TMI Blog2015 (4) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be an error apparent on the face of the record. A point which was not examined on facts or in law cannot be dealt with as a mistake apparent from the record. Tribunal at the first instance had given benefit to the assessee and thereafter, the Department filed Miscellaneous Petitions to recall the order on the legal plea that the benefit of exclusion of asset would not apply in terms of Section 2(ea) of the Wealth Tax Act. This issue, according to us is a legal issue, which the Department, if aggrieved would have to canvass in appeal. The Department cannot be allowed to raise this issue in a petition filed for rectification that is not raised in appeal. The Tribunal in this case exceeded its jurisdiction in invoking the power under Section 35(1)(e) of the Wealth Tax Act to recall the final order dated 13.3.2012 in the guise of rectification. - Tribunal can only exercise its jurisdiction under Section 35(1)(e) of the Wealth Tax Act in the manner indicated in the provision and, de hors the provisions in the Act, it has no jurisdiction to recall its final order passed on the merits of the case. - Tribunal, while exercising the power of rectification, can recall its order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Income Tax Appellate Tribunal. The Tribunal, by a final order dated 16.2.2007 in W.T.A.Nos.54 and 55 of 2006 remanded the matter back to the Commissioner of Wealth Tax (Appeals) for passing speaking order on the issue of re-opening. The relevant portion of the said order of the Tribunal reads as follows: 3. We have heard the rival submissions and perused the material on record. The CWT(Appeals) has not passed speaking order on re-opening. He just held that re-opening is justified. No where the CWT(A) has discussed the reason for re-opening and who it is justified. He is telling that it was based on the audit objection. The nature of audit objection was not discussed. The plea of the Assessee relating to the assessability of income from the factory building and plant and machinery as business income in the corresponding Income-tax assessments was accepted by the Department. If it was accepted in the regular assessment under sec.143(3), it is not proper for the Department to treat the assets as non-business assets. Hence, we set aside the entire issue to the file of the CIT(Appeals) to pass a speaking order on re-opening and on the merit of the case, taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relate to the assessment years 1997-98 and 1998-99. These rectification petitions are filed in the context of the common order passed by the Tribunal on 13-3-2012 in WTA Nos.5 and 6(Mds)/2012. On going through the averments made by the Revenue, we find that prima facie there is a mistake in the order passed by the Tribunal. Therefore, the said common order of the Tribunal dated 13-3-2012 passed in WTA Nos.5 and 6(Mds)/2012 is recalled and again reinstated in the rolls of the Tribunal for fresh hearing and disposal. 10. Thereafter, the Tribunal took up the appeals for re-hearing and by order dated 13.3.2013 decided the issue against the assessee holding as follows: From the above it is very clear that any house which an assessee may occupy for the purpose of any business or profession carried on by him. As per clause (3) if the assessee occupies the house for the purpose of any business or profession it is excluded from assets . Therefore, no wealth-tax is required to be paid. But in the present case the assessee had leased out the land, building and machinery to a third party. Therefore, it cannot be said that the assessee has occupied land and building for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court as well as by this Court. In support of his contention, he placed reliance on the decision reported in 320 ITR 12 (Mad) (Express Newspapers Limited v. Deputy Commissioner of Income-Tax and another), wherein, this Court while dealing with issue of review by the Tribunal, held as follows: 13. From the various judgments of the Supreme Court above referred to and other High Courts, it is clear that the Tribunal' s power under section 254(2) is not to review its earlier order but only to amend it with a view to rectify any mistake apparent from the record. What can be termed as mistake apparent ? Mistake in general means to take or understand wrongly or inaccurately ; to make an error in interpreting ; it is an error ; a fault, a misunderstanding, a misconception. Mistake in taxation laws has a special significance. It is mostly subjective and the dividing line is thin and indiscernible. Apparent means visible, capable of being seen, easily seen, obvious plain, open to view, evident, appears, appearing as real and true, conspicuous, manifest, seeming. The plain meaning of the word apparent is that it must be something which appears to be ex facie and inca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies that save as provided in section 256, the order passed by the Appellate Tribunal on appeal are final. 18. In the case of Karan and Co. V. ITAT reported in [2002] 253 ITR 131 (Delhi), the Delhi High Court, while dealing with the scope of rectification, after referring to the various decisions, held as follows: 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 mean passing of a fresh order. That does not appear to be the legislative 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ror apparent on the face of the record. A point which was not examined on facts or in law cannot be dealt with as a mistake apparent from the record. 21. It is worth to note that even if a Tribunal renders a judgment without dealing with a specific factual situation not raised in appeal, it may be an irregularity of procedure but that would not empower the Tribunal with the jurisdiction to recall the order. The aggrieved party must seek his remedy in appeal and not by rectification. The power conferred under the statute does not contemplate a rehearing which would have the effect of rewriting an order affecting the merits of the case and, therefore, there is a deliberate omission by the Legislature to confer the power of review on the appellate authority under Section 35 (1)(e) of the Wealth Tax Act. 22. In this context, we may refer to the decision in the case of Asst. