2005 (2) TMI 29 - HC - Income Tax

Rectification of mistake under section 254(2) - petitioner is challenging the order dated August 28, 2003, passed by the Tribunal with regard to a miscellaneous petition filed by the petitioner for rectification of mistake under section 254(2) - After hearing both the sides and considering the facts and circumstances, we are clearly of the view, that the Tribunal ought to have heard the petitioner and also ought to have dealt with the specific contentions regarding factual errors, by giving proper findings. Hence, we do hereby, quash and set aside the said impugned order dated August 28, 2003, and remand back the matter to the Tribunal to consider the said miscellaneous application for rectification of mistakes, to be decided strictly on its own merits in accordance with law after affording an opportunity of hearing to the petitioner

Summary

Issues:
Challenge to Tribunal's order for rectification of mistake under section 254(2) of the Income-tax Act, 1961 without affording a hearing to the petitioner and without proper consideration of factual errors.

Analysis:
The petitioner challenged the Tribunal's order dated August 28, 2003, regarding a miscellaneous petition for rectification of mistakes under section 254(2) of the Income-tax Act, 1961. The petitioner pointed out apparent mistakes in the Tribunal's order of May 19, 2003, related to the assessment year 1999-2000. The petitioner filed a miscellaneous application for rectification, emphasizing discrepancies in the application of GP rates and the resultant incorrect closing stock calculation. Despite pointing out factual errors and lack of consideration by the Tribunal, the petitioner was not given a hearing before the impugned order was passed.

The petitioner withdrew an Income-tax Appeal filed before the court to challenge the Tribunal's order. The petitioner's counsel argued that the Tribunal's order was in violation of natural justice as no personal hearing was granted, and various factual errors were not properly addressed. The counsel highlighted that out of approximately 485 transactions, only about 21 had GP rates between 7 and 8 per cent, contradicting the Tribunal's observation regarding the majority GP rate. The respondent's counsel acknowledged the lack of hearing but justified the order as a rejection of a review petition.

Upon hearing both sides, the court found that the Tribunal should have heard the petitioner and addressed the specific contentions regarding factual errors by providing proper findings. The court quashed the impugned order dated August 28, 2003, and remanded the matter back to the Tribunal for reconsideration of the miscellaneous application for rectification, ensuring a hearing for the petitioner. The court disposed of the writ petition with no order as to costs.