TMI Blog2007 (3) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... at the mistake committed by so fundamental that it is vitiated the conclusions arrived at by us, yet the mistake is so obvious and glaring that no two views are possible on the same making it rectifiable even under limited scope of our powers under section 254(2) of the Income-tax Act, 1961. 2. The mistake sought to be rectified is this. The Tribunal has upheld the taxability of capital gains of Rs 16,72,436 by observing as follows : "It is an admitted fact that one of the partners has retired from the firm and relinquished his interest in the firm in favour of continuing partners and firm constituted thereon. . . in cases where the retiring partner assigns and releases his share or interest in the firm in the partnership property bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court s judgment in the case of CIT v. Tribhuvandas G. Patel [1978] 115 ITR 95 , if there is a mere retirement of the partner without specifically assigning his right, title and interest in the firm in favour of any particular partner or other partners, then it is not the case of reliquinshment of assets or assignment of rights. Our attention is invited to the following observations made by Their Lordships : "...In the first place, a retiring partner, while going out and while receiving what is due to him in respect of his share, may assign his interest by a deed, or he may, instead of assigning his interest, take the amount due to him from the firm and give a receipt for money and acknowledge that he has no more claims on his c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus urged to recall the order of the Tribunal and decide it afresh, inter alia, in the light of the above legal position. Learned counsel further submits that, in any event, we should at least hear the matter afresh on the limited aspect whether it will be covered by the exclusions from sale, release or assignment envisaged in Hon ble High Court s observations extracted above. 5. Learned Departmental Representative submits that a mistake in application of law, even if it may exist, cannot be rectified by way of proceedings under section 254(2). It is submitted that the inherently limited scope of section 254(2) only permits rectification of such mistakes on which no two views are possible, which are errors of omission rather than er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssigns his interest to other partners and at best gives a confirmation that he has no claims. The tax implications to these two situations are different. Therefore, having take note of the said decision, we should indeed have examined as to which category of retirement would cover the case before us. Having perused the Hon ble Bombay High Court s judgment as carefully as we could, we are satisfied that it was nothing more than an error of omission that the Tribunal did not take into account two mutually exclusive situations in which a partner can retire and which have different tax implications, and did not put the facts of the case on the touchstone of the principles so laid down by Their Lordships. There was thus indeed a mistake, but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould have tested on the principles so laid down, in our considered view, is not at all debatable. A plain reading of the observations we have extracted above would demonstrate that fact. 9. The next issue raised before us is whether a considered view of the Tribunal can be subjected to rectification of mistake. It is revenue s contention that the mistake, even if there be any, is a conscious one inasmuch as the Tribunal duly considered all aspects of the matter and then came to a particular conclusion. Whatever be the merits of such a conclusion, the conclusions so arrived at by the Tribunal cannot be unsettled as it would amount to reviewing the order of the Tribunal. We are not persuaded by this line of reasoning. Undoubtedly, all mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onscious mistake, even if that be a mistake apparent from record, cannot be rectified under section 254(2) is somewhat devoid of logic and rationale. If a conscious mistake is a mistake apparent from record, there is no reason for not rectifying the same under the provisions of law. To err is human but there cannot be any justification for perpetuating an error. In his inimitable words, Justice Bhagwati, in the case of Distributors (Baroda) (P.) Ltd. v. Union of India [1985] 155 ITR 120 (SC), had observed thus : "To perpetuate an error is no heroism. To rectify it is the compulsion of judicial conscience. In this, we derive comfort and strength from wise and inspiring words of Justice Bronson in Pierce v. Delameter : a judge oug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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