TMI Blog2004 (9) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... as Rs. 3,37,341. According to the Assessing Officer, it was an admitted fact that these expenses were not supported by any third party vouchers and therefore, these were not independently verifiable for the genuineness etc. The Assessing Officer, therefore, felt that these expenses were not wholly and exclusively for the purposes of business and he disallowed 25% of such expenses, i.e. an amount of Rs. 84,335. 3. On appeal, the learned CIT(A) has confirmed the addition observing as under: "I have considered rival submissions. I find that the facts are not in dispute. Regarding the expenses not supported by vouchers there is no other evidence to support the genuineness of the same, whereas the expenses on small repairs such removing the punctures, washing of the vehicles and miscellaneous and repairs are quite likely and inevitable. However, expenses such as payment on account tips at various stages etc., cannot be accepted to be genuinely having been incurred for the purposes of business, particularly in the absence of any proof thereof. Thus, there is an element of claim which deserves to be disallowed and certain element deserves to be allowed. I find that the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese facts cogently before him during the course of assessment proceedings. When the Assessing Officer made enquiries, the assessee came forward with the facts, but according to the Assessing Officer it is not proved that the assessee charges 30% commission in respect of vehicles to which the assessee has supplied tanks owned by the assessee firm. Secondly, it was not proved before him that the assessee firm had spare tanks supposed to be mounted on number of chassis which was in serviceable condition and which can be mounted on different chassis. Further, according to the Assessing Officer, the assessee never proved that it carried out certain activities of supplying tanks for mounting on chassis which are supposed to be very old and therefore, these were not reflected in the books of account of the assessee. In other words, according to the Assessing Officer, after due investigation with the Road Transport Authorities and after having made available the opinion of the Road Transport Authorities to the assessee for rebuttal, the assessee was not able to prove before him that it had certain tanks which were very old tanks as claimed before him, which were actually mounted on differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean that the arrangement is non-genuine. In support of this contention, he relied upon the comments of the learned Author is Chaturvedi Pithisaria at page 2134. He also placed reliance on the judgment of the Patna High Court in the case of Jamshedpur Motor Accessories Stores v. CIT [1974] 95 ITR 664. 10. Shri A.M. Muntode, the learned D.R. strongly supported the orders of the authorities below. He submitted that the assessee failed to furnish evidence before the authorities below that the tankers belonged to the assessee firm and that expenses were incurred on the repairs of such tankers and accordingly, the authorities below were justified in disallowing the unproved claim of Rs. 12,75,006. 11. We have considered the rival submissions and perused the facts on record. The assessee firm owns 6 trucks on which the tankers are loaded for transporting corrosive chemicals. The income arising from these trucks is credited to truck running account. The net income from these 6 trucks is Rs. 13,87,221. In addition to this, the assessee acts as a commission agent for the transport activity. This is of two types: (i) 10% commission is charged in the cases where the truck with the tan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The last grievance of the assessee is that the learned CIT(A) is not justified in confirming the addition of Rs. 4,51,924 on account of bad debts. During the course of assessment proceedings, the Assessing Officer noted that the assessee had claimed a sum of Rs. 4,51,924 on account of irrecoverable amounts written off. The Assessing Officer requested the assessee to give details in respect of the amounts and also to show in view of the provisions of section 36(2) of the Act that these debtors or part thereof had been taken into account in computing the income of the previous year in which the amount of said debts or part thereof were written off. According to the Assessing Officer, the assessee chose not to prove this fact. He therefore disallowed the claim of the assessee. 13. When the matter came up before the CIT(A), the Assessing Officer who was present pointed out that the profit and loss account of the assessee indicated on the credit side that it is not the gross receipts which are taken to the credit of the profit and loss account in respect of 30% commission transaction and in respect of 10% commission transactions. There only the net amount of commission received in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctually correct and duly supported by the statement of accounts submitted by the assessee and accordingly, we do not find any infirmity in the remarks of the ld. CIT(A) reproduced supra. We accordingly dismiss this ground. 17. In the result, the appeal is allowed in part. Per Chhibber, Accountant Member. - The appeal in this case was decided by this Bench vide order dated 21-9-2001. By this application, the assessee has pointed out the following two mistakes: (i) Ground No. 3 - Disallowance of truck running expenses of Rs. 84,335. 