TMI Blog2012 (3) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... the face of the record. The Tribunal has taken one possible view and that cannot be said to be covered by an error apparent on the face of the record. What can be rectified u/s. 254(2) should be apparent and patent. The mistake has to be such for which no elaborate reasons or enquiries are necessary. Where two views are possible, then it cannot be said to be a mistake apparent on record. Rectification can be done only when a glaring mistake of fact or law is committed by the Tribunal while passing the order and which is apparent from record. Rectification is not possible when the issue is debatable. In our opinion, the learned counsel for the assessee seeks review of the earlier order of the Tribunal which Tribunal has no power. In this case the Tribunal after considering the entire facts and circumstances of the case came to conclusion that the CIT validly invoked the provisions of section 263 and also held that income arising on sale of shares/units is 'income from business' and it is not income form 'capital gains'. While holding so, this Tribunal discussed all the contentions raised by the parties and now reviewing or recalling of order on the basis of certain stray obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that this is not at all the basis for invocation of the revisionary jurisdiction by the CIT. Since the CIT cannot pass an order based on a ground other than the ground mentioned in the show cause notice, certainly the Tribunal cannot uphold the order u/ s. 263 on such non-existent ground. This is certainly a mistake apparent from the record. This proposition is supported by the judgment of the Punjab and Haryana High Court in the case of CIT v. Jagadhri Electric Supply and Industrial Co. (140 ITR 490) and that of the Calcutta High Court in the case of CIT v. Howrah Flour Mills Ltd. (236 ITR 156). Besides, the Coordinate Benches of the Tribunal have also taken the same view vide S.S.I. Limited v. DCIT [85 TTJ 1049 (Chennai)] and Maxpak Investment Ltd. v. ACIT [13 SOT 67 (Del)]. The counsel for the assessee submitted that even in the order passed by the CIT u/s. 263 of the Act, there is no such allegation that the Assessing Officer has not applied his mind/not made proper enquiry/not examined the case properly. In such circumstances, the Tribunal was not justified in arriving at the conclusion, for the first time, that the revision is justified due to non-application of mind by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said para that if there is a change in the facts and circumstances, a different view is required to be taken. While observing so, the Tribunal has ignored the following vital facts: i) In all the earlier years as well as the subsequent year, the stand of the assessee has been accepted by the Department in scrutiny proceedings. ii) During the year under consideration, there is no change in the facts and circumstances of the case. No such 'change' has been discussed by the Tribunal nor the same is to be found in the order of the CIT. iii) It has been categorically explained that the facts are identical and hence, different view is not required to be taken. iv) It was specifically pointed out in para 5 of the written submissions that in the earlier years the Assessing Officer had specifically raised the above query and accepted the stand of the assessee after satisfying himself with the reply of the assessee. v) The Tribunal has ignored the direct decisions and various orders of co-ordinate Benches on the principle of consistency/res judicata relied upon by the assessee. For his proposition he relied on the following decisions: CIT v. Gopal Purohit [336 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the comparison of purchase and sale of shares within few days would have been correct, the resultant gain would have been assessed as short-term capital gain. However, that is nobody's case. The shares sold are out of the earlier acquisition, the profit wherefrom has been offered and assessed as long-term capital gain. In light of this, the whole discussion is irrelevant and misleading. iv) In paragraphs 47 and 48, the Tribunal has considered the volume and frequency of the transactions in mutual fund. It is clarified that the figures given on page No. 38 of the Tribunal's order are incorrect and misleading. The correct figures are to be found on page No. 4 of the Miscellaneous Application dated 08.09.2011 filed before the Tribunal. It may be clarified that the complete particulars of the purchase and sale of units are already available on page Nos. 57 to 64 of the paper book No. 1 filed before the Tribunal during the course of the hearing. v) In any case, the final conclusion in para 51 of the Tribunal's order is in respect of the transactions of shares and, hence, the dispute qua units has remained to be decided. It would be worthwhile to add that the only pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope and ambit of application u/s 254(2) is very limited. The same is restricted to rectification of mistakes apparent from record. We shall first deal with 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 u/s 254(1) is the effective order so far as the appeal is concerned. Any order passed under s. 