TMI Blog2006 (10) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative during the course of hearing submitted that as the actual payment as contained in section 43A has not been paid after fluctuation of rate (of exchange), no benefit under section 43 ought to have been passed on to the assessee. On the other hand, the learned Authorized Representative relied upon the order of the authorities below. 35. A perusal of section 43A leaves no room to doubt that the making of payment is a condition precedent for availing the benefit of the section and as the actual payment has not been made after fluctuation, the value of the asset could not be increased by adding the increase on account of fluctuation and thus, we feel that depreciation was not only wrongly claimed but also wrongly allowed by the Commissioner of Income-tax (Appeals). The grounds Nos. 2 and 3 of I. T. A. Nos. 5544 5545/Delhi/96 are respectively allowed." 3 Accepting the assessee's application for rectification, the Tribunal by the impugned order dated September 10, 2003, recalled its earlier decision on the above grounds Nos. 2 and 3 and held : "Admittedly, a decision of the co-ordinate Bench was cited and placed on record but the same has escaped the attention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been recalled or reviewed but only in respect of two grounds, the said decision has been varied. Referring to the proviso to section 254(2) of the Act, Mr. Syali submits that pursuant to an application for rectification, the Tribunal could pass an order, amending the earlier order that has the effect of "enhancing an assessment" or "reducing a refund" or " increasing the liability of the assessee". The only requirement is that this should not be done without notice to the assessee. A reasonable opportunity of being heard should also be afforded to the assessee. As regards the meaning to be attributed to the expression " " mistake apparent from the record" Mr. Syali seeks to distinguish this from the expression "mistake on the face of the record" occurring in Order 47 Rule 1 CPC. He submits that the expression in section 254(2) of the Act is wider in nature and permits the Tribunal to look into the entire record. Reliance is placed on the judgments in CIT v. ITAT [1992] 196 ITR 640 (Orissa) which was followed in Smt. Baljeet Jolly v. CIT [2001] 250 ITR 113 (Delhi), Karan and Co. v. ITAT [2002] 253 ITR 131 (Delhi), Shaw Wallace and Co. Ltd. v. ITAT [1999] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reading of the above provision indicates that in order to exercise the power vested in it under section 254(2) of the Act, the Tribunal has to ensure that the following factors are present : (a) The application is made within 4 years from the date of the order sought to be rectified. (b) There is a mistake apparent from the record which is brought to its notice by either the assessee or the Assessing Officer. 9 As regards the procedure to be followed, if the amendment sought has the effect of enhancing the assessment or reducing a refund or increasing the liability of the assessee, the Tribunal has to give prior notice to the assessee and also allow the assessee a reasonable opportunity of being heard. 10 It is plain that the power to rectify a mistake is not equivalent to a power to review or recall the order sought to be rectified. Rectification is a species of the larger concept of review. Although it is possible that the prerequisite for exercise of either power may be similar (a mistake apparent from the record), by its very nature the power to rectify a mistake cannot result in the recall and review of the order sought to be rectified. Otherwise, what cannot be do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower indirectly when it cannot do so directly. If the contention of learned counsel for the respondent is correct, then it could mean that, even on merits, the Tribunal can recall its earlier order and then hear the case afresh and pass a different order. If this is so, it would amount to the Tribunal exercising power of review when it does not have any such power. To give an example, under the provisions of the Code of Civil Procedure, Order 47 provides the circumstances in which a judgment may be reviewed. If the contention of learned counsel for the respondent is correct, then, applying the same analogy to a civil case, it would be open to a court to recall its judgment in a case where the provisions of Order 47 are not applicable, and then to rehear the case. With respect, we see no warrant for this in legal jurisprudence. The appellate court can hear a case and decide it on merits, once for all, and cannot keep on rehearing the same appeal over and over again. Full effect has to be given to the provisions of section 254(4) which specifically provides that a decision of the Tribunal passed in appeal is final. This decision is final not only for the assessee but also final as fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from an order of rectification, a reference application under section 256 can be filed. 