2002 (8) TMI 263 - AT - Income Tax

Summary

Issues Involved:
1. Legality of the search operation under Section 132 of the Income-tax Act.
2. Violation of Sections 132(8) and 132(9A) of the Income-tax Act.
3. Addition of Rs. 2,08,250 based on Document No. 3.
4. Tribunal's power to recall its order under Section 254(2) of the Income-tax Act.

Detailed Analysis:

1. Legality of the Search Operation Under Section 132 of the Income-tax Act:
The assessee argued that the conditions in clauses (a), (b), and (c) of sub-section (1) of Section 132 were not satisfied, rendering the search operation illegal. However, the Tribunal did not find merit in this argument and rejected the ground, stating that the provisions of Section 132(9A) should be examined in light of Section 158BD, which deals with the special procedure for assessment of search cases. The Tribunal concluded that the 15-day period mentioned in Section 132(9A) was not strictly relevant and there was no gross violation of natural justice principles to annul the assessment order.

2. Violation of Sections 132(8) and 132(9A) of the Income-tax Act:
The assessee contended that the search proceedings were vitiated due to the violation of Sections 132(8) and 132(9A), but the Tribunal did not address this specific point in its order. The Tribunal, however, considered the broader legal provisions and documents and decided against the assessee. The Tribunal emphasized that the failure to mention a specific argument does not constitute a mistake apparent from the record.

3. Addition of Rs. 2,08,250 Based on Document No. 3:
The assessee challenged the addition of Rs. 2,08,250 on account of alleged storage charges based on entries in Document No. 3, arguing that the document did not constitute regular books of account and its authorship was not established. The Tribunal, however, found that the notebook was seized from the joint residence of the partners and applied the presumption under Section 132(4A). The Tribunal concluded that the notebook belonged to the assessee and the entries were valid, but directed the Assessing Officer to recalculate the charges per bag at Rs. 47 instead of Rs. 50, providing some relief to the assessee.

4. Tribunal's Power to Recall its Order Under Section 254(2) of the Income-tax Act:
The assessee filed an application under Section 254(2) for recalling the Tribunal's order, arguing that certain submissions were not considered, leading to a mistake apparent from the record. The Tribunal reviewed various case laws, including T.S. Balaram v. Volkart Brothers, and concluded that a mistake apparent on the record must be obvious and patent, not requiring a long-drawn process of reasoning. The Tribunal held that it does not have the power to review its own order under the guise of rectification. The Tribunal found no patent mistake in its original order and concluded that recalling the order would amount to a review, which is beyond the scope of Section 254(2). Consequently, the application was dismissed.

Conclusion:
The Tribunal dismissed the application for recalling its order, holding that there was no mistake apparent from the record. The Tribunal emphasized that its power under Section 254(2) is limited to rectifying obvious and patent mistakes and does not extend to reviewing its own decisions. The assessee's arguments regarding the legality of the search operation and the addition based on Document No. 3 were found to be without merit.