TMI Blog2009 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for M/s. Anita Sumanth for the Petitioner. Mr. K. Subramanian, Sr. Standing Counsel for Income-tax for the Respondents. JUDGMENT K. RAVIRAJA PANDIAN, J. - The Writ Petition is filed seeking for the relief of issuance of writ of certiorari to call for the records in M.P.No.35/Mds/2000 in I.T.A.No.1199 of 1989 dated 30.11.2000 of the second respondent and quash the same. 2. The facts of the case are as follows: The petitioner/assessee is a Company registered under the Companies Act and derives income from various sources. In respect of the assessment year 1985-86 relevant to the previous year ended 31st March, 1985, the petitioner filed a return of income on 22.7.1985 declaring a net loss of Rs.32,99,289/-, which was revised by filing a revised return on 26.2.1988 declaring a loss of Rs.32,80,700/- subject to the adjustment of the loss brought forward from the earlier years. The first respondent-Assessing Officer completed the assessment on 30.3.1988 and determined the total income at Rs.1,27,95,570/- by making various additions and disallowing various claims made by the petitioner. 3. The petitioner filed an appeal before the Commissioner of Income-tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not have remitted the matter for fresh consideration and decision on the basis of the evidence available on record particularly the findings of the Settlement Commission? 4. While the said reference petition is pending before the Tribunal on 10.7.1997, the first respondent filed a petition under Section 254(2) of the Act in M.P.No.35 of 2000 in I.T.A.No.1199 of 1989 for rectification of mistakes in the order of the Tribunal dated 31.1.1997. The petitioner filed reply objecting to the said petition. After hearing the parties, the second respondent Tribunal by its order dated 30.11.2000 allowed the miscellaneous petition in part. The correctness of that part of the order is put in issue in this writ petition. 5. In order to complete the narration of the facts, though it is not relevant to the present case, the following facts are to be stated: While the appeal filed by the petitioner was pending before the Commissioner of Income-tax (Appeals), the petitioner filed a petition before the Settlement Commission on 16.12.1988. After filing of the said petition, the Commissioner of Income-tax (Appeals) passed an order in the appeal on 31.1.1989. The petitioner filed an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 7. On the other hand, the learned counsel for the revenue supported the order passed by the Tribunal by contending that there is palpable mistake on the part of the Tribunal in observing that the borrowals of Express Newspapers from Traders and Services and the borrowals of Trades and Services from various creditors had not been questioned by the Department. So, is the observation of the Tribunal that the cold storages were functioning even after November 1984 and Express had stocks worth Rs.1.5 Crores in the cold storages between November 1984 to February 1985. The Tribunal has proceeded on the assumption that the Department has not questioned the genuineness of the transaction of the assessee with the bankers and the shareholders, which is also factually incorrect. In respect of the transaction in scrap dealings, the Tribunal held that except the cash book and ledger all other documents were produced and were available with the assessing officer when he made the assessment and the Department did not find any discrepancy in the documents impounded later on. This assumption is also incorrect on facts. The mistake so committed by the Tribunal was pointed out by the revenue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chance of re-arguing the appeal already decided. What can be rectified under Section 254(2) is a mistake which is apparent and patent. The mistake has to be such for which no elaborate reasons or enquiry is necessary. Where two opinions are possible then it cannot be said to be a mistake apparent on the record. When prejudice resulting from an order is attributable to the Tribunal's mistake, error or omission, it is its bounden duty to set it right. The purpose behind the enactment of Section 254(2) of the Act to amend any order passed under sub-section (1), if any mistake apparent from the records is brought to the notice of the Tribunal, 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 power of the Tribunal. If prejudice is resulted to the party, which prejudice is attributable to the Tribunal's mistake, error or omission and which error is a manifest error, then the Tribunal would be justified in rectifying its mistake. Rectification can be made only when a glaring mistake of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 incapable of argument and debate. If such a "mistake apparent on the face of record" is brought to the notice, Section 254(2) empowers the Tribunal to amend the order passed under Section 254(1). Amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order. What is mistake apparent on the face of the record or where does a mistake cease to be mere mistake, and become mistake apparent on the face of the record is rather difficult to define precisely, scientifically and with certainty. An element of indefiniteness inherent in its very nature and it must be discernible from the facts of each case by judiciously trained mind. Mere existence of a mistake or error would not per se r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e letter dated 8.1.1985 of the Manager of the Lal Bazaar Branch of the Bank. The statement of the Manager of Catholic Syrian Bank is that the Bankers had accommodated Express in their transactions and also the statements of the share brokers admitting the transaction to be bogus; and that the Settlement Commission in the case of Nariman Point Building Services Trading Private Limited, (a concern belonging to the Express group) has also given a clear finding that these transactions of Express group with the share brokers in Calcutta were not genuine. 13. The other mistake of fact pointed out for rectification is the transaction in scrap dealings. It is the case of the Department that the Tribunal held that except the cash book and ledger, all other documents were produced and were available with the assessing officer when he made the assessment and the Department did not find any discrepancy in the documents impounded later on. According to the Department, this finding is also incorrect in view of the fact that the Tribunal failed to notice that none of the alleged long term contracts on the basis of which the petitioners were stated to be bound to sell scraps were produced; th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment for the purchases started in November 1984; that the payments have all been made by account payee cheques and thus the transactions are contemporaneous; and that the cold storages were closed as per statutory provision during the relevant period has not been proved by the Department. 