TMI Blog1992 (11) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... tners of Messrs. Neeta Electric Corporation were the wives of the partners in the assessee-firm and the fifth partner of Messrs. Neeta Electric Corporation was an employee in the assessee-firm. Thus, all the five partners of the firm of Messrs. Neeta Electric Corporation had close links with the assessee-firm. Under an agreement dated October 29, 1969, entered into between the assessee-firm and Messrs. Neeta Electric Corporation, it was agreed that the assessee-firm would pay a commission on purchases made by the assessee-firm through Messrs. Neeta Electric Corporation from Bombay at the rate of two per cent. on the first Rs. 20 lakhs and at 1 1/2 per cent. on any excess over Rs. 20 lakhs. The assessee claimed that they had paid a sum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Messrs. Neeta Electric Corporation, to prove the services rendered by Messrs. Neeta Electric Corporation. No such evidence was adduced either before the authority below or before the Tribunal. The Tribunal did not accept the assessee's explanation that all directions were given on phone, in view of the magnitude of the transactions effected. The Tribunal also noted the fact that the assessee-firm had a Bombay office for making purchases and the expenses incurred in respect of the Bombay office were claimed as business expense. The Tribunal also noted that in the purchase bills of the assessee which were called for, there was no reference to the order being placed by the so called commission agent. The Tribunal also noted the relationship b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond its jurisdiction in setting aside its order dated June 9, 1975, and allowing the appeal? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the commission of Rs. 54,000 paid to Messrs. Neeta Electric Corporation as a deduction under section 37 of the Income-tax Act, 1961 ?" Under section 254(2) of the Income-tax Act, 1961, the Appellate Tribunal may, "with a view to rectifying any mistake apparent from the record", amend any order passed by it under sub-section (1) within the time prescribed therein. It is an accepted position that the Appellate Tribunal does not have any power to review its own orders under the provisions of the Income-tax Act, 1961. The only power which the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of its powers of rectification. In the case which is before us, it is obvious that the Tribunal's earlier order of June 9, 1975, was based on the merits of the case. Various arguments were advanced before the Tribunal by the assessee in support of its contention that the commission of Rs. 54,000 which was paid to Messrs. Neeta Electric Corporation was a genuine payment made in the course of business dealings for purchases effected by Messrs. Neeta Electric Corporation on behalf of the assessee-firm. After examining all the circumstances, the Tribunal came to the conclusion that the payment of Rs. 54,000 was not a genuine business payment. The only grounds on which the Tribunal has subsequently purported to "rectify" its order of June 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd. In fact, we doubt if this sort of an exercise could have been done by the Tribunal even if it had the power of review. The Tribunal has, patently, far exceeded its jurisdiction under section 254(2) of the Income-tax Act in redeciding the entire dispute which was before it in this fashion, and the Tribunal has committed gross and inexplicable error for reasons which we fail to understand. Mr. Inamdar, learned advocate for the assessee, drew our attention to a judgment of the Madhya Pradesh High Court in the case of CIT v. Mithalal Ashok Kumar [1986] 158 ITR 755. The Madhya Pradesh High Court said that the Tribunal can correct its mistake by rectifying the same in case it is brought to its notice that the material which was already on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error, apparent on the record, although it may be an error of judgment. In the present case, the alleged failure, at least on one count, is attributed by the assessee to the income-tax Officer and not the Tribunal. In our view, the Tribunal had no jurisdiction under section 254(2) to pass the second order. The questions, therefore, are answered as follows: Question No. 1 In the affirmative and in favour of the Revenue. Question No. 2 The Tribunal was not justified in allowing the commission of Rs. 54,000 as a deduction under section 37 of the Income-tax Act, in view of the fact that it had no jurisdiction to pass the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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