2006 (8) TMI 438 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the Tribunal's order under section 254(2) of the Income-tax Act, 1961.
2. Applicability of the Press Release dated 12-3-1996 regarding scrutiny assessment guidelines.
3. Impact of a survey operation under section 133A on the exemption from scrutiny.
4. Concept of 'mistake apparent from record' and its rectification.
5. Principle of merger of Tribunal's order with High Court's judgment.
6. Jurisdiction of the Tribunal to rectify its order post High Court's decision.

Issue-wise Detailed Analysis:

1. Validity of the Tribunal's order under section 254(2):
The Tribunal addressed the revenue's petition under section 254(2) of the Income-tax Act, 1961, challenging the Tribunal's order dated 20-8-2002. The Tribunal held that the revenue's claim of a mistake apparent from the record was not substantiated. The Tribunal emphasized that the fact of the survey was not brought to its notice during the appeal hearing, and thus, could not be considered a part of the record under section 254(2).

2. Applicability of the Press Release dated 12-3-1996:
The assessee relied on the Press Release dated 12-3-1996, which stated that returns for the assessment year 1996-97 would not be selected for detailed scrutiny if the total income declared was at least 30% more than the previous year, subject to certain conditions. The Tribunal concluded that the assessee satisfied these conditions and that the revenue was bound by the principle of promissory estoppel not to scrutinize the case, as per the press release.

3. Impact of a survey operation under section 133A:
The revenue argued that the survey conducted on 13-3-1996 placed the assessee's case under compulsory scrutiny. However, the Tribunal noted that this fact was not presented during the original appeal. The Tribunal maintained that the record before it did not include the survey details, and thus, there was no mistake apparent from the record.

4. Concept of 'mistake apparent from record' and its rectification:
The revenue contended that the omission of the survey fact constituted a mistake apparent from the record. The Tribunal disagreed, stating that the records referred to in section 254(2) are those presented before it during the hearing. The Tribunal emphasized that rectification under section 254(2) is not intended to address issues not raised during the original proceedings.

5. Principle of merger of Tribunal's order with High Court's judgment:
The Tribunal considered whether its order had merged with the High Court's judgment, which dismissed the revenue's appeal. The Tribunal concluded that the High Court's decision did not address the survey issue, and thus, the Tribunal retained jurisdiction to adjudicate the matter.

6. Jurisdiction of the Tribunal to rectify its order post High Court's decision:
One member of the Tribunal opined that the Tribunal had no jurisdiction to rectify its order post the High Court's decision, citing the principle of merger. However, the majority view held that the Tribunal could still address the issue as the High Court did not consider the survey fact. Ultimately, the Tribunal dismissed the revenue's petition, upholding the original order.

Conclusion:
The Tribunal dismissed the revenue's miscellaneous petition, emphasizing that the fact of the survey was not part of the record during the original appeal. The Tribunal also held that the revenue was bound by the press release guidelines and that there was no mistake apparent from the record to warrant rectification under section 254(2). The Tribunal's decision remained unaffected by the High Court's judgment, as the specific issue of the survey was not addressed by the High Court.