1993 (4) TMI 17 - HC - Income Tax

Summary

Issues Involved:
The issues involved in this judgment include the jurisdiction of the Tribunal under section 254(2) of the Income-tax Act to recall an order and the interpretation of section 68 of the Income-tax Act regarding the treatment of unexplained income.

Jurisdiction of Tribunal under Section 254(2):
The Assistant Commissioner of Income-tax filed a writ petition challenging the Tribunal's order recalling a previous order and posting the appeal for fresh hearing. The Tribunal recalled the earlier order under section 254(2) of the Income-tax Act, citing a misappreciation of the legal position by the previous Bench. The petitioner contended that the Tribunal exceeded its jurisdiction in recalling the order. The court analyzed the provisions of section 254(2) and held that the Tribunal's action was in the nature of a review, which was not permissible under the said section. The court emphasized that rectification should not amount to a review or rewriting of the previous order based on findings of law or facts.

Interpretation of Section 68 of the Income-tax Act:
The counsel for the first respondent-assessee argued that the Tribunal's decision to recall the order was valid under section 254(2) as it involved a point of law that required reconsideration. He referred to section 68 of the Income-tax Act, which deals with unexplained credits in an assessee's books. The counsel contended that the Tribunal had overlooked a crucial interpretation of section 68 in the initial order but rectified this in the subsequent order. However, the court held that the Tribunal's acceptance of an alternative view in the second order did not justify the exercise of rectification powers under section 254(2). The court emphasized that rectification should only be for obvious and patent mistakes, not for debatable points of law.

Conclusion:
The court concluded that the Tribunal's order was erroneous as it amounted to a review rather than a rectification of a mistake apparent on the face of the record. The court reiterated that rectification should not be used to rewrite previous orders based on differing opinions. The judgment allowed the writ petition, stating that the Tribunal had no jurisdiction to pass the impugned order. The court clarified that the assessee could still pursue the alternative statutory remedy of reference under section 256 of the Income-tax Act.