TMI Blog2003 (3) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Tribunal, Ahmedabad Bench "C", Ahmedabad ("the Tribunal"), in Miscellaneous Application No. 31/Rajkot of 2000 under section 254(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The petitioner is the Assistant Commissioner of Income-tax, Circle 1, Rajkot, having jurisdiction to assess the respondent-assessee, i.e., Saurashtra Kutch Stock Exchange Limited. The assessee returned nil income on October 29, 1996, for the assessment year 1996-97 seeking exemption under section 11 of the Act. Before the assessment was finalised on February 3, 1999, under section 143(3) of the Act, the assessee was granted certificate of registration dated February 20, 1998, under section 12A of the Act by the Commissioner of Income-tax, Rajkot. The Assessing Officer vide assessment order dated February 3, 1999, rejected the claim for exemption under section 11 of the Act. The assessee went in appeal before the Commissioner of Income-tax (Appeal)-I, Rajkot. However, on February 28, 2000, the Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer denying exemption under section 11 of the Act. The assessee preferred second appeal before the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to non-availability of the Bench at Ahmedabad the matter stood adjourned. Ultimately, the said miscellaneous application was posted for hearing on May 25, 2001, and the same was fully heard by the Bench to which the said miscellaneous application was assigned. On September 5, 2001, the Tribunal passed the order on the miscellaneous application holding that as there was a mistake apparent from the record the order of the Tribunal dated October 27, 2000, was recalled and the Registry was directed to refix the case for fresh disposal. It is this order which is under challenge in the present petition. Mr. P.G. Desai, learned counsel appearing on behalf of the petitioner, contended that: (a) The Tribunal had wrongly exercised jurisdiction under section 254(2) of the Act; (b) Section 254(2) of the Act only permitted amendment of an order with a view to rectifying a mistake apparent from the record, and the said provision did not permit review in the guise of rectification; (c) The Tribunal was a creature of the statute as could be seen from the provision of section 252 of the Act and hence it could not go beyond the powers granted under the Act; (d) Under section 254(4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... auri Ramniklal Trust v. CIT [1999] 239 ITR 528 (Guj); (b) That once a mistake was shown to have occurred it would constitute a valid reason to recall the order, regardless of the fact that the mistake had been caused by a party; (c) That the argument regarding hearing of the miscellaneous application by the Ahmedabad Bench and not by the Rajkot Bench was not available to the petitioner as the Vice-President had, in his administrative capacity, as authorised by rules passed the order transferring the miscellaneous application from the Rajkot Bench to the Ahmedabad Bench; that the petitioner had not only not raised any objection but had participated in the hearing of the miscellaneous application before the Ahmedabad Bench; (d) That rule 34A of the Tribunal rules itself provided for posting rectification applications for hearing; (e) That various judgments regarding review jurisdiction relied on by the petitioner were not applicable on the facts of the case; (f) That whether an order was required to be recalled or not before rectification could be made would depend on the facts of the case and the issue involved; (g) That the Tribunal in the impugned order dated September ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. While rule 4 provides that a Bench shall hear and determine such appeal and application made under the Act as the President may by general or special order direct, sub-rule (2) of rule 4 empowers the President or in his absence the senior Vice-President/Vice-President of the concerned zone to transfer an appeal or application from any one of such Benches to any other. Therefore, on a conjoint reading of the provision of section 255(5) of the Act and rules 3 and 4 of the Tribunal Rules it is apparent that the miscellaneous application which was filed before the Rajkot Bench stood transferred to the Ahmedabad Bench under an administrative order taking into consideration the fact that the Rajkot Bench was not available. Once the miscellaneous application had been validly transferred under a valid and legal order of transfer by way of an administrative exigency, unless a fresh order retransferring the matter from the Ahmedabad Bench to the Rajkot Bench was made it would be the Ahmedabad Bench which would be seized of the jurisdiction to hear and determine the miscellaneous application. The contention of the petitioner on this count cannot be countenanced and is devoid of any merit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here must be a mistake apparent from the record which would require that the order in appeal is amended. The first proviso reproduced hereinabove specifically provides that an amendment which directly creates prejudice to the assessee in the form of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, cannot be made unless the Tribunal gives a notice of its intention to do so and allows the assessee a reasonable opportunity of being heard. Sub-section (4) of section 254 of the Act provides that the orders passed by the Tribunal on appeal shall be final save as provided in section 256 or section 260A of the Act. It may be noted that the language employed in the orders passed by the Tribunal on appeal. The order passed on appeal can be an order passed under sub-section (1) of section 254 of the Act or it could be an order passed under sub-section (1) as amended by an order under subsection (2) of section 254 of the Act. In both the situations an order would none the less remain an order on appeal. As already seen hereinbefore, the Tribunal has power to rectify the mistake apparent from the record in two situations. One is on its motion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duce an irrational or illogical result. It is one of the basic principles and a legal policy that when there is a provision for rectification of a mistake apparent from the record, that power should be allowed to be exercised for correcting mistake and/or error from the record and if the Tribunal feels that the Tribunal has committed an error of law, it would be against the concept of justice and fair play and also against the principle of legal policy not to allow the Tribunal to exercise such power. The proposition that a contention raised but not dealt with by the Tribunal should be held to have been negatived is correct only up to a stage. Once a party brings to the notice of the Tribunal that an important point or contention raised by the party has not been dealt with it would be within the jurisdiction and powers of the Tribunal to decide whether the same constitutes a mistake apparent from the record and thereafter, if necessary, reopen the appeal. Such a power is inherent in the Tribunal, as a party has suffered prejudice due to a lapse on the part of the Tribunal and not on account of any fault of such a party. An act of the Tribunal should not prejudice a party so as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation