TMI Blog2001 (1) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment under section 143(3) of the Act. The appeal filed by the petitioner was allowed by the Commissioner of Income-tax (Appeals), Jalandhar (for short, "the CIT(A)"). He set aside the order of assessment and remanded the case to the Assessing Officer with a direction to allow the deduction. The Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) and dismissed the appeal filed by the Department. However, it accepted the reference application filed under section 256(1) of the Act and referred the following questions to this court for its opinion : "1. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was right in law in dismissing the appeal of the Revenue and upholding the order of the learned Commissioner of Income-tax (Appeals) that the term 'profit' in the proviso to subsection (3) of section 80HHC of the Income-tax Act, 1961, can be stretched to include the term 'loss' whereby directing to allow the deduction as claimed by the assessee-firm ?" 2. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was right in law in dismissing the appeal of the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 448 (AP) ; (5) CIT v. ITAT [1997] 227 ITR 443 (All) ; and (6) Shaw Wallace and Co. Ltd. v. ITAT [1999] 240 ITR 579 (Cal). Shri R. P. Sawhney, senior advocate for the Department, submitted that the Tribunal has not committed any illegality by recalling the order dated December 15, 1997, because it was entirely based on the concession made by the Departmental representative and the office note recorded by the Income-tax Officer in relation to the assessment year 1993-94, though the same had no bearing on the assessment for the year 1992-93. He submitted that pendency of reference before this court cannot be treated as a bar to the entertaining of an application under section 254(2). Shri Sawhney further argued that one line observation contained para. 6 of the order dated December 15, 1997, suggesting that the Tribunal had agreed with the finding given by the Commissioner of Income-tax (Appeals) cannot be treated as a compliance of the requirement of recording reasons which the Tribunal was bound to do in discharge of its judicial function. Shri Sawhney relied on the following decisions: (1) ITO v. ITAT [1965] 58 ITR 634 (All) ; (2) CIT v. Mithalal Ashok Kumar [1986] 158 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t piece of evidence or plea raised by the aggrieved party. The absence of adequate reasons in an order passed under section 254(1) cannot per se be regarded as a mistake apparent within the meaning of section 254(2). Likewise, the possibility of forming a different opinion than the one expressed in the order passed under section 254(1) cannot be treated as a ground for entertaining an application under section 254(2). At this stage, we may notice some of the judicial precedents relied upon by learned counsel for the parties. In CIT v. ITAT [1992] 196 ITR 683, a Division Bench of the Orissa High Court interpreted section 254(2) of the Act and held as under : "The language used in section 254(2) makes it clear that only 'amendment' to the order passed under section 254(1)is permissible, where it is brought to the notice of the Tribunal that there is any mistake apparent from the record. In our view, 'amendment' of an order does not mean obliteration of the order originally passed, and its substitution by a new order. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther Division Bench of the Andhra Pradesh High Court expressed its views on the subject in the following words : "We understand the section to have two parts : (1) The Tribunal recalling the order ; and (2) the Tribunal passing a final order of rectification after hearing the parties. The Division Bench of this court in W. P. No. 14166 of 1991 (see [19941 206 ITR 126) has held that the earlier part of the order recalling an order is not subject of a reference under section 256 of the Income-tax Act, and, therefore, the writ petition challenging such an order is maintainable. The Division Bench, following a number of Supreme Court judgments and judgments of various High Courts in the country, held that rectification of a mistake should not amount to review or rewriting of the previous order either on findings of law or on findings of facts. The Supreme Court in T. S. Balaram's case [1971] 82 ITR 50 had asserted that it must be an obvious and patent mistake that calls for rectification and not something where there may be two conceivable opinions or on a debatable point of law and the latter would not amount to a mistake which can be rectified." In CIT v. ITAT [1997] 227 ITR 443 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the above, we shall now determine whether the impugned order is ultra vires section 254(2) warranting issuance of a writ of certiorari. A perusal of the order dated December 6, 1993, shows that while allowing the petitioner's claim for deduction, the Commissioner of Income-tax (Appeals) had assigned the following reasons : "I have carefully considered the rival submission. I find merit in the submissions of learned counsel that referred to the 'profits computed in the proviso to sub-section (3) of section 80HHC of the Income-tax Act does not warrant the interpretation that deduction is admissible only if there is a business profit and not in a case where there is business loss excluding export incentives, etc. In my view, the deduction would be admissible even after excluding the export incentives, etc., there is a business loss provided the same is restricted with reference to resultant profits after taking into account export incentives. In the case of the appellant, the deduction has been claimed in the similar manner and is, therefore, held to be admissible. I also find merit in the plea that the scrap sales cannot be termed as Indian turnover as it is not the sale of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity merely because it did not record independent reasons. Some of the observations made in that decision are extracted below : "The Income-tax Appellate Tribunal is the final fact-finding authority and normally it should record its conclusion on every disputed question raised before it, setting out its reasons in support of its conclusion. But, in failing to record reasons, when the Appellate Tribunal fully agrees with the view expressed by the Appellate Assistant Commissioner and has no other ground to record in support of its conclusion, it does not act illegally or irregularly, merely because it does not repeat the grounds of the Appellate Assistant Commissioner on which the decision was given against the assessees or the Department. The criticism made by the High Court that the Tribunal had 'failed to perform its duty merely affirming the conclusion of the Appellate Assistant Commissioner' is apparently unmerited." The issue deserves to be examined from another angle. The Act envisages a pyramid of adjudicating authorities with the Appellate Tribunal at its apex. In discharge of their quasi-judicial and judicial function, these authorities and the Tribunal are bound to act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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