2015 (4) TMI 412 - HC - Wealth-tax

Recall of previous order - Power of Tribunal to recall its final order - Whether in a case of wealth tax, the Tribunal has power to recall its order in the guise of rectification of mistake contrary to the provision under Section 35 of the Wealth Tax Act - Held that - Power under Section 35(1)(e) of the Wealth Tax Act extends only to rectify the mistake apparent from the face of the record. An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the record means an error which strikes one on mere looking and does not need a long drawn out process of reasoning. Under the garb of rectification of mistake, it is not possible for a party to take further chance of rearguing the appeal already decided. What can be rectified under Section 35(1)(e) is a mistake which is apparent and patent. A patent, manifest and self-evident error, which does not require elaborate discussion of evidence or argument to establish it can be said to be an error apparent on the face of the record. A point which was not examined on facts or in law cannot be dealt with as a mistake apparent from the record. Tribunal at the first instance had given benefit to the assessee and thereafter, the Department filed Miscellaneous Petitions to recall the order on the legal plea that the benefit of exclusion of asset would not apply in terms of Section 2(ea) of the Wealth Tax Act. This issue, according to us is a legal issue, which the Department, if aggrieved would have to canvass in appeal. The Department cannot be allowed to raise this issue in a petition filed for rectification that is not raised in appeal. The Tribunal in this case exceeded its jurisdiction in invoking the power under Section 35(1)(e) of the Wealth Tax Act to recall the final order dated 13.3.2012 in the guise of rectification. - Tribunal can only exercise its jurisdiction under Section 35(1)(e) of the Wealth Tax Act in the manner indicated in the provision and, de hors the provisions in the Act, it has no jurisdiction to recall its final order passed on the merits of the case. - Tribunal, while exercising the power of rectification, can recall its order, if it is satisfied that on account of mistake, manifest error or omission attributable to the Tribunal, prejudice is caused to the party. The Tribunal can recall its order for rectification of mistake apparent from the record. Else, the Tribunal has no power to recall its order. - Decided in favour of assessee.

Issues Involved:
1. Tribunal's power to recall its order under Section 35 of the Wealth Tax Act.
2. Assessment of wealth tax on leased commercial property.
3. Jurisdiction and procedural propriety of the Tribunal's recall order.

Issue-wise Detailed Analysis:

1. Tribunal's Power to Recall its Order under Section 35 of the Wealth Tax Act:
The primary question of law was whether the Tribunal has the power to recall its order in the guise of rectification of mistake contrary to Section 35 of the Wealth Tax Act. The court examined the scope of rectification under Section 35(1)(e) of the Wealth Tax Act, which allows the Appellate Tribunal to amend any order to rectify any mistake apparent from the record. The court emphasized that rectification is limited to correcting manifest errors that are self-evident and do not require elaborate discussion or re-argument of the case. The court cited various judgments, including the Supreme Court ruling in Honda Siel Power Products Ltd. v. CIT, to affirm that the Tribunal can recall its order only in cases of manifest errors and not for re-evaluating the merits of the case.

2. Assessment of Wealth Tax on Leased Commercial Property:
The assessee, engaged in manufacturing and selling glass products, had leased out land and buildings, receiving rental income. The Assessing Officer issued a notice under Section 17 of the Wealth Tax Act, determining the total wealth based on the leased property. The Tribunal initially ruled in favor of the assessee, stating that the property remained a commercial asset exploited for business purposes and thus did not attract wealth tax. However, the Revenue filed a Miscellaneous Petition arguing that the Tribunal had improperly applied amended provisions not applicable to the relevant assessment years. The Tribunal recalled its earlier order and, upon re-hearing, ruled against the assessee, stating that leased assets are not excluded from the definition of "assets" under Section 2(ea) of the Act.

3. Jurisdiction and Procedural Propriety of the Tribunal's Recall Order:
The court scrutinized the Tribunal's jurisdiction to recall its final order. It was argued that the Tribunal, after passing the final order, became functus officio and had no jurisdiction to recall the order based on a plea not raised by the Revenue initially. The court highlighted that the Tribunal's power under Section 35(1)(e) is confined to rectifying apparent mistakes and not for rehearing the case. The court noted that the Tribunal exceeded its jurisdiction by recalling the order on a legal plea that should have been addressed through an appeal. The court reiterated that reasons must be recorded for recalling an order, and such recall should be based on manifest errors apparent from the record.

Conclusion:
The court concluded that the Tribunal's recall of its order dated 13.3.2012 was erroneous and not in accordance with law. The original order favoring the assessee was restored. The court emphasized that the Tribunal should follow strict guidelines for rectification to prevent unnecessary litigation and ensure fairness in decision-making. The Department was allowed to pursue the matter further in accordance with law, with the period of pending litigation eschewed for limitation purposes. The appeals were allowed in favor of the assessee.

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