2004 (10) TMI 37 - HC - Income Tax

Powers to be exercised by the Income Appellate Tribunal - Whether Tribunal was correct in law in holding that the order impugned before it was rectifiable under section 154 by the Commissioner of Income-tax (Appeals) when the order was the subject-matter of an appeal before the Tribunal? - power to rectify a mistake under section 254(2) cannot be used for recalling the entire order - Thus, what it cannot do directly, cannot be allowed to be done indirectly. If the assessee was aggrieved, it was open for him to approach the appropriate forum but the Tribunal could not have reviewed the entire judgment delivered by it earlier in the garb of exercising its power under section 254(2) - reading the language of sections 154 and 254, it appears that there is not much difference between the two and same principle would apply - order made by CIT (Appeals) u/s 154 and the order made by the Tribunal are set aside

Summary

Issues:
1. Whether the order rectifiable under section 154 of the Income-tax Act when the order was subject to an appeal before the Tribunal?

Analysis:
The High Court was tasked with determining whether the Income-tax Appellate Tribunal was correct in holding that an order could be rectified under section 154 of the Income-tax Act, even when the order was under appeal before the Tribunal. The case involved an appeal preferred by the Revenue against an order made by the Commissioner of Income-tax (Appeals) on January 28, 1997, for the assessment year 1993-94. During the pendency of this appeal, the Commissioner of Income-tax (Appeals) passed another order on June 4, 1999, under section 154, declaring the appeal invalid, which led to the Tribunal disposing of the appeal on February 10, 2003.

The Assessing Officer had earlier raised concerns about the tax not being paid as required by the Act, even after the Commissioner of Income-tax (Appeals) had disposed of the initial appeal in favor of the assessee. Subsequently, the Commissioner of Income-tax (Appeals) held the appeal to be invalid, leading to further appeals and the present case before the High Court. The court noted that the appeal filed by the assessee may not have been maintainable under section 249(4) of the Act, which could have been raised before the Tribunal.

The court delved into the provisions of section 154 of the Income-tax Act, which allows for rectification of mistakes apparent from the record by the income-tax authority. Additionally, section 254(2) empowers the Appellate Tribunal to rectify mistakes within four years from the date of the order. The court referred to a previous case to highlight that the power to rectify a mistake under section 254(2) does not extend to recalling the entire order, emphasizing that the Tribunal cannot review its entire judgment under the guise of rectification.

Ultimately, the High Court set aside the orders made by the Commissioner of Income-tax (Appeals) and the Tribunal, directing the Income-tax Appellate Tribunal to rehear the appeal in accordance with the law. The court's decision favored the assessee against the Revenue, emphasizing the limitations on the Tribunal's power to review its judgments indirectly under section 254(2) of the Act.