Income Tax Appellate Tribunal - Chennai
Bojaraj Textile Mills Ltd., Madurai vs Assessee on 19 August, 2011
IN THE INCOME-TAX APPELLATE TRIBUNAL
CHENNAI 'B' BENCH, CHENNAI.
Before Shri.U.B.S. Bedi J.M. & Shri. Abraham P. George, A.M.
M.A. No. 137/Mds/2011
[In I.T.A. No. 1503/Mds/2007]
Assessment Year: 2001-02
M/s. Bojaraj Textile Mills Ltd., The Assistant Commissioner of
Sitalakshmi Mills Premises, Vs. Income Tax,
Tirunagar, Madurai 625 006. Company Circle II, Maudrai.
[PAN: AABCB1529P]
(Appellant) (Respondent)
Assessee by : Shri T.N. Seetharaman, Advocate
Revenue by : Shri K.E.B. Rengarajan, Jr. St. Counsel
Date of Hearing : 19.08.2011
Date of Pronouncement : 02.09.2011
ORDER
PER U.B.S. Bedi, J.M.
By means of present application, the assessee seeks to get recalled the order of the Tribunal passed in the appeal of the Revenue in I.T.A. No. 1503/Mds/2007 dated 08.04.2011 for the assessment year 2001-02 mainly on the ground that the Tribunal has not given decision on the merits of the issue raised and no specific decision on reopening issue has been given. So, the Tribunal order is incorrect and incomplete as it dealt with the matters not raised and silent on the matter raised before it.
2. The ld. Counsel for the assessee, while reiterating the submissions as made in the MP has emphatically pleaded that the order of the Tribunal is not only incomplete, but no final decision has been given by the Tribunal on the point of reopening, and other issues raised by the Department in the memorandum of appeal, have not been properly dealt with and decided, whereas, the decision has been given for the issue not raised in 2 M.A. No.1 No.137/Mds/ 37/Mds/11 /Mds/11 the appeal. So, the order of the Tribunal requires to be recalled and should be fixed for hearing again to give due opportunity to the parties. It was thus, prayed for recalling of the order.
3. The ld. DR opposed the application of the assessee by pleading that it is conscious decision taken by the Tribunal considering each and every aspect of the matter as raised before it by the Department and the Department has got no grievance about the order passed by the Tribunal and moreover, the assessee has neither filed any appeal against the order of the ld. CIT(A) nor has come in CO on filing the appeal by the Department. So, the assessee has no locus standi to file the present application, which is otherwise, devoid of any merits and needs to be dismissed. The ld. DR has further submitted that valid reasons have been given by the Tribunal by passing a detailed and elaborate order touching all aspects of the matter, so it does not require any interference and the Department is otherwise satisfied that proper opportunity has been given to both the sides and revision of the order is otherwise not permissible under section 254(2), therefore, the application of the assessee being without merit should be dismissed. Moreover, the order of the Tribunal cannot legally be disturbed for giving opportunity to one party when during appeal proceedings, proper opportunity has been given to both the sides. In this case, the assessee has been duly represented by assessee's counsel during hearing of appeal, therefore, the application of the assessee is liable to be dismissed, which may be dismissed.
4. To counter the submissions of the ld. DR, the ld. Counsel for the assessee again submitted that there is no finding and no valid ground in the decision taken by the Tribunal though all the issues were mentioned and discussed. Therefore, the order 3 M.A. No.1 No.137/Mds/ 37/Mds/11 /Mds/11 passed under section 254(1) should be recalled and proper opportunity be given to both the sides for rehearing of the appeal afresh. Reliance was placed on the decision of Hon'ble Mysore High Court in the case of Pathikonda Balasubba Setty (deceased) v. CIT 65 ITR 252 (page 256 and 257) and in the case of Karnataka State Forest Industries Corporation Ltd. v. CIT 201 ITR 674 (Kar) (page 679 and 680) to support the plea raised and argued.
