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2015 (1) TMI 1427 - HC - Income TaxRectification u/s 254 (2) - no satisfaction was recorded in respect of quantum and penalty which resulted in an error apparent on record warranting rectification - HELD THAT:- The evidence of satisfaction being recorded is communication dated 21st August, 2000 addressed by the AO of the person searched to the AO of the petitioner. The petitioner also does not dispute communication dated 21st August, 2000 which is being relied upon by the revenue was a part of the record but submit that the same was considered by the Tribunal before passing the order dated 29th December, 2010. No fault in the impugned order concluding that there was an error apparent on record in the order dated 29th December, 2010 as it does not deal with/or consider the communication dated 21st August, 2000 and deal with the revenue's contention that satisfaction in terms of section 158BD of the Act was recorded. A similar situation arose before the Supreme Court in HONDA SIEL POWER PRODUCTS LTD [2007 (11) TMI 8 - SUPREME COURT] and SAURASHTRA KUTCH STOCK EXCHANGE LTD [2008 (9) TMI 11 - SUPREME COURT] Tribunal had in exercise of its powers under section 254 (2) of the Act had recalled its earlier order as it had by mistake not considered a binding decision of the jurisdictional High Court. This recall by the Tribunal was upheld by the Apex Court on the fundamental principle of law that no prejudice should be caused to either of the parties appearing before the Tribunal by its decision based on a mistake apparent from the record. The Apex Court negatived the contention that such recall of an order would amount to review of its earlier orders. The Supreme Court held that mistake is a valid reason to recall an order. In the circumstances,the objections of the petitioner that the impugned order recalling the order dated 29th December 2010 is without jurisdiction is not sustainable. We find that the impugned order after correctly holding that there is an error apparent from the record recalling its earlier order dated 10th December 2010 proceeded further to make observations on the scope of the satisfaction dated 21st August 2000. In fact the concluding paragraph of the impugned order seeks to suggest that the issue of jurisdiction is decided and it is only on merits that the appeal is being placed before the regular bench of the Tribunal. This is impermissible as it would foreclose an issue which is to be heard and decided by the bench rehearing the appeal. Thus the impugned order is unsustainable to the extent it decides and/or makes observations on the satisfaction note dated 21st August 2000 is the context of jurisdiction. Tribunal would certainly be entitled to recall an order u/s 254 (2) of the Act as it suffers from mistakes apparent from record, while recalling the order and placing it before a regular bench to adjudicate/decide the merits of the appeal it was not entitled/justified to observe on the merits of adjudication. Once an order is recalled and the appeal is to be placed before a regular bench for fresh consideration in a manner of speaking it restores status quo ante. At the hearing of the appeal all the issues are bound to be urged by the petitioner and considered by the Tribunal hearing the appeal. In this case, the impugned order while recalling the order dated 29th December, 2010 places the appeal before a regular bench to be decided on merits yet concludes that jurisdictional requirement to proceed against the petitioner is satisfied. The aforesaid decision and observations on the jurisdictional issue in the impugned order is unsustainable. While we uphold the impugned order to the extent it holds that there is an error apparent on the record in the order dated 29th December, 2010 in not having considered the letter dated 21st August, 2000, we do not uphold the other observations made by the Tribunal in the impugned order with regard to the exact nature, scope, effect and consequences of the communication dated 21st August, 2000. The regular Bench of the Tribunal to whom the revenue's appeals both on quantum and penalty are restored for hearing would not be influenced in any manner by the observations made in the impugned order on the merits of the controversy. When the original order dated 29th December, 2010 was passed the petitioner was allowed to make submissions under rule 27 of the Income Tax Rules in the absence of having filed a separate appeal. The benefit of the above direction of the Tribunal would be extended to the petitioner at the hearing of the appeal by the regular Bench of the Tribunal hearing the revenue's appeal consequent to the recall of the earlier order dated 10th December, 2010. This is particularly so as the revenue had consented when the appeals were originally heard to the petitioner making its submissions under Rule 27 of the Income Tax Rules in the absence of having filed a substantial appeal.
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