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Issues Involved:
The legality of the order passed by the Income-tax Appellate Tribunal under section 254(2) of the Income-tax Act, 1961. Judgment Details: Background Facts: The assessee filed a return of income for the assessment year 1978-79, showing a loan of Rs. 50,000 from Smt. Sara Devi as unexplained investment. The Assessing Officer added this amount to the returned income as income from undisclosed sources. The Commissioner of Income-tax (Appeals) set aside the assessment for further inquiry. The Tribunal held that the matter did not require further investigation. The assessee filed applications under section 254(2) for rectification of alleged mistakes in the Tribunal's orders. Arguments Presented: The Department contended that the Tribunal reconsidered the appeal on merits, which is impermissible under section 254(2). They also argued that the second rectification application was not maintainable. The assessee argued that the Tribunal did not consider the correct facts and legal position in the earlier orders, justifying the second rectification application. Analysis of Section 254(2): Section 254(2) allows the Tribunal to rectify any mistake apparent from the record in an order passed under sub-section (1) within four years. The order must relate to an appeal filed under section 253. An order rejecting a rectification application is not eligible for rectification under section 254(2). The Tribunal erred in using section 254(2) to rectify an order rejecting a rectification application. Therefore, the impugned order was set aside. Conclusion: The High Court allowed the writ application, setting aside the impugned order. No costs were awarded. Judge S. K. Mohanty concurred with the decision.
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