2015 (4) TMI 980 - HC - Income Tax

Rectification of mistake - powers of Tribunal u/s 254(2) - appeal against the order of tribunal pending before HC - Held that - Merely because the assessee has challenged the order of the Tribunal in an Appeal under section 260A of the Income Tax Act, 1961 before the High Court does not mean that the power under section (2) of section 254 cannot be invoked either by the assessee or by the revenue/Assessing Officer. Such a power enables the Tribunal to rectify any mistake apparent from the record and make amendments. That in a given case would not only save precious judicial time of the Tribunal but even of the higher Court. Only when the assessee or the Assessing Officer calls upon the Tribunal to undertake an exercise which is not permissible within the meaning of section (2) of section 254 that the Tribunal can rely on the principle of judicial propriety or its reluctance or refusal to take upon itself the powers of the higher Court of Appeal. We can understand if the Tribunal had passed an order after considering the application made by the peritioner-assessee on its merits and in accordance with law. However, the refusal of the Tribunal to go ahead and reject the application only on the ground that the petitioner-assessee has invoked the appellate powers of higher Court cannot be sustained. That is contrary to the plain language of the two statutory provisions and which have been brought to our notice. Nothing contrary having been pointed out and such a view of the Tribunal may affect and prejudicially the interest of the revenue that all the more we cannot sustain the impugned order. The Writ Petition is allowed. The petitioners misc. application seeking to invoke the powers under subsection (2) of section 254 shall now be heard by the Tribunal and it shall be decided in accordance with law.

Summary

Issues:
1. Rectification of mistake in the initial order passed by the Income Tax Appellate Tribunal.
2. Interpretation of powers under section 254(2) of the Income Tax Act, 1961.
3. Judicial propriety in seeking remedies before two authorities simultaneously.
4. Correctness of the view taken by the Tribunal regarding invoking powers under section 254(2).

Analysis:

Issue 1: The petitioner-assessee filed a Misc. Application seeking rectification of mistakes in the initial order passed by the Income Tax Appellate Tribunal for the assessment year 2007-08. The application highlighted errors in the order and requested the Tribunal to correct them. The Tribunal rejected the application stating that since the assessee filed an appeal before the High Court, seeking a remedy simultaneously before two authorities was not permissible.

Issue 2: The petitioner's counsel argued that the power under section 254(2) of the Income Tax Act allows the Tribunal to rectify any mistake apparent from the record within four years from the date of the order. The Tribunal's understanding of the legal provision was deemed incorrect and erroneous. The Tribunal's refusal to consider the application solely based on the pending appeal before the High Court was contrary to the statutory provisions.

Issue 3: The Tribunal's view that seeking remedies before two authorities simultaneously was against judicial propriety was challenged. The petitioner's counsel emphasized that the Tribunal could exercise its powers under section 254(2) even if an appeal was pending before a higher court. The Tribunal's decision to reject the application on this ground was considered unsustainable.

Issue 4: After analyzing the relevant legal provisions, the Court concluded that the Tribunal's order rejecting the application could not be sustained. The Court clarified that the Tribunal possessed the power to entertain rectification applications even after disposing of the main matter. The Tribunal was directed to hear the application under section 254(2) expeditiously and decide in accordance with the law, allowing both sides to present their arguments on the merits of the rectification application.

In summary, the High Court allowed the Writ Petition, emphasizing the Tribunal's authority to rectify mistakes under section 254(2) of the Income Tax Act and directing the Tribunal to reconsider the petitioner's application for rectification in light of the correct legal interpretation.