2. The assessee is a transporter running tankers. During the year, the assessee incurred total expenditure of Rs. 3,37,341 under the head 'truck running expenses' out of which the Assessing Officer disallowed the expenses of Rs. 84,355, i.e. 25% of the total expenses. These expenses are incurred on escort, miscellaneous expenses and preventive expenses and are incurred by the drivers of the truck and for which the drivers give trip memos to the assessee. Details of these expenses were given on pages 1-3 of the paper book. The details of expenses incurred on various trucks (total 5 in numbers) are given on page 2 of the paper book. There are no ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the Tribunal is fair and reasonable and no further modification is called for. 5. After hearing both the parties, we find that some of the expenses are to be disallowed, but while deciding the issue, we have not taken into consideration the two important facts pointed out above which related to the past history of the case. In the assessment year 1990-91, the Assessing Officer did make a disallowance to the tune of Rs. 3000 per vehicle and the assessment order for that year was submitted before us during the course of hearing. Going by this yardstick, disallowance for five trucks in this year should have been Rs. 15,000 which fact has been ignored by us. After hearing both the sides, we hold that keeping in view the past history of the case, the disallowance will be restricted to Rs. 20,000. To that extent, our above order stands modified. (ii) Ground No. 5 - Addition of Rs. 4,51,924. 6. The above addition has been discussed and confirmed in para 12 of our order. The assessee not only runs its own tankers but takes the tankers from other persons on commission basis which in the cases wherein the tanker is owned by that person comes to 10% and wherein the tanker is of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1 and in the case of A.V. Thomas Co. v. CIT [1963] 48 ITR 67. This Tribunal decided the whole issue in para 16 of its order which reads as under: "We have considered the rival submissions and perused the facts on record. After perusing the orders of the authorities below, we find that the stand taken by them is factually correct and duly supported by the statement of accounts submitted by the assessee and accordingly, we do not find any infirmity in the remarks of the ld. CIT(A) reproduced supra. We accordingly dismiss this ground." 7. Dr. Pathak submitted that while deciding the issue, this Tribunal has committed the following mistakes which are apparent from the record: (i) that mainly the above amount constituted the discount/remission and the accounts were settled and for that purpose, the accounting entries as to whether the assessee reduced this amount directly from the receipts was not relevant at all and there is no reason to disallow such remission because it is a genuine business loss. (ii) That even if part of the amount in question is considered as bad debts, by reducing from the trading receipts, they had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Misc. application that the disallowance made by the Assessing Officer is very much on the higher side and not justified which requires to be reduced and for this purpose one additional fact was brought out by filing photocopy of the assessment order for the assessment year 1990-91 at the time of hearing of the present application to contend that since in the assessment year 1990-91 similar type of addition was restricted to Rs. 3,000 per vehicle. Therefore, same yardstick should be applied here and addition may be restricted accordingly. 13. To support the contention as raised in the application and to substantiate the claim made by the learned counsel for the assessee further submitted that the Tribunal has erred in confirming the disallowance of this amount, as these important facts have not been considered. It was therefore, submitted that on this issue, the Tribunal has omitted to consider these important facts with regard to department itself allowing substantially the claim of the assessee. It was thus urged to correct the mistake which is apparent from record and restrict the addition to Rs. 15,000 as has been done for the assessment year 1990-91. 14. Shri S.K. Rastogi, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1990-91, photocopy of which was filed at the time of hearing of the appeal. It is however, found from the record that neither the assessee has specifically relied upon the assessment order for assessment year 1990-91 before the Assessing Officer nor before CIT(A) or even before this Bench at the time of hearing of the appeal. It is also not found to be part of the record before the lower authorities or before this Bench upto stage of hearing of the appeal. Moreover, there is no application/request for admission of this document as provided under Rule 29 of the ITAT, Rules, 1963 and this Bench of the Tribunal has seen this document for the first time while hearing the application filed under section 254(2) of the Act. Therefore, in view of facts and circumstances of the present and in the light of discussions made, I am of the considered view, this photocopy of the assessment order for assessment year 1990-91 cannot be taken as part of the record and as such, the same is ignored for the purposes of present proceedings. Now the only plea left is that part disallowance made/confirmed is unreasonable and has unjustifiably been confirmed by passing a brief order whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not a mistake apparent from the record." 