen the question previously decided only if fresh facts come to light, which on investigation would entitle the officer to come to a conclusion different from the conclusion previously reached or if the earlier decision had been rendered without taking into consideration material evidence". It has been pointed out in the petition that the assessing officer had not found any fresh facts. In fact he relied upon his own order for assessment year 1986-87 in deciding the issue against the assessee. He had also referred to the decision of the Commissioner (Appeals) in favour of the assessee but had refused to accept the same for the reason that the department had not accepted the decision and second appeal was filed before the Tribunal. This is claimed to be a mistake.
28. In my view, the claim made by the assessee is to some extent misconceived insofar as the Tribunal has referred to the contention on behalf of the assessee that the Commissioner (Appeals) in assessment years 1989-90 and 1990-91 had not taken into consideration the order of his predecessor for assessment year 1986-87 on the same issue. It is in the context of this contention that the Tribunal relied upon the decision of the Bombay High Court in the case of Burmah Shell Refineries Ltd. (supra) and held that the Commissioner (Appeals) had considered material in assessment years 1989-90 and 1990-91 which had not been considered in assessment year 1986-87 by his predecessor. The issue before the Tribunal argued, was whether the Commissioner (Appeals) was justified in not following his predecessors order for assessment year 1986-87 and not as to whether there were fresh materials before assessing officer in assessment years 1989-90 and 1990-91 for taking a different view. The assessing officer has in assessment years 1989-90 and 1990-91 in fact followed his own order for assessment year 1986-87. The Tribunal, in its wisdom, has justified the action of the Commissioner (Appeals) in not following his predecessors order for assessment year 1986-87. It is in this context that the decision of the Bombay High Court in the case of Burmah Shell Refineries Ltd. (supra) has been followed.
29. It may be pertinent to mention that under the Income Tax Act, each year of assessment is an independent unit of assessment. The assessing officer takes a decision which is appealable before the Commissioner (Appeals). If the Commissioner (Appeals) decides the appeal in favour of the assessee, the department has the right of appeal to the Tribunal. Once the Tribunal also decides the matter in favour of the assessee, the department has the right of seeking a reference to the High Court and ultimately to the Supreme Court. In the subsequent assessment year the assessing officer is not bound to follow the decision of the Commissioner (Appeals) as in that case he will be acting prejudicial to the interests of the revenue. When the department has not accepted the decision of the first appellate authority, one cannot except the assessing officer to decide the issue in favour of the assessee in the subsequent year pending litigation.
30. In this case the assessing officer had decided the issue against the assessee for assessment year 1986-87. However, on appeal the Commissioner (Appeals) decided the appeal in favour of the assessee. This decision of the Commissioner (Appeals) was not accepted by the revenue and accordingly an appeal was filed before the Tribunal. For assessment years 1989-90 and 1990-91, the matter had again come up before the Commissioner (Appeals), who on consideration of the material on record took a different view than his predecessor. Whereas the revenue utilised its right of appeal against the decision of the Commissioner (Appeals) for assessment year 1986-87, the assessee also exercised its right of challenging the decision of the Commissioner (Appeals) for assessment years 1989-90 and 1990-91 by way of appeal to the Tribunal. All the three appeals had come up before the Tribunal simultaneously and the issue was wide open for both the parties. The point of view of the assessing officer, that of the Commissioner (Appeals) for assessment year 1986-87 and for assessment years 1989-90 and 1990-91, was available to the Tribunal as well as to the parties. The assessee as well as the revenue had full opportunity to represent the respective point of view. There has been no violation of principles of natural justice. The Tribunal, after consideration of the facts and circumstances of the case, the rival contentions and material on record, reversed the order of the Commissioner (Appeals) for assessment year 1986-87 and confirmed the orders of the Commissioner (Appeals) for assessment years 1989-90 and 1990-91. There was thus no mistake in the order of the Tribunal apparent from record in regard to this issue.
31. The next issue raised in the application is that the Tribunal has referred to the decision of the Jaipur Bench of the Tribunal in the case of Balwant Singh v. Income Tax Officer (1995) 55 ITD 363 (Jp) and held that while relying upon the decision of the Supreme Court in the case of CIT v. Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC) the observations have been quoted as under :
"The observations of the Supreme Court leave no room for doubt that income from nursery would be considered as agricultural income."