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining un-amended is the effective order for all practical purposes. An order u/s 254(2) does not have existence de-hors the order u/s 254(1). Recalling of the order is not permissible u/s 254(2). Recalling of an order automatically necessitates re-hearing and re-adjudication 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 of Rule 24 of the ITAT rules 1963, and that too only in a case where the assessee shows that it had a reasonable cause for being absent at a time when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Tribunal is not liable to be interfered with unless, of course, the conclusions arrived at by the Tribunal are perverse. 14. The next issue is whether the ITAT was correct in stating that the AO has taken a view without proper enquiry when in fact the CIT concludes on a reading of the record that the AO came to the wrong conclusion . In the same vein, it was argued by the Ld. Counsel that the AO made enquiries vide his questionnaire dated 04-08-2008 and is deemed to have concluded that the assessee was an investor, which is one of the possible views. Having taken one possible view, it was argued that the CIT lacked jurisdiction to replace it with his view of the matter. 15. In short it is argued by the learned AR that there is an acceptance of assessee s replies which in turn is deemed to be a finding / opinion of the AO. It was urged in the reply by the DR that the Assessment Order, bereft of specific findings in this matter is as much a part of the record perused by the Ld CIT as the questionnaire/reply thereto. It was further urged that failure to record a finding cannot be a case of expressing opinion and unless opinion is expressed there can be no c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Kelvinator Ltd 320 ITR 561. 19. It was also pointed out by the DR that this was the precise point being made by the Hon ble Bench in the present order, where at para 38 on page 29 it was held that ... Adopting one of the courses permissible in law necessarily requires the Assessing Officer to consciously analyse and evaluate the facts in the light of relevant law and bring them on record. It is only then that he can be said to have adopted or chosen one of the courses permissible in law. The Assessing officer cannot be presumed or attributed to have adopted or chosen a course permissible in law when his order does not speak in that behalf. ... 20. Similarly, in their order dated 09-04-2010 vide ITA 01/H/2009 in the case of M/s Sarang Hi-Tech Cold Storage (P) Ltd., the A Bench (Hyderabad) have held as follows at para 4 on page 3- The CIT is justified in invoking the provision u/s 263 of the Act, because there is a wrong assumption of facts by assessing officer and also non application of mind. There was total failure on the part of the assessing officer to make enquiries that are called for in the circumstances if the case. The assessing officer shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Counsel in trying to set up a conflict between the phrase wrong conclusion used by the Ld CIT and the expression has not at all examined employed by the Bench has missed the overarching fact that the Bench has approved of the conclusions drawn by the Ld CIT from the facts on record. 23. It was also urged by the DR that without prejudice to this argument on the correctness of this argument, the Hon ble Bench cannot be requested to review the correctness of its conclusions in a petition u/s 254(2). It is judicially well established that an error of judgment, assuming it to be so, does not give rise to a mistake apparent from the record. 24. Ld AR in his arguments had submitted that there were certain mistakes in drawing conclusions from redemption of Mutual Fund units, ratio of Capital Gains to Dividend, frequency of transactions, number of shares purchased in specific transactions, etc. In response it was urged by the DR that even if these mistakes are indeed mistakes, by themselves they are not enough to qualify the business nature of the assessee s activity. Secondly, the impact of these mistakes are arguable and hence outside the scope of this petition. As urged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the first reply. Secondly, on the issue of whether non-application of mind was identified as an issue it was submitted that the contextual fact of non-application of mind was writ large in the showcause notice. Besides, this is, in the ultimate analysis, a matter of facts on record, rather than whether a certain phrase was employed or not. Thirdly, on the issue of whether the Ld CIT ought to have simply set aside the matter rather than issuing definite directions to the AO it was pointed out that such a ground was never taken in the assessee s appeal in the first instance, and it was, therefore, wrong to even raise such issues now. (b) In sum, the assessee was seeking to re-argue his appeal in the guise of rectification proceedings, which was fundamentally wrong. 