TMI Blog2012 (9) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... rectified, the entire basis of its previous reasoning was substituted, and a wholly new result ensued. This court is clear that such re-appreciation did not amount to rectification of a mistake, but re-appreciation of a process of reasoning, which falls legitimately in the sphere of the appellate forum - As Tribunal took note of its order dated 9-10-2009 in respect of the AY 2005-06, and was to quite an extent influenced by it but is to be noted that the correctness of that order is under appeal before this court - thus the Tribunal could have not entirely substituted and re-written its previous order - the main order disposing of the matter on 30-11-2009 is hereby restored. - W.P.(C) 106/2012 - - - Dated:- 4-9-2012 - MR. JUSTICE S. RAVINDRA BHAT, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Sh. N.P. Sahni, Advocate. For Respondent: Sh. Ajay Vohra and Sh. Somnath Shukla, Advocates. MR. JUSTICE S.RAVINDRA BHAT 1. This writ petition by the revenue (Commissioner of Income Tax) seeks quashing of an order of the Income Tax appellate Tribunal dated 14.1.2011 in Misc. App. No. 75 (Del)/2010 (in ITA No. 2866 (Del)/2009) whereby it rectified its previous order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during earlier years justified payment of higher commission, and that for 2006-07 such commission payment should have reduced. 4. The Tribunal, in its order (impugned in this case) dated 14-1-2011 accepted the assessee s contention. It reasoned that the mistake in holding that the dealership commission should have reduced was unwarranted. On a reappreciation of the record, it concluded that the number of dealerships and workshops remained constant and that by its order for 2005-06 (in ITA 1590 and 1924(Del)/09 dated 9-10-2009) it had upheld the commission expenditure to an extent of 70%. Consequently, it allowed the rectification application, and reversed its previous order. The result was that the rectification order amounted to dismissal of the revenue s appeal (to the Tribunal). 5. The revenue contends, through this writ petition, that the Tribunal exceeded its limited jurisdiction to rectify its orders, and in effect re-examined the merits. It was argued that if indeed the previous order, allowing the revenue s appeal was based on faulty reasoning or appreciation of the law, the subsequent action, in allowing a rectification was utterly unjustified. Mr. Sahni, learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is one which is patent, obvious and whose discovery is not dependent on argument. 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. The amendment of an order therefore, 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. Undoubtedly, a mistake capable of rectification under Section 254(2) is not confined to clerical or arithmetical mistakes. At the same time, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by the Supreme Court in Master Construction Co. (P) Ltd. v. State of Orissa (1966) 17 STC 360, an error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. A similar view was also expressed in Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale AIR 1960 SC 137. 8. Significantly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intent. The order passed by the Tribunal under Section 254(1) is the effective order so far as the appeal is concerned. Any order passed under Section 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining unamended is the effective order for all practical purposes. The same continues to be an order under Section 254(1). That is the final order in the appeal. An order under Section 254(2) does not have existence de hors the order under Section 254(1). Recalling of the order is not permissible under Section 254(2). Recalling of an order automatically necessitates re-hearing and readjudication of the entire subject-matter of appeal. The dispute no longer remains restricted to any mistake sought to be rectified. Power to recall an order is prescribed in terms or Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, and that too only in cases where the assessed shows that it had a reasonable cause for being absent at a time when the appeal was taken up and was decided ex parte. This position was highlighted by one of us (Justice Arijit Pasayat, Chief Justice) in CIT v. ITAT . Judged in the above back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctifying mistakes "apparent from the record." A liberal approach might constitute an invitation to parties to allow the period for filing an appeal to expire, anticipate a change of coram of the bench that heard the appeal in the first instance, and then at their own sweet will "take a chance" by filing a rectification application on any fancy imagined 'mistake apparent from the record' at any time before the expiry of four years. The Supreme Court also, in T.S. Balaram, Income Tax Officer, Company Circle IV, Bombay v. Volkart Brothers, Bombay [1971] 82 ITR 50 (SC) placed similar interpretation on the expression with a view to rectifying any mistake apparent from the record - an expression common in section 254(2) and section 154 of the Act, holding: From what has been said above, it is clear that the question whether Section 17(1) of the Indian Income-tax Act, 1922 was applicable to the case of the first respondent is not free from doubt. Therefore the Income-tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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