32. It has been stated in the application that the Tribunal has wrongly mentioned in the appellate order that the decision of the Supreme Court in the case of Raja Benoy Kumar Sahas Roy (supra) has not adjudicated the issue at all and that there was a mere discussion on the point which was neither raised nor argued. It has been claimed that the Ahmedabad Bench of the Tribunal has committed a grave error in taking the above stand.
33. In my view, it is a question of opinion. The Tribunal has taken a view which the assessees counsel or the assessee may consider to be wrong or even erroneous. However, that does not bring it within the ambit of section 254(2), being a mistake apparent from record. The Tribunal has discussed the issue and expressed its opinion and, therefore, there is no mistake in regard to this issue in the appellate order.
34. The next issue raised in the miscellaneous application is the non-consideration of the report of income-tax officials on their surprise spot visit to the agricultural land of the petitioner, i.e. the survey report under section 133A. It has been pointed out that the Tribunal has missed to refer to the report in the appellate order resulting into grave injustice to the applicant.
35. The claim of the assessee that the Tribunal has not referred to the survey report in the appellate order is correct. The learned Vice President in his order has admitted that the survey report under section 133A which had been filed before the Tribunal on its directions had not been considered while disposing of the appeal. The Honble A.M. has not commented upon this finding of the Vice-President. The question that arises for consideration is as to whether the non-consideration of the survey report constitute a mistake apparent from record and if so whether the order of the Tribunal requires to be recalled. The copy of the report is available on record. In this report it has been brought to the notice of the Inspecting Assistant Commissioner, Ahmedabad, that the assessee has not filed any returns on the ground that the income derived was believed to be agricultural income. It had also been brought to the notice of the Inspecting Assistant Commissioner that Inspectors had given an opinion in their report that the income derived by the assessee was agricultural income.
The statements of the three brothers had also been recorded and the same had been forwarded to the Inspecting Assistant Commissioner. It had also been reported to the Inspecting Assistant Commissioner that the assessee had accumulated the assets of the value of more than Rs. 25 lakhs. In the report it had also been pointed out that even if the income is agricultural, the assets are liable to wealth-tax. The report had been forwarded along with the Inspectors report. This report is dated 6-5-1986. When this report is read in conjunction with the decisions of the Commissioner (Appeals) for assessment years 1986-87 and 1989-90, it becomes abundantly clear that the Inspecting Assistant Commissioner and the concerned Income Tax Officer had not accepted the opinion of the Inspectors that the income derived by the assessee was agricultural income. That is the reason why the proceedings against the assessee had been initiated by issue of notice under section 148.
36. At this stage it may be relevant to point out that for assessment year 1986-87 the Commissioner (Appeals) has relied upon the survey report of the Inspectors dated 24-4-1986. From para 18 of his order the relevant portion may be quoted hereunder :
"It will be seen that the family of Shri Puransingh M. Verma was entirely engaged in all the basic operations on the land itself for the purpose of growing plants saplings in different manners adopting modern scientific techniques. All the operations carried on by the family for producing the plant saplings involved basic as well as subsequent operations done in conjunction with the basic operations and there is no dispute about the fact. I find from the report of the Inspectors dated 24-4-1986, who carried out the survey action under section 133A at the nursery site, that they have reported that the nursery is spread over about 25 acres of land approximately and employing 40 employees and there are two tube-wells and irrigation is done with submersible pumps with the help of which the land was being irrigated. They have also reported that the income is derived from agricultural process. In view of these factual aspects and the decision of the Supreme Court as to what constitutes an agricultural operation, I have no hesitation to hold that the family of Shri Puransingh M. Verma is engaged in agricultural operations on the land and the income from nursery arising from sale of the agricultural produce i.e. plants of various species is income from agriculture exempt under section 10(1) of the Income Tax Act, 1961."