29. The Hon ble jurisdictional Bench in the case of Sri Mathuradasji Ayodhyabai Rathi Charitable Trust (supra), relying on 330 ITR 164 (P H) CIT vs Pearl Wollen Mills and 293 ITR 163 (Del) CIT vs Hindusthan Coca Cola Beverages (P) Ltd., spelt out that oversight of a fact, or failure to consider an argument, or arriving at a wrong conclusion may be errors of judgement, but that cannot constitute a mistake apparent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 254(1) of the Act. All that the assessee has done in the present case is to press into service this provision since glaring and apparent mistakes were found in the order of the Tribunal. ii) With reference to paragraph-3 of the written submissions, we state that the objections raised by the learned CIT (DR) herein are purely technical in nature and, therefore, would not come to the way of exercise of powers under section 254(2) of the Act. In any case, it is humbly submitted that the captioned miscellaneous application is required to be read along with the subsequent letter dated 19-9-2011 submitted before the Tribunal and the learned departmental representative clarifying the mistakes in the order sought to be rectified, in the interest of justice and equity. iii) With reference to paragraph-3.1 of the written submissions, without making any comments upon the order cited therein it is submitted that the Tribunal is required to rectify the mistakes which have crept in the order when pointed out, or even otherwise on their own which is evident from the wordings of section 254(2) of the Act itself. This proposition is further fortified by the judgment of the Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the order passed by the assessing officer was erroneous because of non applicatio0n of mind. It is felt apt to state that the argument of the ld. CIT (DR) regarding change of opinion is on different proposition and therefore not relevant at all to the present proceedings. viii) With reference to the case laws referred to and extracted in paragraphs No.5.2, 5.3, 5.4 ane 5.5 o0f the written submissions, it is sufficient to state that in these decisions the debate was in respect of change of opinion . In this view of the matter, it is humbly submitted that the case laws relied upon by the ld. CIT (DR) in these paragraphs are not at all relevant for the purpose of the present proceedings. ix) With reference to paragraph No.5.6 of the written submissions, attention of the Hon ble Members is invited towards the conclusion of the ld. CIT at the end of paragraph 5 of his order to the effect that the assessment order is erroneous because of acceptance of the claim of the assessee for LTCG and STCG. Further at the end of paragraph 5.1 of his order, the ld. CIT has concluded as under: The assessee s reliance on the decision in the case of Kelvinator of India Limited (256 ITR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to paragraph No.7 of the written submissions, it is submitted that the ld. CIT (DR) is under an incorrect impression that the assessee has been considering itself all along as a trader prior to the change in law and, therefore, is stopped now from pleading that it is an investor. It is submitted that this statement of the ld. CIT (DR) is incorrect and misleading and the records would speak otherwise in as much as, right from the very beginning the assessee has been considering itself as an investor. In the circumstances, it is submitted that the statements made by the ld. CIT (DR) in this paragraph deserve to be ignored as they are contrary to the record. xiii) With reference to paragraph No.8 of the written submissions, we have no comments to offer. With reference to paragraph 8.1 of the written submissions, it is submitted that this paragraph has three parts. Since the first part concerns the merits of assessee s ground No.2 in the appeal, it is irrelevant at this stage as what is sought in these proceedings is to find out whether this ground has been adjudicated or not. xiv) In so far as the second part, i.e., the stand of the ld. CIT (DR) that non-application of mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the written submissions, it is submitted that the attempt of the assessee is neither to reargue the matter nor to further strengthen the case but only to get the vital and glaring apparent mistakes, which go to the root of the matter, rectified and which is also the bounden duty of the Tribunal as has been ruled by the Hon ble Supreme Court. xviii) With reference to paragraph 9 of the written submissions, it is repeated and reiterated that the case of the assessee has never been that there was any oversight of facts or failure to consider any argument on the part of the Tribunal in the present proceedings. On the contrary, all along it has been the stand of the assessee that in view of the apparent mistakes going to the root of the matter, the order of the Tribunal deserved to be recalled. Accordingly, it is submitted that the judgments relied upon by the ld. CIT (DR) in this paragraph, being distinguishable, are of no assistance to his pleadings. xix) With reference to the case laws relied upon by the ld. CIT (DR) in