5. We have heard both the sides, considered the material on record as well as precedents relied upon by the ld. Counsel for the assessee. It is not in dispute that the appeal of the Revenue in ITA No. 1503/Mds/2007 for the assessment year 2001-02 has been disposed of by this Bench by passing detailed order running into 20 pages and the assessee has not either filed any appeal against the order passed by the ld. CIT(A) II, Madurai dated 21.03.2007 or any CO after having received intimation of filing of appeal by the Department against such order. It is also not in dispute that the Department has not filed any MA against the Tribunal's order dated 08.04.2011 in this case. The assessee is taking up the issue in the application with the prayer for recalling of the order dated 08.04.2011 for rehearing and passing fresh order without establishing its basis for such prayer. Since proper opportunity was afforded to both the sides and the assessee was duly represented before the Tribunal at the time of hearing of the appeal by Shri T.N. Seetharaman & Shri R. Kumar, who are the counsels present during the hearing of the application, whose arguments have duly been considered for arriving at the conclusion as arrived by the Tribunal with regard to reopening issue from para 4, 5, 6 7 and 8 to 8.3, whereas on merits, the Tribunal has passed the order from para 9.1 to 9.7 of its order after making elaborate discussions on the issues raised in the light of 4 M.A. No.1 No.137/Mds/ 37/Mds/11 /Mds/11 relevant case law and provisions of law by passing a detailed order. The assessee has also not been able to point out any apparent mistake in the order and this Bench also has not been able to find any such mistake in the order. Otherwise, law does not provide for recalling of the order in appeal already determined, just for giving rehearing. In case prayer of the assessee is accepted, it would amount to review of the order, which, has rightly been pointed out by the ld. DR, is not permissible under law. 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 5 M.A. No.1 No.137/Mds/ 37/Mds/11 /Mds/11 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 Order 47, Rule 1 of the Code of Civil Procedure, 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 in capable of argument or debate. It is therefore, follows that a decision on a debatable point of law or fact or failure to apply 6 M.A. No.1 No.137/Mds/ 37/Mds/11 /Mds/11 the law to a set of facts which remains to be investigated cannot be corrected by way of rectification.
5. Since, the assessee has failed to point out any mistake in the order nor the same has been noticed by this Bench and in case application of the assessee is accepted, as rightly pointed out by the ld. DR, that would amount 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 and support can be taken from the decision of the Hon'ble Calcutta High Court in the case of CIT vs Gokul Chand Agarwal (202 ITR 14), which has dealt with the similar point and opined as under:
"Section 254(2) of the Income Tax Act, 1961, empowers the Tribunal to amend its order passed under section 254(1) to rectify any mistake apparent from the record either suo moto 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 o the controversy between the parties. Such remedy is certainly not provided by the Income Tax Act, 1961, in respect of proceedings before the Tribunal."
5.1 In similar situation, while dealing with the rectification, the Hon'ble Andhra Pradesh High Court in the case of CIT and Anor vs. I.T.A.T and Anor (206 ITR 126 has held as under:
"The appellate 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 7 M.A. No.1 No.137/Mds/ 37/Mds/11 /Mds/11 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."
5.2 Further, the Hon'ble Supreme Court in the case of CIT vs Karam Chand Thapar and Br.P.Ltd. (176 ITR 535) has held as under:
"APPELLATE TRIBUNAL - DUTY TO CONSIDER CUMULATIVE EFFECT OF CIRCUMSTANCES AND TOTALITY OF FACTS - NO NEED TO STATE SO IN APPELLATE ORDER SPECIFICALLY - INCOME TAX ACT, 1961, SEC. 254 Further it was held as under:
"It is equally well settled that the decision of the Tribunal has not to be scrutinized sentence by sentence merely to find out whether all facts have been set out in detail by the Tribunal or whether some incidental fact which appears on the record has not been noticed by the Tribunal in its judgment. If the court, on a fair reading of the judgment of the Tribunal, finds that it has taken into account all relevant material and has not taken into account any irrelevant material in basing its conclusions, the decision of the Tribunal is not liable to be interfered with, unless, of course, the conclusions arrived at by the Tribunal are perverse.
It is not necessary for the Tribunal to state in its judgement specifically or in express words that it has taken into account the cumulative effect of the circumstances or has considered the totality of the facts, as if that were a magic formula; if the judgment of the tribunal shows that it has, in fact, done so, there is no reason to interfere with the decision of the Tribunal.