37. For assessment years 1989-90 and 1990-91 also the Commissioner (Appeals) has considered the survey report. It will be relevant to quote from the order of the Commissioner (Appeals) for assessment year 1989-90 as under :
"In this case, there was a survey on 24-4-1986 in the premises of M/s Baroda Nursery, 15, Vithalbhai Patel Colony, Stadium Road, Ahmedabad. At the time of survey, it was found that this plot of land had been purchased for a sum of Rs. 3,07,850 and construction has also been carried out on this plot. This place serves as head office of Baroda Nursery. At the time of survey thousands of plants lying in pots and plastic bags were seen in this premises. The statement of Shri Zaverilal Puransingh Verma was recorded wherein he has stated that the activities of M/s Baroda Nursery are carried on by three brothers namely Shri Zaverilal Puransingh Verma, Shri Chimanlal Puransingh Verma and Shri Chandulal Puransingh Verma. He has stated that the income was being earned from the following nurseries (1) Baroda Nursery, Ahmedabad.
(2) Baroda Nursery, Raicka, Baroda.
(3) Roses Garden, Baroda.
(4) Sandhya Nursery, Baroda.
(5) Garden Centre, Baroda.
On the basis of survey carried out and on the information, income-tax proceedings were initiated. The appellant claimed that the income from the nursery is exempted under section 10(1). The assessing officer has not accepted the claim of the appellant in view of Allahabad High Court decision H.H. Maharaja Vibhuti Narain Singh v. State of U.P. (1967) 65 ITR 364 (All)."
38. A perusal of the survey report which is on record and the decisions of the Commissioner (Appeals) for assessment years 1986-87 and 1989-90 does not leave one in doubt that this report has been considered in arriving at the conclusion. When the matter was brought to the Tribunal by way of appeals challenging the orders of the Commissioner (Appeals) the latter disposed of the appeals against the impugned orders. There is no doubt that the material available in the survey report had been considered by the Commissioner (Appeals). The Tribunal while deciding the appeals did consider the decisions of the Commissioner (Appeals) for the respective assessment years where the relevant materials stood considered and discussed. It is not suggested by anyone that the decisions of the Commissioner (Appeals) for the respective assessment years were not considered by the Tribunal while deciding the appeals. Firstly, the material contained in the report having been considered by the Tribunal, the non-consideration of the same as such separately has not affected the consequences of the appeals. Secondly, a perusal of the report furnished by the assessing officers along with the Inspectors report reveals two things in favour of the assessee. One is the cultivation of land and the other is the opinion of the Inspectors that the income of the assessee is the agricultural income. As far as the opinion of the Inspectors is concerned, the same was not binding upon the assessing officer or any other superior authority. Therefore, its non-consideration is of no consequence. The second aspect of the report is the cultivation of the land. In this regard it may be pertinent to mention that the Commissioner (Appeals) for assessment year 1986-87 reached to the conclusion that the income derived by the assessee was agricultural income. For assessment year 1989-90, another Commissioner (Appeals) held that the income derived by the assessee from nursery business was not agricultural income of the assessee. Whereas for assessment year 1986-87 the Commissioner (Appeals) took into account that there was cultivation of land, for assessment year 1989-90 the Commissioner (Appeals) was of the view that the main activity of the assessee was that of business and not of agricultural operations. When the matter came up before the Tribunal by way of appeals, the Tribunal proceeded to hold that the income of the assessee cannot be held to be agricultural income even if there has been cultivation. At p 5 of the order of the Tribunal it has been observed as under :
"The Honble Supreme Court in Roys case at p 510 of the report has observed as under:
"If the term agricultural is thus understood as comprising within its scope the basis as well as subsequent operations in the process of agriculture and the raising on the land of products which have some utility either for consumption or for trade and commerce, it will be seen that the term agriculture receives a wider interpretation both in regard to its operations as well as the results of the same. Nevertheless there is present all throughout the basis idea that there must be at the bottom of it cultivation of land in the sense of tilling of the land, sowing of the seeds, planting, and similar work done on the land itself. This basic conception is the essential sine quo non of any operation performed on the land constituting agricultural operation. If the basic operations are there, the rest of the operations found themselves upon the same. But if these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations."
It is true that in Roys case the Honble Supreme Court held that for an agricultural income basic operation on the land is sine qua non; but it did not hold any income where there is a cultivation will be essentially an agricultural income. A hypothetical example may be given. If a court holds for a motor-car its ability to transport people or goods from one place to another is sine quo non, then, this cannot be said to have held any vehicle, which is capable of transporting people or goods from one place to another will be a motor-car, It may be a train or even a ship."
