2001 (7) TMI 48 - HC - Income Tax

Summary

Issues Involved:
The legality of an order passed by the Income-tax Appellate Tribunal under section 254(2) of the Income-tax Act, 1961 is challenged through a petition under articles 226 and 227 of the Constitution of India, 1950.

Factual Background:
The assessee appealed the reopening of assessment under section 147(a) for the assessment year 1985-86. The Tribunal allowed the appeal, but subsequent applications and references were filed by both the Revenue and the assessee, leading to a series of proceedings and orders.

Recall and Review of Orders:
The Tribunal recalled the order passed in the appeal and directed a fresh hearing based on the finding of a mistake apparent from the record in the original order dated November 24, 1993. The power to rectify under section 254(2) is limited to mistakes that are apparent from the record and does not extend to revising or reviewing orders.

Interpretation of "Mistake Apparent from the Record":
The term "mistake apparent from the record" under section 254(2) refers to errors that are visible, obvious, and do not require elaborate arguments for discovery. It does not cover debatable points of law or fact, and the power to rectify is constrained to mistakes that are self-evident.

Limitations on Tribunal's Power:
The Tribunal's power to recall an order is restricted, and any amendment under section 254(2) merges with the original order passed under section 254(1). Recalling an order necessitates a fresh adjudication, which goes beyond rectifying apparent mistakes and is not within the Tribunal's authority.

Maintainability of Writ Petition:
The exhaustion of statutory remedy is a rule of prudence, but exceptions exist, such as lack of jurisdiction by the authority passing the impugned order. In this case, the Tribunal exceeded its jurisdiction by recalling the order, making the writ petition maintainable.

Conclusion:
The impugned order recalling the original order is quashed, and applications under section 256(1) are to be dealt with by the Tribunal in accordance with the law. The judgment highlights the limited scope of rectification under section 254(2) and the constraints on the Tribunal's power to recall orders beyond rectifying apparent mistakes.