16. The contention of the Department has been extracted in paragraph No.21 of the order which reads that the assessee has failed to discharge the primary onus in regard to purchase and sale of potatoes and the loss arising in its transaction has not been fully established;that the purchase and sales have taken place when the cold storages ought to be closed under the relevant legislation and that the assessee's own money was circulated twice once at the time of purchase of potatoes and again at the time of sales of potatoes; and that the Department has established beyond doubt that the assessee's money has come back to it. 17. The explanation offered on behalf of the petitioner has been extracted in paragraph No.22 of the order of the Tribunal and the submission made on behalf of the Department in rejoinder has been stated in paragraph No.24. Ultimately after analysing all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spaper (Madurai) Pvt.Ltd., - Rs.46,50,000/-; Nariman Point B.S. and T.P.Ltd., Rs.31,61,000/- on Traders and Services Rs.72,89,000/-. No where in the Assessment Order, it has been mentioned or proved that the loans obtained by the assessee is not genuine or not proved, genuine, nor it is apparent from the Assessment Order that the Assessing Officer of these parties were informed for conducting necessary enquiries on this account. Nor the Assessing Officer has enquired about the source of these funds. Similarly in the case of K.K.Sukhani or his proprietary concern this basis issue was raised by the Assessing Officer. It is also observed that the assessee had produced the relevant documents which were impounded by the Department as and when produced and that these documents at no stage were objected to by the Department or proved to be wrong. Under the circumstances, we fail to understand as to how the Department can say that the loan obtained was from Hawala conductors. If the loan is proved to be not genuine, the conclusions drawn by the assessing officer on this account are baseless." 18. After analysing as above, ultimately the Tribunal in paragraph No.27 has recorded its find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuineness of these purchases and sales cannot be doubted. After so analysing the facts, the Tribunal has recorded a finding in paragraph No.37 to the following effect: "37. In view of the above discussions, we are of the opinion that the assessee genuinely suffered the loss in the trading activities of purchase and sale of shares which cannot be disallowed nor these transactions can be held as speculative in nature. The conclusions drawn by the CIT (Appeals) on this account are considered as unreasonable and unjustified. Hence, this ground of appeal is decided in favour of the assessee." Loss in scrap dealings: 20. The next issue is "loss of scrap dealings. The Tribunal in paragraph Nos.38 and 39 of its order referred to the reasoning given by the assessing officer in the assessment order and that of the Commissioner of Income-tax (Appeals). The facts of the case has been discussed in paragraph No.39. The contentions advanced on behalf of the assessee before the Tribunal has been stated in extenso in paragraph Nos.40 to 44. The submission made on behalf of the Department has been extracted in paragraph No.45. In paragraph No.46, the issue has been discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he loss suffered by the assessee on this account." 22. From the above extractions and narration, it is clear that in respect of all the three points, the Tribunal has considered and discussed all the contentions raised and argued by both the parties and ultimately recorded a finding. A clear adjudication has been made. A mere isolated or stray sentence "Nowhere in the assessment order it has been mentioned or proved that the loan obtained by the assessee is not genuine or not proved genuine; the Assessing Officer not doubted the transaction; that the books of accounts were available with the Assessing Officer" have been projected as a mistake apparent on the face of the record. It is pertinent to state that the Tribunal has not come to the conclusion that the petitioner is entitled to these claims solely resting upon the above observations which is regarded as mistake of fact by the Department. The Tribunal has given its own reasoning in the earlier and subsequent sentences of the above observations, to come to the conclusion. The issues have been elaborately discussed and decided on merits. The order of the Tribunal may be an erroneous order with which we are not expressing an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Allahabad High Court has held that the order of the Tribunal that the issue becomes redundant because of the Income-tax officer had already passed an order under Section 154 of the Act giving relief to the assessee was a mistake apparent from the records. 25. In the case of CHAMPA LAL CHOPRA VS. STATE OF RAJASTHAN reported in (2002) 257 ITR 74, a survey was conducted at the premises of the assessee the karta of a Hindu undivided family, under section 133A, on August 18, 1979. The Income-tax Officer after investigation assessed the income of the assessee and made an addition of Rs.80,000 in the income for the assessment year 1978-79. The appeal against the order of assessment was dismissed by the Appellate Assistant Commissioner. On further appeal, the Tribunal dismissed the same by order dated July 26, 1984. The assessee filed an application under section 254(2) of the Income-tax Act, 1961, for rectification of the mistake. It was, inter alia, pointed out in the rectification application that the assessee was assessed as a Hindu undivided family an entirely different entity distinct from the assessee in his individual capacity, that the Hindu undivided family, was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Tribunal after the hearing was over, and thus the Tribunal inadvertently took into consideration such information which was never disclosed to the assessee and without affording any opportunity to him to explain the information transmitted to the Tribunal which vitiated the order founded on such information. This was a mistake obvious from the record. 27. In the case of HONDA SIEL POWER PRODUCTS LTD. VS. COMMISSIONER OF INCOME-TAX reported in (2007) 295 ITR 466, the assessee had taken a term loan in foreign exchange for the import of machinery. On account of fluctuation in the foreign exchange rate, the liability of the assessee to repay the loan in terms of Indian rupees went up. The assessee enhanced the figure of written down value of the block of assets and claimed depreciation accordingly. The Assessing Officer held that revision in actual cost was not permissible but on appeal the Commissioner (Appeals) held that the claim was admissible. On appeal, the Appellate Tribunal held that the revision was not permissible unless actual payment had been made by the assessee, since under section 43A actual payment was a condition precedent for availing of the benefit. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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