20. Moreover, this Bench of the Tribunal has passed an elaborate order discussing each and every aspect of the matter and no apparent mistake has been pointed out. Besides this, since the orders of the authorities below have been agreed to by the Tribunal, therefore, to my mind, the Tribunal need not meticulously and minutely discuss all the points as the same have already been discussed in length at the original stage. This view finds support from the Gujarat High Court decision in the case of CIT v. Gnan Ganga Science Institute [1999] 238 ITR 473 wherein it has been held as under: "When the appellate authority particularly agrees with the views taken by the authority below he need not meticulously and minutely discuss on the points at the same length as the original authority". So far as the so-called inaccuracy is concerned, the Delhi High Court in the case of Smt. Baljeet Jolly v. CIT [2001] 250 ITR 113 held as under: "In order to attract the power to rectify under section 254(2) of the Income-tax Act, 1961, it is not sufficient if there is merely a mistake in the order sought to be rectified. The mistake to be rectified must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suo motu 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 of the controversy between the parties. Such remedy is certainly not provided by the Income-tax Act, 1961, in respect of proceedings before the Tribunal." In similar situation, while dealing with the rectification, the Hon'ble Andhr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its power of rectification, look into some other circumstances which would support or not support its conclusion." 23. Therefore, the plea of the assessee for rectification with respect to ground No. 5 of appeal is found to be without merits. Thus, in view of the facts and circumstances of the case, and the discussions held in the light of the case law cited, I am of the considered view that it is not a fit case for rectification and reject the objection raised by the assessee. 24. As a result, the Misc. application of the assessee gets dismissed. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Per U.B.S. Bedi, Judicial Member - As there is a difference of opinion between the Members on the Bench, following points of difference are being referred to Hon'ble President for hearing on such points or for nominating the Third Member or to pass such orders as the Hon'ble President may deem fit and proper: In view of facts and circumstances of the case, (a) Whether addition on account of disallowance out of truck running expenses to the extent of Rs. 84,355 at 25% could be further reduced to Rs. 20,000 on the basis of copy of assessment order for the assessment year 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income-lax Act, 1961 (hereinafter called the Act), cannot be resorted to. 3. In regard to the disallowance of truck running expenses of Rs. 84,355, the learned A.M. held that the past history of the case was not considered, as such mistake has crept into the order. Dr. Pathak, learned counsel for the assessee fairly conceded that there is no apparent error which could be rectified under section 254(2) of the Act on this count. As such, he did not press this ground. 4. Coming now to the rectification in relation to the addition of Rs. 4,51,924, Dr. Pathak submitted that the error has crept as because the Tribunal did not consider all the grounds of appeal. The facts of the case were not appreciated in the right perspective and the decision rendered by the Tribunal was not a possible decision. 5. Shri Satya Prakash, learned Departmental Representative submitted that it is not correct that the Tribunal did not consider all the grounds. It is palpable from the perusal of the submissions made by Dr. Pathak before the Tribunal that he objected as to not considering some of the contentions. There is difference between contentions and grounds. It is not clear what contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 7. Now the question arise what is apparent mistake? Various precedents are available on this issue. It is laid down by the Orissa High Court in the case of CIT v. ITAT [1992] 196 ITR 564 that the apparent mistake must be one for the discovery of which no elaborate reasoning or enquiry is necessary. It must be visible and patent. Whether the Tribunal has committed an error of judgment, the same would not be sufficient to exercise power of rectification under section 254(2) of the Act. Thus, the correctness of a conclusion of facts cannot be the subject-matter of an application for rectification. 8. Invocation of section 254(2) of the Act is not proper where the matter needs long drawn arguments. Absence of adequate reasons in an order was not considered to be a mistake apparent from record in the case of Popular Engg. Co. v. ITAT [2001] 248 ITR 577 (Punj. Har.). 9. In the case of Smt. Baljeet Jolly v. CIT [2001] 250 ITR 113 (Delhi). It was held that where an error was far from self evident, it ceased to be an apparent error. The so called inaccuracies or wrong recording of facts as alleged were not patent mistakes which constitute the sine qua non for exercise of power un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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