Indian Kanoon - Search engine for Indian Law

"1. Whether, on the facts and in the circumstances of the case, the Tribunal acted without jurisdiction and/or acted beyond its jurisdiction in setting aside its order dated June 9, 1975, and allowing the appeal ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the commission of Rs. 54,000 paid to Messrs. Neeta Electric Corporation as a deduction under section 37 of the Income-tax Act, 1961 ?"

7. Under section 254(2) of the Income-tax Act, 1961, the Appellate 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 Appellate Tribunal does not have any power to review its own orders under the provisions of the Income-tax Act, 1961. 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 extent of this power of rectification was considered by the Supreme Court as far back as in 1971 in the case of T. S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50. The Supreme Court said (headnote) :

9. Mr. Inamdar, learned advocate for the assessee, drew our attention to a judgment of the Madhya Pradesh High Court in the case of CIT v. Mithalal Ashok Kumar [1986] 158 ITR 755. The Madhya Pradesh High Court said that the Tribunal can correct its mistake 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. It, however, said that this will depend on the facts of each case. And whether it amounts to a review or rectification will depend on the facts of each case. In our view, these wide observations do not accord with the decision of the Supreme Court of this point in T. S. Balaram v. Volkart Brothers [1971] 82 ITR 50. Similarly, the decision of the Allahabad High Court in the case of Laxmi Electronic Corporation Ltd. v. CIT [1991] 188 ITR 398 to the effect that if the Tribunal fails or omits to deal with an important contention affecting the maintainability/merits of an appeal, it must be deemed to be a mistake apparent from the record which can be rectified by the Tribunal by its subsequent order, is also, in our view, in the teeth of the Supreme Court judgment in the case of Balaram v. Volkart Brothers [1971] 82 ITR 50. In fact, we find that the decision in the case of Balaram v. Volkart Brothers , was not brought to the attention of the learned judges who decided the above case. In our view, the power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified as 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, as has been shown in the present case. Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. In the present case, the alleged failure, at least on one count, is attributed by the assessee to the Income-tax Officer and not the Tribunal. In our view, the Tribunal had no jurisdiction under section 254(2) to pass the second order.