2001 (7) TMI 111 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Tribunal erred in law and facts to recall its final order with a view to rectify the same u/s 254(2).

Summary:

Issue 1: Tribunal's Power to Recall Final Order u/s 254(2)

The High Court of Gauhati examined whether the Tribunal erred in recalling its final order dated 24th September 1993, under the pretext of rectifying a mistake apparent from the record as per section 254(2) of the Income Tax Act, 1961. The Tribunal had initially allowed the Revenue's appeal against the CIT(A)'s cancellation of reassessment proceedings initiated u/s 34(1)(a) of the Indian IT Act, 1922, for the assessment years 1953-54 and 1954-55. The Tribunal later recalled this order upon the assessee's miscellaneous applications, claiming that certain decisions supporting the assessee's view were not considered.

Legal Provisions and Interpretation:

Section 254(2) allows the Tribunal to rectify any mistake apparent from the record within four years from the date of the order. However, the High Court emphasized that this provision does not empower the Tribunal to recall or review its final order entirely. The Court referred to several precedents, including the Supreme Court's ruling in Dwaraka Das vs. State of Madhya Pradesh, which clarified that post-judgment, a court or tribunal becomes functus officio and cannot vary the terms of its original judgment, decree, or order except for correcting clerical or arithmetical mistakes.

Error Apparent on the Face of the Record:

The Court cited the Supreme Court's decisions in Thungabhadra Industries Ltd. vs. Government of Andhra Pradesh and Satyanarayan Laxminarayan Hegde vs. Mallikarjun Bhavanappa Tirumale, which defined an error apparent on the face of the record as one that is obvious and does not require elaborate argument or reasoning.

Arguments and Precedents:

The Department argued that the Tribunal's action amounted to an impermissible review rather than a rectification of a mistake. They cited several cases, including T.S. Balram, ITO vs. Volkart Brothers and CIT vs. K.L. Bhatia, which supported the view that a mistake apparent on the record must be obvious and not subject to debate.

Conversely, the respondent contended that the Tribunal's recall was justified due to an error in the earlier judgment regarding the validity of the notice u/s 34(1)(a). They referenced cases like CIT vs. Mithalal Ashok Kumar and Kil Kotagiri Tea & Coffee Estates Co. Ltd. vs. ITAT, which suggested a broader interpretation of 'mistake' under section 254(2).

Conclusion:

The High Court concluded that the Tribunal's action to recall its final order was beyond the scope of section 254(2) and amounted to an unauthorized review. The Court held that the Tribunal could only rectify apparent mistakes without recalling the entire order. Consequently, the question was answered in favor of the Revenue, affirming that the Tribunal's recall of its final order was not permissible under the law.