paragraph 10 of the written submissions, it is submitted that none of them is on the point at issue and, therefore, inapplicable to the facts of the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said to be covered by an error apparent on the face of the record. What can be rectified u/s. 254(2) should be apparent and patent. The mistake has to be such for which no elaborate reasons or enquiries are necessary. Where two views are possible, then it cannot be said to be a mistake apparent on record. Rectification can be done only when a glaring mistake of fact or law is committed by the Tribunal while passing the order and which is apparent from record. Rectification is not possible when the issue is debatable. No error can be said to be apparent on the face of the record if it is not self-evident or requires examination or arguments to establish it. Lengthy arguments made by the assessee's counsel themselves suggest that the issue is debatable. The error said to have crept in the order cannot be said to be a mistake apparent on record when it requires elaborate arguments through which one could point out the error and here is a substantial point of law which is staring at ones face and there could be reasonably two opinions possible and it cannot be said a mistake apparent on record to rectify u/s. 254(2) of the Act. The provisions of section 254(2) ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be interfered with, unless, of course, the conclusions arrived at by the Tribunal are perverse. 39. It is not necessary for the Tribunal to state in its order specifically or in express words that it has taken into account the cumulative effect of the circumstances or has considered the totality of the facts, as if that were a magic formula; if the order of the Tribunal shows that it has, in fact, done so, there is no reason to interfere with the decision of the Tribunal. 40. The Tribunal cannot rectify an order u/s. 254(2) on the basis of re-appraisal of facts that amount to review of the original order which is not permissible. In the present case the Tribunal went into the merit of the contentions raised by the parties at the time of hearing of the appeal. Now it is barred from rehearing or amending its conclusion on merit. The Tribunal has no power to review its own order u/s. 254(2) and even if there is a failure to consider any of the arguments of the assessee's counsel that may constitute an error of judgement but it was not a mistake apparent for the purpose of section 254(2) of the Act. 41. The Appellate Tribunal, being a creature of the statute, has to confine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a reason for them to recall an order allegedly for the purpose of rectification of a mistake. Held, that, in the instant case, the Tribunal had upheld the additional income on the ground that there was no proper explanation regarding cash credits. Subsequently, the Tribunal recalled its earlier order. The Tribunal had no jurisdiction to pass the impugned order which was in the nature of review which the Tribunal could not have made u/s. 254(2). 43. In the case of CIT vs. ITAT Anr. 206 ITR 126 the Andhra Pradesh High Court held as under: The Appellate Tribunal, being a creature of the statute, has to confine itself in the exercise of its jurisdiction to the enabling or empowering terms of the statute. It has no inherent power. Even otherwise, in cases where specific provision delineates the powers of the court or Tribunal, it cannot draw upon its assumed inherent jurisdiction and pass orders as it pleases. The power of rectification which is specifically conferred on the Tribunal has to be exercised in terms of that provision. It cannot be enlarged on any assumption that the Tribunal has got an inherent power of rectification or review or revision. It is axiomatic that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee against the exercise of jurisdiction under section 263 by the Commissioner. The order did not fall within the parameters of section 254(2). The order was not valid. 45. In view of the above discussion, we do not find any merit in the arguments advanced by the learned counsel for the assessee to recall or rectify the earlier order of the Tribunal. 46. As is evidenced from the argument of the assessee's counsel, the grievance expressed is about the correctness of the decision of the Tribunal. Whether the Tribunal has decided the appeal in accordance with law or whether it has exceeded its jurisdiction is not a matter which can be debated in proceedings u/s. 254(2) of the Act. The power of the Tribunal u/s. 254(2) is not a power to review its own order but its scope is limited to rectification of mistakes apparent from record and the issue which can be decided by long drawn process of reasoning or debate, does not fall within the ambit of powers of the Tribunal u/s. 254(2) of the Income-tax Act, 1961. Whether the Tribunal exceeded its jurisdiction in confirming the order of the CIT(A) on a ground other than the one taken by the CIT(A) is not a matter which can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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