2001 (1) TMI 76 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Income-tax Appellate Tribunal can review or revise an order passed u/s 254(1) while deciding an application u/s 254(2) of the Income-tax Act, 1961.
2. Whether the Tribunal's order dated December 15, 1997, suffered from any mistake apparent from the record justifying its recall.

Summary:

Issue 1: Tribunal's Power to Review or Revise Orders u/s 254(2)
The court examined whether the Income-tax Appellate Tribunal (the Tribunal) could review or revise an order passed u/s 254(1) while deciding an application u/s 254(2). The Tribunal's power u/s 254(2) is limited to rectifying any mistake apparent from the record and does not extend to reviewing or revising an order made u/s 254(1). The expression "mistake apparent from the record" is not defined in the Act, but it generally refers to patent mistakes that are obvious and self-evident. The Tribunal cannot recall an entire order under the guise of rectification, as this would amount to a review, which is beyond its jurisdiction.

Issue 2: Existence of Mistake Apparent from the Record
The Tribunal had recalled its order dated December 15, 1997, on the ground that it had not considered the Department's plea on the merits. The court found that the Tribunal had indeed considered and approved the reasons assigned by the Commissioner of Income-tax (Appeals) in its original order. The absence of detailed reasons in the Tribunal's order does not constitute a mistake apparent from the record. The Tribunal's order dated December 15, 1997, satisfied the requirement of a speaking order, and the recall of this order was not justified.

Judicial Precedents:
The court referred to several judicial precedents to support its conclusion, including:
- CIT v. ITAT [1992] 196 ITR 683 (Orissa): Recalling an entire order is not permissible u/s 254(2).
- CIT v. ITAT [1994] 206 ITR 126 (AP): Rectification should not amount to a review or rewriting of the previous order.
- Asst. CIT v. Dr. Ved Prakash [1994] 209 ITR 448 (AP): Rectification is for obvious and patent mistakes, not for debatable points of law.
- CIT v. K.Y. Pilliah and Sons [1967] 63 ITR 411 (SC): The Tribunal does not act illegally if it agrees with the reasons of the lower authority without recording independent reasons.

Conclusion:
The court held that the Tribunal committed a jurisdictional error by entertaining the application filed by the Department u/s 254(2) and recalling its order dated December 15, 1997. The writ petition was allowed, and the impugned order dated January 20, 1999, was quashed. The court clarified that this decision would not prejudice the reference pending before it.