39. The Tribunal has further proceeded to consider the meaning of words 'agriculture, horticulture and nursery. At page 6 of the order of the Tribunal it has been observed as under :
"In the parlance of the above observations if we consider the decision cited by the learned counsel placed at para 119 of the compilation the case of Shri Ranchhodbhai Kalabhai v. Puransingh Manoharlal in the court of Bombay Revenue Tribunal, it can be noticed that Bombay Tenancy Act in definition of agricultural has included horticultures in its ambit. Had the agricultural, horticultural and nursery are the same, then the legislature in the Tenancy Act would not have included the horticulture and the nursery specifically in the definition clause. To interpret the words-agriculture, horticulture and nursery, the help of Chambers 20th Century Dictionary New Edition, is taken and it defined them as follows :
40. It has been held that the income derived by the assessee from running the nursery does not fall within the definition of agricultural income and, therefore, the assessee is not entitled to exemption under section 10 of the Income Tax Act, 1961.
41. It is in the light of these facts I hold that the material contained in the survey report under section 133A has been considered in arriving at the decision. No prejudice has been caused to the assessee by not looking at the copy of the report filed during the hearing when it is established that the contents of the report have been duly considered. On consideration of the facts and circumstances of the case the Tribunal has discussed the legal aspects of the case. In my view, recalling of the order on the ground that the survey report under section 133A has been overlooked is not warranted. The claim of the assessee on this count is also rejected.
42. The last issue raised by the assessee in the miscellaneous application is the non-consideration of the report of the two Departmental Representatives, viz, Shri Manoj Misra and Shri R.K. Chaudhary. It is claimed that these two Departmental Representatives had been directed to visit the spot and furnish a report to the Tribunal as to whether the plants which are being sold at Ahmedabad are the ones which are actually grown on the land at Baroda. It has been claimed that a list of plants had been prepared by the two officers and the same had been furnished to the Tribunal. The counsel for the assessee had also filed a letter dated 17-9-1996, stating that Shri Manoj Misra and Shri R.K. Chaudhary had been asked by the Tribunal to visit Baroda and to find out whether the plants which are sold at Ahmedabad, as enumerated in the report dated 5-2-1986, are actually grown on the assessees land there. It was stated in the certificate that they visited the spot and found that the plants which are sold at Ahmedabad are being grown on assessees land at Baroda.
43. The learned AM in his order has specifically pointed out that there was no direction issued by the Tribunal at any stage to any Departmental Representative to visit any place nor was any report submitted to the Tribunal. I have gone through the records and find no evidence of the Tribunal having ever directed the Departmental Representatives to visit the site and furnish a report. Thus, the issue raised is about a disputed fact : as to whether any direction was issued by the Tribunal and whether any report had been furnished during the course of the hearing of the appeals. A disputed issue cannot fall within the ambit of mistake apparent from record. There is another aspect of the matter. What are the contents of the report of Departmental Representatives and what could be the consequences had this report been considered.
44. It is claimed by the learned counsel for the assessee that the two senior Departmental Representatives who had been directed by the Tribunal to visit the spot had specifically mentioned that the activities of the assessee, M/S Baroda Nursery, are largely agricultural. He had also expressed the view that the profit from selling the plants is non-agricultural income and, therefore, some portion of the total income would be non-agricultural income. Assuming that the Tribunal had directed the two senior Departmental Representative to visit the spot and give a report to it the issue that remains is as to whether the opinion given by the two Departmental Representatives would be binding upon the Tribunal.
45. In my view, the opinion of the two Departmental Representatives was not binding upon the Tribunal and, therefore, even if they had been directed by the Tribunal to submit a report, the non-consideration of their opinion has not affected the results of the appeals. Therefore, on that ground also the application fails.
46. I am, therefore, of the considered view that there is no mistake apparent from record in the order of the Tribunal which can be rectified under section 254(2). As already pointed out, the Tribunal does not have the power to review its earlier order. The Bench of the Tribunal has considered the contentions and the material and arrived at a decision. The correctness of that decision cannot be questioned in the proceedings under section 254(2). It is only the mistakes if any which are apparent from record which can be rectified. If the mistakes are such which will affect the result of the order, then the order can be recalled. However, since I am in agreement with the view expressed by the learned A.M. that there is no mistake apparent from record, miscellaneous applications of the assessee are liable to be rejected.
47. In my view, on the facts and in the circumstances, of this case, recalling of the order of the Tribunal is not warranted.