2001 (7) TMI 263 - AT - Income Tax

Summary

Issues Involved:
1. Alleged errors and omissions in the Tribunal's order dated 16th July 1999.
2. Rejection of the assessee's application for rectification under section 254(2).
3. Assessment of the cost of construction and related disputes.
4. Validity of the second rectification application under section 254(2).

Issue-wise Detailed Analysis:

1. Alleged errors and omissions in the Tribunal's order dated 16th July 1999:
The assessee contended that the Tribunal's order suffered from various errors and omissions, which were patent on the face of the record and went to the root of the matter. These errors were pointed out in the application filed under section 254(2) on 12th October 1999. The assessee argued that material points raised during the hearing were not discussed or dealt with in the Tribunal's order. Specifically, the assessee highlighted that the cost of construction was overestimated due to the application of higher rates for the working hall and administrative block, and the rebate for self-supervision was not adequately considered.

2. Rejection of the assessee's application for rectification under section 254(2):
The Tribunal rejected the assessee's application for rectification, stating that the errors or omissions pointed out were not such obvious and patent mistakes on the face of the record that would justify rectification. The Tribunal held that reconsidering these errors would amount to rehearing the case and reconsidering the matter afresh, which is beyond the scope of section 254(2). The Tribunal concluded that the application had no merit as the averments were beyond the scope of rectification.

3. Assessment of the cost of construction and related disputes:
The assessee was engaged in the manufacturing and trading of sports goods and constructed a factory building at Noida over three years. The cost declared by the assessee was Rs. 19,20,561, while the DVO estimated it at Rs. 27,21,030. The difference was added by the ITO. The CIT(A) set aside the assessment for reconsideration, but the revised DVO report was delivered to the assessee only on 27th March 1996, with the assessment framed on 31st March 1996. The assessee argued that they were not given adequate time to meet the DVO's report. Additionally, disputes arose regarding labor payments and the engagement of a contractor, which the assessee explained were misunderstood by the ITO. The Tribunal upheld the findings of the CIT(A) and dismissed the assessee's appeal, ignoring the material points raised by the assessee.

4. Validity of the second rectification application under section 254(2):
The Tribunal noted that the assessee had moved a second rectification application on 19th April 2001, raising similar grounds as those in the first application. The Tribunal held that the second application was not maintainable under the law, as the order rejecting an application for rectification under section 254(2) is not an order passed under section 254(1) and cannot be rectified under section 254. The Tribunal referred to the decisions of various High Courts, which held that a second application for rectification is not permissible. The Tribunal concluded that the second application was beyond the scope of rectification and dismissed it.

Conclusion:
The Tribunal dismissed the assessee's miscellaneous application, reiterating that the errors and omissions pointed out were not apparent mistakes justifying rectification. The Tribunal also emphasized that the second rectification application was not maintainable under the law.