2014 (10) TMI 73 - HC - Income Tax

Reopening of assessment u/s 147 - Amount spent on construction of godown - unexplained investment u/s 69B or not - The orders of assessment, insofar as they relate to the cost of construction of a godown have been reopened in exercise of power u/s 148 of the Act - The appellants suffered orders of re- assessment in the hands of the assessing authority and accordingly carried the matter to the appellate Commissioner - It is no doubt true that the ground of the absence of factual basis for reopening the assessment was urged - The reason appears to be that the reopening was on the basis of the valuation of the godown by the Superintending Engineer. Miscellaneous application - The assessee are not able to point out as to what exactly the error in the orders passed by the Tribunal in the appeals, which is apparent from the record - the Tribunal did not address the question pertaining to the very basis for reopening the assessment - the Court or a Tribunal is deemed to have taken every aspect that is placed before it, into account and granted the relief which it felt appropriate and gave a disposal to the matter before it, in a manner which it felt appropriate the order of the Tribunal is upheld Decided against assessee.

Issues:
1. Reopening of assessments under Section 147 of the Income Tax Act.
2. Exercise of jurisdiction under Section 254(2) of the Act by the Tribunal.
3. Rectification of mistakes in orders passed by the Tribunal.
4. Legal interpretation of "error apparent on the face of the record."

Reopening of assessments under Section 147:
The appellants, who are brothers and assessees under the Income Tax Act, jointly constructed a godown. After the assessment was completed, the Income Tax Department issued notices stating a significant difference in the cost of construction determined by the Superintending Engineer. The assessing officer then made additions to the appellants' income, leading to appeals and subsequent reductions by the Commissioner (Appeals) and the Tribunal. The Tribunal partially allowed the appeals, prompting the appellants to file miscellaneous petitions under Section 254(2) of the Act, which were rejected by the Tribunal. The Court noted that the power under Section 148 to reopen assessments is maintained as long as some basis exists, and the adequacy of material available with the assessing officer is not subject to adjudication.

Exercise of jurisdiction under Section 254(2) of the Act:
The Tribunal's power under Section 254(2) is comparable to a review and can only rectify a mistake apparent from the record. The appellants argued that the Tribunal should have rectified its orders due to errors in reopening assessments without a factual basis. However, the Court emphasized that the power under Section 254(2) can only be exercised for rectifying mistakes within the record and not for other purposes.

Rectification of mistakes in Tribunal orders:
The Court highlighted that for a mistake to be apparent on the face of the record, it must be discernible just by perusing the connected record without external material. The appellants failed to demonstrate any such error in the Tribunal's orders, and the Court held that the Tribunal's silence on certain aspects does not necessitate interference if the overall disposal was deemed appropriate.

Legal interpretation of "error apparent on the face of the record":
Citing legal precedents, the Court explained that an error apparent on the face of the record should be self-evident and not require extensive discussion or external material to establish. The Court clarified that if a judgment reflects one of the possible views, it does not constitute an error apparent on the face of the record. The Court concluded that there was no basis to interfere with the Tribunal's orders, and the appeals were dismissed with no costs awarded.

In conclusion, the Court upheld the Tribunal's decisions, emphasizing the limited scope of rectification under Section 254(2) and the requirement for errors to be self-evident from the record for such rectification to be warranted.

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