14 The next important decision is Ms. Deeksha Suri v. ITAT [1998] 232 ITR (Delhi). In the said case, the assessees had moved an application under rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 ("the Rules"), seeking admission by way of additional evidence before the Tribunal. The Tribunal, after hearing the appeal on merits, dismissed it by order dated January 3, 1997. On February 5, 1997, the assessees moved an application 1 section 254(2) stating that very serious errors or mistakes had crept into the final order of the Tribunal. They pointed out that the Tribunal had overlooked its earlier order dated October 23, 1996, directing the application under rule 29 to be disposed of first. The Tribunal rejected the rectification application observing: "It was indeed the duty of counsel to address this Bench first on the rule 29 application if at all the same was desired to be pressed or argued. Admittedly not having done so it cannot now be attributed as a mistake apparent from record to the Tribunal." The Tribunal concluded (page 406) "14.7 In the circumstances, the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Delhi), urged thatthe Tribunal had exceeded its jurisdiction under section 254(2) of the Actand could not have possibly recalled the entire order. After referring to the case law, this court reiterated that the power entrusted under section254(2) could not be used to recall the order itself. Reference was made tothe decision in Smt . Baijeet Jolly v. CIT [2001] 250 ITR 113 (Delhi), whereit was categorically held that "amendment of an order does not mean obliteration of an order originally passed and its substitution by a new order". This court expressly dissented from the decision of the Rajasthan High Court in CIT v. Ramesh Chand Modi [2001] 249 ITR 323 where it had been held that where the Tribunal fails to decide some of the questions raised before it inadvertently or by oversight, it could exercise the power under section 254(2) to rectify such a mistake. This court in J. N. Sahni v. ITAT [2002] 257 ITR 16 observed (page 21-22): "With utmost respect we are unable to subscribe to the aforementioned view. The Tribunal in the absence of any express power cannot be said to have a power of substantive review. The Tribunal has merely the power to amend its order. While e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal order of the Tribunal and not a total substitution thereof. That position is fairly well-settled by two decisions of this court in Ms. Deeksha Suri v. ITAT [1998] 232 LTR 395 and Karan and Co. v. ITAT [2002] 253 ITR 131. This court has in both these decisions held that the foundation for the exercise of the jurisdiction lies in the rectification of a mistake apparent from the record which object is ensued by amending the order passed by the Tribunal. The said power does not, however, contemplate a rehearing of the appeal for a fresh disposal. Doing so would obliterate the distinction between the power to rectify mistakes and the power to review the order made by the Tribunal. The following passage from the decision of this court in Karan and Co.'s case [2002] 253 ITR 131 elucidates the difference between review and rectification of an order made by the Tribunal (page 136) 'The scope and ambit of application of section 254(2) is very limited. The same is restricted to rectification of mistakes apparent from the record. We shall first deal with the question of the power of the Tribunal to recall an order in its entirety. Recalling the entire order obviously would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndone the same, but the very fact that the Tribunal has made those observations would not render valid the order of recall passed by it. The net result of the order made by the Tribunal continues to remain the same, viz, the appeal has to be heard again simply because one of the issues decided by the Tribunal is debatable or the Tribunal has not noticed an earlier decision rendered by another Bench. Both these reasons were insufficient to justify the order of recall made by the Tribunal." (emphasis 1 supplied) 20 Turning to the facts of the present case, we are of the considered view that it makes no difference whether the entire order is sought to be recalled or the order passed by the Tribunal on individual grounds is sought to be recalled in entirety. In other words, if the Tribunal has given its decision on say grounds Nos. 3 and 4 in a particular way in its first order while dealing with ten separate grounds and pursuant to a rectification application, it recalls its decision on grounds Nos. 3 and 4 and gives a completely different decision on the said grounds, then it would certainly amount to recall and review of its entire order in respect of those grounds. We ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the same constitutes a mistake apparent from the record and thereafter, if necessary, reopen the appeal. Such a power is inherent in the Tribunal, as a party has suffered prejudice due to a lapse on the part of the Tribunal and not on account of any fault of such a party. An act of the Tribunal should not prejudice a party so as to force the party into unwarranted litigation." 23 It was further observed in the above decision that "after the mistake is corrected, consequential order must follow, and the Tribunal has power to pass all necessary consequential orders". Mr. Syali accordingly advocates for a similar wider interpretation of the scope of the power under section 254(2) of the Act by this court, in the peculiar facts of this case. 24 We are unable to agree with this submission of Mr. Syali. One instance of a mistake apparent from the record is indicated in rule 24 of the Income-tax (Appellate Tribunal) Rules and that mistake is permissible to be corrected by recalling the order. However, in order to invoke the under section 254(2) the mistake would have to be shown to be a mistake apparent from the record. The Tribunal, in the present case is in paragraph 5 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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