2019 (4) TMI 500 - AT - Income Tax

Rectification u/s 254(2) - non-satisfaction or disagreement of the parties to the litigation, with the reasoning given by the Tribunal in its order - HELD THAT - Commissioner Of Income-Tax vs Ramesh Electric And Trading Co 1992 (11) TMI 32 - BOMBAY HIGH COURT power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent; mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment and under such circumstances the Tribunal has no jurisdiction under section 254(2) to pass the second order.

Summary

Issues:
1. Mistake apparent on record in the Tribunal's order regarding compensation on delayed payment of refund and interest.
2. Interpretation of the law laid down by the Hon'ble Supreme Court.
3. Maintainability of the application under section 254(2) of the Act.
4. Power of rectification under section 254(2) of the Income-tax Act.
5. Jurisdiction of the Tribunal to pass a second order.

Analysis:
The Misc. Applications filed by the Revenue alleged a mistake in the Tribunal's order related to compensation on delayed refund payment and interest. The Assessing officer contended that the Tribunal misinterpreted the law set by the Hon'ble Supreme Court in the 'CIT Vs. Gujarat Flluro Chemicals' case and the 'CIT Vs. Indian Farmers Fertilizers Cooperative' case. Despite notice, no one appeared on behalf of the assessee. The Ld. DR strongly relied on the Supreme Court's decision in the 'CIT Vs. Gujarat Flluro Chemicals' case, arguing that the Tribunal misinterpreted the order. However, the Tribunal found no apparent mistake in its order and stated that disagreement with the Tribunal's reasoning does not constitute a mistake. The Tribunal had considered relevant Supreme Court decisions and allowed the appeal based on detailed analysis and reasoning.

Regarding the power of rectification under section 254(2) of the Income-tax Act, the Tribunal cited the 'Commissioner Of Income-Tax vs Ramesh Electric And Trading Co.' case and the 'T. S. Balaram, ITO v. Volkart Brothers' case. It emphasized that rectification can only be done for obvious and patent mistakes apparent from the record, not for errors requiring lengthy reasoning. Failure to consider an argument does not constitute an error apparent on the record. Therefore, the Tribunal lacks jurisdiction under section 254(2) to pass a second order. Based on these observations and legal principles, the Tribunal dismissed the Revenue's Misc. Applications, finding no merit in them. The order was pronounced in the Open Court on 27.02.2019.