is: for review--"error apparent on the face of the record", and for rectification--"mistake apparent from the record". The only distinguishing feature being the difference, if any, between the term "error" and "mistake". In the case of T.S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50, the apex court has observed thus: "The power of the officers mentioned in section 154 of the Income-tax Act, 1961, to correct 'any mistake apparent from the record' is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an 'error apparent on the face of the record'." The provisions of sections 154 and 254(2) of the Act, section 35 of the Indian Income-tax Act, 1922, section 35 of the Wealth-tax Act, 1957, and section 13 of the Companies (Profits) Surtax Act, 1964, are pari materia. Though the Supreme Court and various High Courts have sought to lay down precisely what is a mistake apparent from the record or an error apparent on the face of the record it has been difficult to provide a definite comprehensive definition. Various factors like: mistake/error should be self-evident, should not be debatable, should not be arrived at afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sai also contended that if the language of the provision was clear, the same had to be given effect to and resultant hardship cannot be a consideration for not applying the provision; when a plain reading of the provision conveys meaning it was not open to add any words nor could interpretation not intended by the Legislature be adopted; that in a taxing statute there is no intendment, no equity. There can be no dispute with these principles. However, those sections which impose the charge or levy should be strictly construed; but those which deal with the machinery of assessment and collection should not be subjected to a rigorous construction but should be construed in a manner which makes the machinery workable. Procedural provisions should be so construed as to subserve the course of justice and not to hinder it. Hearing of an appeal and passing an order thereon is a part of the machinery prescribed for collection and recovery of tax. The power to make an order encompasses within its fold the power to rectify. Rule 24 of the Tribunal Rules provides for hearing of an appeal ex parte for default by the appellant and by virtue of the proviso under the said rule it is laid down t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or hearing if the same appears to be prima facie a petition for review. It was therefore submitted that the assessee having filed a review application the Tribunal ought to have exercised its power under the proviso to sub-rule (3) of rule 34A of the Tribunal Rules and rejected the said application filed by the assessee. That the Tribunal having failed to do so, the impugned order dated September 5, 2001, is contrary to the specific provision of the said rule and hence requires to be quashed. Rule 34A(3) of the Tribunal Rules states that the Bench which heard the matter giving rise to the application shall dispose of it after hearing both the parties to the application, but an exception has been carved out by the portion in parentheses whereby it is stipulated that unless the President, Senior Vice-President, Vice-President or the senior member present at the station otherwise directs. That means if any of the aforesaid authorities directs that the miscellaneous application shall be heard by a Bench comprised of the members other than the Bench which heard the appeal, such other Bench would hear and dispose of the miscellaneous application. This rule does nothing else but provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arent from the record and for rectification of the same both the parties to the appeal were required to be heard. In these circumstances, the contention on behalf of the petitioner on this count is therefore ill-founded. Whether the judgment of the jurisdictional court would constitute a mistake apparent from the record or not is no longer res integra. In the case of Parshuram Pottery Works Co. Ltd. v. D.R. Trivedi, WTO [1975] 100 ITR 651 (Guj), the facts before the court were that the petitioner-company claimed deduction of certain amount in respect of the provision for taxation while computing its net wealth. The said claim was disallowed by the Assessing Officer as according to him the provision for tax liability did not constitute a "debt owed" on the valuation date. Though the said assessment was not challenged by way of appeal, when the petitioner came to know subsequently about a decision of the Tribunal allowing such a claim in some other case, the petitioner applied to the Assessing Officer for rectifying the assessment order under section 35 of the Wealth-tax Act, 1957. The said application came to be rejected on the ground that there was no mistake apparent on the face ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order proposed to be rectified, then the point ceases to be a debatable point and it also ceases to be a point requiring elaborate arguments or detailed investigation/inquiry. The subsequent decisions of the jurisdictional High Court do not enact the law but declare the law as it always was." Hence, it is well settled that a decision of the jurisdictional High Court, even if rendered subsequently, would constitute a mistake apparent from the record investing an authority with jurisdiction to rectify the mistake. The question that would then arise is: What should be the consequential order, i.e., how should the original order be rectified and in what form must the amendment be carried out. In the case of Sidhramappa Andannappa Manvi v. CIT [1952] 21 ITR 333 (Bom), almost a similar contention was raised before the Bombay High Court on behalf of the assessee as is raised on behalf of the Revenue in the present petition. It is contended by Mr. Desai that in the guise of rectification it is not open to the Tribunal to pass an order which is contrary to the order already passed. The Bombay High Court has dealt with the contention as follows: "But the more substantial question rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record on its own motion or on an application by a party under section 254(2) of the Act (b) An order on appeal would consist of an order made under section 254(1) of the Act or it could be an order made under sub-section (1) as amended by an order under sub-section (2) of section 254 of the Act; (c) The power of rectification is to be exercised to remove an error or correct a mistake and not for disturbing finality, the fundamental principle being, that power of rectification is for justice and fair play; (d) That power of rectification can be exercised even if a mistake is committed by the Tribunal or even if a mistake has occurred at the instance of party to the appeal; (e) A mistake apparent from record should be self-evident, should not be a debatable issue, but this test might break down, because judicial opinions differ, and what is a mistake apparent from the record cannot be defined precisely and must be left to be determined judicially on the facts of each case; (f) Non-consideration of a judgment of the jurisdictional High Court would always constitute a mistake apparent from the record, regardless of the judgment being rendered prior to or subsequent to the o ..... 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