2014 (1) TMI 751 - AT - Income Tax

Recall of order u/s 254 of the Act - Rectification of mistake apparent from record - Held that - The use of term net of all deductions and specific direction not to allow separate deduction towards remuneration and interest payments to partners, is nothing but the manner of estimation of income of the assessee approved by the Tribunal for determining the incomes of the assessee for the years under consideration by the Assessing Officer - such a direction need not specifically arise only on account of any specific ground raised by the Revenue with regard to allowability of deductions towards remuneration and interest payments to partners - the Tribunal has taken a conscious view in the matter of adopting a method estimation of income, while giving such a direction thus, it cannot be termed as a mistake apparent from record, nor the Tribunal could review or modify such directions, in the guise of rectifying its order, within the scope of the provisions of S.254(2) of the Income-tax Act, 1961 the decision of CIT V/s. Ved Prakash 1993 (4) TMI 17 - ANDHRA PRADESH High Court followed - thus, there could not be any mistake apparent from record in the order of the Tribunal Decided against Assessee.

Summary

Issues: Rectification of common order of Appellate Tribunal regarding determination of income from liquor business for assessment years 2007-08 and 2008-09.

Analysis:
1. The applicant sought rectification of the Appellate Tribunal's common order dated December 5, 2012, regarding the determination of income from liquor business for the assessment years 2007-08 and 2008-09. The Assessing Officer had estimated the income, and the CIT(A) and Tribunal made subsequent directions on the estimation of net profit at different rates. The issue arose regarding the allowability of separate deductions towards remuneration and interest payments to partners, which the applicant claimed was not the subject matter of dispute before the Tribunal, leading to a mistake apparent from the record.

2. The Tribunal, in its order, directed the Assessing Officer to determine the income of the assessee at a rate of 5%, net of all deductions, and disallowed further deductions towards remuneration and interest to partners. The Tribunal clarified that this direction was part of the approved method of income estimation, even if not specifically raised by the Revenue as a ground for dispute. The Tribunal held that such direction did not constitute a mistake apparent from the record and was within its jurisdiction to decide on the method of income estimation.

3. The Tribunal referred to the decision of the jurisdictional High Court in a similar case, emphasizing that unless there are manifest errors that are obvious, clear, and self-evident, the Tribunal cannot recall its previous order to rewrite it. The power of rectification is limited to correcting mistakes that are patent and clear from the record. The Tribunal also cited another High Court case stating that unless an error is apparent without the need for long arguments or research, it does not qualify as a mistake for rectification.

4. Based on the above legal principles and the specific facts of the case, the Tribunal concluded that there was no mistake apparent from the record within the scope of Section 254(2) of the Income-tax Act, 1961. The Tribunal's decision was upheld, and both the Miscellaneous Applications of the assessee were dismissed. The judgment highlighted the limited scope of rectification powers and the necessity for errors to be clear and self-evident for such rectification to be allowed.

5. The judgment was pronounced in court on June 10, 2013, marking the conclusion of the legal proceedings regarding the rectification sought by the assessee concerning the determination of income from the liquor business for the relevant assessment years.