2008 (10) TMI 124 - HC - Income Tax

Application for rectification of mistake filed by assessee u/s 254 (2) were allowed by tribunal on ground that certain decision of the SC overruling the decisions of the HC had not been considered by it while disposing of the appeals mistake can be said to be a mistake apparent from the record which could be rectified u/s 254(2) - tribunal rectifying its mistake could not be found fault with - no question of law can be said to arise out of the impugned order revenue s appeal dismissed

Summary

Issues:
Appeal against the order passed by the Income-tax Appellate Tribunal under section 254(2) of the Income-tax Act, 1961 regarding rectification applications filed by the assessee in respect of the tribunal's earlier common order dated 31.08.2005. The tribunal had not considered the Supreme Court decision in the case of Commissioner of Income-tax, Karnataka, Bangalore v. M/s Shaan Finance Pvt. Ltd. [1998] 231 ITR 308 while passing the earlier order. The issues involved depreciation on hire-purchase assets and the applicability of the Supreme Court decision in Shaan Finance Pvt. Ltd. [1998] 231 ITR 308.

Detailed Analysis:

1. The appeals arose from a common order dated 15.02.2008 passed by the Income-tax Appellate Tribunal under section 254(2) of the Income-tax Act, 1961. The rectification applications were filed by the assessee in response to the tribunal's earlier order dated 31.08.2005 concerning assessment years 1995-96, 1996-97, and 1997-98. The appeals were admitted for hearing before the court, leading to the present appeals arising from the order dated 15.02.2008 recalling the earlier order due to the tribunal's failure to consider the Supreme Court decision in Shaan Finance Pvt. Ltd. [1998] 231 ITR 308.

2. The tribunal acknowledged its oversight in not discussing the Supreme Court decision in the earlier order and accepted that there was an error apparent from the record. The tribunal recognized that non-consideration of a relevant Supreme Court judgment could constitute a mistake apparent from the record under section 254(2) of the Income-tax Act. Consequently, the tribunal recalled the earlier order but refrained from expressing any opinion on the applicability of the Supreme Court decision, leaving it for the regular bench to decide after hearing arguments from both sides.

3. The revenue filed appeals against the tribunal's order, challenging the decision to recall the earlier order. The court found that the tribunal correctly exercised its power to rectify under section 254(2) of the Act, citing a recent Supreme Court decision in Assistant Commissioner of Income-tax v. Saurashtra Kutch Stock Exchange Limited [2008] 305 ITR 277. The Supreme Court emphasized the importance of rectification to correct errors and uphold justice, supporting the tribunal's decision to rectify the order based on the oversight of not considering the relevant Supreme Court decision.

4. The court upheld the tribunal's decision, stating that the law was well-settled, and no question of law arose from the impugned order. The judgment highlighted the fundamental principle that rectification aims to remove errors and ensure justice, aligning with the tribunal's actions in recalling the earlier order to consider the Supreme Court decision properly.

5. Consequently, the appeals against the tribunal's order were dismissed, affirming the correctness of the tribunal's decision to rectify the order under section 254(2) of the Income-tax Act based on the oversight of not considering the relevant Supreme Court decision.