2003 (7) TMI 728 - HC - Income Tax

Tribunal has right in recalling its earlier order passed under section 254(1)? - Discrepancy in the stocks and sales of silver ornaments - Addition - HELD THAT - Miscellaneous applications have been moved and the Tribunal has, on those miscellaneous applications, just upheld the view of the CIT(A), whereby the CIT(A) has given relief to the assessee. When, at one stage, the Tribunal has taken the view that the CIT(A) has not properly looked into the papers in the paper book which was submitted to him and he should reconsider his views and discuss the evidence which has been brought on record in the form of paper book. In our view, there is nothing wrong in the observations in the earlier order and at least it cannot be said that there was an apparent mistake in the order dated 29‑10‑1993 which can be corrected on application u/s 254(2) of the Income-tax Act. In our view, there is nothing wrong in the observations in the earlier order and at least it cannot be said that there was an apparent mistake in the order dated 29‑10‑1993 which can be corrected on application u/s 254(2). In our considered opinion, the Tribunal has committed error in upholding the view of the CIT(A), after specific observations that the CIT(A) has not properly appreciated the evidence on record. That cannot be said to be an apparent mistake which can be corrected u/s 254(2) of the Income-tax Act, 1961. In the result, we answer the question in negative i.e., in favour of the revenue and against the assessee. The reference so made, stands disposed of accordingly.

Summary

Issues:
1. Interpretation of provisions under section 254(2) of the Income-tax Act.
2. Assessment of unexplained cash and silver ornaments.
3. Judicial review of Tribunal's decision on recalling an earlier order.
4. Proper appreciation of evidence by CIT(A) in assessment proceedings.

Analysis:

The case involved a partnership firm engaged in the business of silver and gold ornaments. The Department conducted a search under section 132 of the Income-tax Act, revealing discrepancies in stock and cash. The Assessing Officer added unexplained cash and silver ornaments to the total income of the assessee. The CIT(A) later deleted these additions for the assessment year 1985-86 but sustained a portion of the addition for 1986-87 due to discrepancies in stocks and sales.

Upon appeal, the Tribunal initially set aside the CIT(A)'s order, citing improper evidence appreciation. Subsequently, the Tribunal received two applications under section 254(2) for rectification of its earlier order. After reconsideration, the Tribunal upheld the CIT(A)'s decision, leading to a reference questioning the order dated 12-10-1994.

During the proceedings, the Tribunal observed that the CIT(A) had not adequately considered the evidence presented, directing a fresh assessment after proper evaluation. However, the Tribunal later upheld the CIT(A)'s decision based on the same evidence, prompting the Court to question the Tribunal's judgment.

The Court held that the Tribunal erred in endorsing the CIT(A)'s decision despite acknowledging the initial lack of evidence appreciation. The Court concluded in favor of the revenue, emphasizing that the Tribunal's actions did not constitute an apparent mistake under section 254(2) of the Income-tax Act. Consequently, the reference was disposed of, ruling against the assessee.