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2003] 262 ITR 146 wherein a Division Bench of the Gujarat High Court while dealing with a writ petition preferred under articles 226 and 227 of the Constitution of India came to hold as follows: (a) The Tribunal has power to rectify a mistake apparent from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. As stated above, the expression 'rectification of mistake from the record' occurs in section 154. It also finds place in section 254(2). The purpose behind the enactment of section 254(2) is based on the fundamental principle that no party appearing before the Tribunal, be it an assessee or the Department, should suffer on account of any mistake committed by the Tribunal. This fundamental principle has nothing to do with the inherent powers of the Tribunal. In the present case, the Tribunal in its order dated September 10, 2003 allowing the rectification application has given a finding that Samtel Color Ltd. (supra) was cited before it by the assessee but through oversight it had missed out the said judgment while dismissing the appeal filed by the assessee on the question of admissibility/allowability of the claim of the assessee for enhanced depreciation under section 43A. One of the important reasons for giving the power of rectification to the Tribunal is to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record. 'Rule of precedent' is an important aspect of legal certainty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and the said line of decisions are also to be treated as not laying down the correct pro position of law that the Tribunal has no power to recall an order passed by it in exercise of power under section 254(2) of the Act. (D) The Tribunal, while exercising the power of rectification under section 254(2) of the Act, can recall its order in entirety if it is satisfied that prejudice has resulted to the party which is attributable to the Tribunal's mistake, error or omission and which error is a manifest error and it has nothing to do with the doctrine or concept of inherent power of review. (E) When the justification of an order passed by the Tribunal recalling its own order is assailed in a writ petition, it is required to be tested on the anvil of law laid down by the apex court in Honda Siel Power Products Ltd. [2007] 295 ITR 466 (SC) andSaurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227 (SC). (Emphasis supplied) 27. A plea is made that power to recall has been recognised in paragraph 33(A) above and therefore the Tribunal is justified. We hold that it is not so. It stems from misreading of the above decision. 28. In the present case, we find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act and Section 35(1)(e) of the Wealth Tax Act and it cannot blindly recall the order on a mere application for rectification. 32. In the case of S.N.Mukherjee Vs Union of India (1990 (4) SCC 594), the Apex Court, after considering various decisions on the subject, and the legal principle of passing the test of reasonableness, while once again stressed the necessity to record reasons, held as hereinbelow :- 35. The decisions of this Court referred to above indicate that with regard to the requirement to record reasons the approach of this Court is more in line with that of the American courts. An important consideration which has weighed with the court for holding that an administrative authority exercising quasi-judicial functions must record the reasons for its decision, is that such a decision is subject to the appellate jurisdiction of this Court under Article 136 of the Constitution as well as the supervisory jurisdiction of the High Courts under Article 227 of the Constitution and that the reasons, if recorded, would enable this Court or the High Courts to effectively exercise the appellate or supervisory power. But this is not the sole consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenge. 37. Having considered the rationale for the requirement to record the reasons for the decision of an administrative authority exercising quasi-judicial functions we may now examine the legal basis for imposing this obligation. While considering this aspect the Donoughmore Committee observed that it may well be argued that there is a third principle of natural justice, namely, that a party is entitled to know the reason for the decision, be it judicial or quasi-judicial. The Committee expressed the opinion that there are some cases where the refusal to give grounds for a decision may be plainly unfair; and this may be so, even when the decision is final and no further proceedings are open to the disappointed party by way of appeal or otherwise and that where further proceedings are open to a disappointed party, it is contrary to natural justice that the silence of the Minister or the Ministerial Tribunal should deprive them of the opportunity. (p. 80) Prof. H.W.R. Wade has also expressed the view that natural justice may provide the best rubric for it, since the giving of reasons is required by the ordinary mans sense of justice. (See Wade, Administrative Law, 6th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of natural justice which govern exercise of power by administrative authorities. The rules of natural justice are not embodied rules. The extent of their application depends upon the particular statutory framework whereunder jurisdiction has been conferred on the administrative authority. With regard to the exercise of a particular power by an administrative authority including exercise of judicial or quasi-judicial functions the legislature, while conferring the said power, may feel that it would not be in the larger public interest that the reasons for the order passed by the administrative authority be recorded in the order and be communicated to the aggrieved party and it may dispense with such a requirement. It may do so by making an express provision to that effect as those contained in the Administrative Procedure Act, 1946 of U.S.A. and the Administrative Decisions (Judicial Review) Act, 1977 of Australia whereby the orders passed by certain specified authorities are excluded from the ambit of the enactment. Such an exclusion can also arise by necessary implication from the nature of the subject matter, the scheme and the provisions of the enactment. The public interest u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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