2020 (1) TMI 561 - AT - Income Tax

Rectification of mistake u/s 254 - rectification of mistake apparent from record OR rectification in error of judgment - Tribunal has relied on the decision of the Hon‟ble Supreme Court of India which is with respect to Central Excise Act Rules and ignoring the decision of the Hon‟ble Supreme Court which deals directly with Income Tax Act, 1961 - HELD THAT - There are series of decisions by the Hon'ble Supreme Court as well as Hon'ble High Court expounding scope of exercising powers under section 254(2) of the Act. We do not deem it necessary to recite and recapitulate all of them, but suffice to say that core of all these authoritative pronouncements is that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. The Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric Trading Company reported 1992 (11) TMI 32 - BOMBAY HIGH COURT has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment. We are of considered view that in the guise of rectification, the Revenue is seeking review of the order of Tribunal, which is beyond the scope of powers as envisaged u/s. 254(2) of the Act. As per the Miscellaneous Application filed before us, we do not find any mistake, much less any apparent mistake that warrants rectification in the order of Tribunal.

Summary

Issues Involved:
Review of Tribunal's order under section 254(2) of the Income Tax Act, 1961 based on reliance on specific court decisions.

Analysis:

Issue 1: Review of Tribunal's Order
The Appellate Tribunal received a Miscellaneous Application from the Revenue under section 254(2) of the Income Tax Act, 1961, seeking a review of its own order in ITA No.1667/PUN/2015 dated 29.11.2018. The Revenue contended that the Tribunal had erred by relying on a decision related to the Central Excise Act, ignoring a relevant decision under the Income Tax Act. The Revenue argued that this failure to follow the decision of the Hon'ble Supreme Court constituted a mistake apparent from the record.

Issue 2: Arguments by the Parties
The Departmental Representative (DR) failed to identify any obvious mistake in the Tribunal's order, while the Assessee's Representative (AR) strongly opposed the review, stating that the Tribunal's order was well-reasoned and did not require rectification. The AR argued that the Revenue's application was an attempt to review the entire order under the guise of rectification, which exceeded the scope of section 254(2) of the Act.

Issue 3: Tribunal's Evaluation
Upon reviewing the case record and considering the arguments presented, the Tribunal found that its decision was based on a Supreme Court ruling related to the Central Excise Act. The Tribunal emphasized that the power of rectification under section 254(2) could only be exercised for obvious and patent mistakes apparent from the record, not for errors requiring extensive arguments or differing opinions. The Tribunal referenced previous court decisions to support this interpretation.

Issue 4: Scope of Rectification
Citing the jurisdictional High Court's ruling, the Tribunal clarified that section 254(2) allowed rectification of mistakes apparent from the record itself, not errors in judgment. The Tribunal concluded that the Revenue's application sought a review of the order rather than rectification, exceeding the statutory powers granted under section 254(2) of the Act.

Conclusion:
The Tribunal dismissed the Revenue's Miscellaneous Application, stating that no mistake, let alone an apparent one, existed in its order dated 29.11.2018. The Tribunal justified its reliance on the Supreme Court's decision in the case of M/s. Andaman Timber Industries and upheld its original adjudication based on this precedent. The Tribunal deemed the Revenue's application devoid of merit and concluded that the order was rightly decided. Consequently, the Miscellaneous Application filed by the Revenue was dismissed.