Similarly the Bombay High Court in the case of CIT-vs- Ramesh Electric and Trading Co. (203 ITR 497) .............It is an accepted position that the Appellate 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 8 M.A. No.1 No.137/Mds/ 37/Mds/11 /Mds/11 apparent from the record........ The power of rectification under section 254(2) can be exercised only when the mistake which is sought to be rectified s 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 opinion. 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 judgments........................"
5.3 We also draw support here from Hon'ble Madras High Court decision in T.C.(A) No. 156 of 2006 dated 21.08.2007 in the case of CIT Vs. Tamil Nadu Small Industries Development Corporation Ltd. wherein the Hon'ble High Court held as under:-
"The Tribunal has no power to review its order. When the Tribunal has already decided an issue by applying its mind against the assessee, the same cannot be rectified under Section 254 (2) of the Act. There was no necessity whatsoever on the part of the Tribunal to review its own order. Even after the examination of the judgments of the Tribunal, we could not find a single reason in the whole order as to how the Tribunal is justified and for what reasons. There is no apparent error on the face of the record and thereby the Tribunal sat as an appellate authority over its own order. It is completely impermissible and the Tribunal has traveled out of its jurisdiction to allow a Miscellaneous Petition in the name of reviewing its own order".
"In the present case, in the guise of rectification, the Tribunal reviewed its earlier order and allowed the Miscellaneous Petition which is not in accordance with law. Section 254(2) of the Act does not contemplate rehearing of the appeal for a fresh disposal and doing so, would obliterate the distinction between the power to rectify mistakes and power to review the order made by the Tribunal. The scope and ambit of the application of Section 254(2) is limited and narrow. It is restricted to rectification of mistakes apparent from the record. Recalling the order obviously would mean passing of a fresh order. Recalling of the order is not permissible under Section 254(2) of the Act. Only glaring and any mistake apparent on the face of the record alone can be rectified and hence anything debatable cannot be a subject matter of rectification."9 M.A. No.1
No.137/Mds/ 37/Mds/11 /Mds/11 5.4 Further, we place reliance upon Hon'ble Delhi High Court exposition on the scope of rectification u/s 254(2) as reported in the case of Ras Bihari Bansal Vs. Commissioner of Income Tax (2007) 293 ITR 365:-
"Section 254 of the Income Tax Act, 1961, enables the concerned authority to rectify any "mistake apparent from the record". It is well settled that an oversight of a fact cannot constitute an apparent mistake rectifiable under this section. Similarly, 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 mere fact that the Tribunal had not allowed a deduction, even if the conclusion is wrong, will be no ground for moving an application under section 254(2) of the Act. Further, in the garb of an application for rectification, the assessee cannot be permitted to reopen and re-argue the whole matter, which is beyond the scope of the section."
5.5 The Hon'ble Jurisdictional High Court in the case of Express Newspapers Limited v. DCIT [2010] 320 ITR 12 (Mad) has held as under:
"A patent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of the record and can be corrected under section 254(2) of the Income-tax Act, 1961. Section 254(2) does not confer power on the Tribunal to review its order. Under the garb of rectification of mistake, it is not possible for a party to take further chance of re-arguing the appeal already decided:
Held, that the Tribunal in its order on the appeal had allowed the claim for losses under three heads: (a) claim of loss relating to potato business; (b) claim of loss relating to the dealing in shares and securities; and (c) claim relating to scrap dealings. In respect of all the three points, the Tribunal had considered and discussed all the contentions raised and argued by both the parties elaborately and ultimately recorded its findings. A clear adjudication had been made. The Tribunal was not justified in reviewing its order."
6. Therefore, in view of the facts, circumstances, in the light of ratio of decisions cited and discussion as held above, we do not find any substance in the petition of the assessee and dismiss the same being devoid of any merits. 10 M.A. No.1
No.137/Mds/ 37/Mds/11 /Mds/11
7. In the result, the Miscellaneous Petition of the assessee gets dismissed.
Order pronounced on 02.09.2011.
Sd/- Sd/- (ABRAHAM P. GEORGE) (U.B.S. BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER Vm/- Dated :. 02.09.2011. Copy To: The assessee//A.O./CIT(A)/CIT/D.R.