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TMI Blog2013 (12) TMI 1311X X X X Extracts X X X X X X X X Extracts X X X X ..... e Aditya Nath Mittal,JJ. For the Petitioner : C.S.C.,B. Agrawal,S. Chopra For the Respondent : S. K. Garg, Amit Shukla ORDER We have heard Sri Shambhu Chopra for the Revenue. Sri R.S. Garg appears for the Assessee. In this Income Tax Reference, under Section 256 (2) of the Income-tax Act, 1961, the Court directed the Income Tax Appellate Tribunal, to draw up statement of the case, and to refer the following question of law, for its consideration. "Whether on the facts and in the circumstances of the case the Hon'ble Tribunal was right in law in recalling its order dated 6.11.1990, which had become final u/s 254 (2) of the Act in exercise of its inherent power and in restoring the appeal of its file? " The Income-tax Appellate Tribunal has drawn up the statement of case, and forwarded the reference application on 30.04.1997. The facts leading to this reference are as follows:- "The assessee, by status a private limited company was engaged in the manufacture and sale of black and galvanized steel tubes. For the year under consideration, it had filed its return declaring a loss of Rs.2,67,520/-. The relevant assessment was completed by the Income-tax Office, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court had held that it can at the worst lead to rejection of accounts and estimation of profits and not that the entire irregularity itself could be converted into money value and added to the income of the assessee. Therefore, with a view to ensuring that the principle laid down by the jurisdictional High Court in the case of Swadeshi Cotton Mills (supra) was followed in this case also both in letter and spirit, the Tribunal, vide its order dated 30.07.1993 in M.A. No. 67 (Alld) of 1991 recalled its order dated 6.11.1990 for the limited purpose of finding out as to what was the quantum of addition called for on account of excess stocks declared to the Bank." The paper book has been filed in this case, and the matter was heard. Sri Shambhu Chopra for the Revenue submits that the Tribunal has, in exercise of its power under Section 254 (2) of Income-tax Act, 1961 (hereinafter referred to as "the Act"), with a view to rectifying mistake apparent from the record, reviewed its judgment, which is not permissible. Sri Chopra submits that the Tribunal had considered the judgment of this Court, which is a jurisdictional court to the Tribunal, in Swadeshi Cotton Mills Co. Ltd., report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt reasons for giving the power of rectification to the Tribunal under Section 254 (2) of the Act, is to ensure that no prejudice is caused to either of parties appearing before it. Sri R.S. Garg also relied upon judgment of this Court in CIT Vs. Khan Sirohi Steel Rolling Mills [2006 (152) Taxman 224 (Alld) in which this Court has held that where the Tribunal has already found that there was no verification of stock made by any bank official, and that no contrary decision was pointed out to show that a practice to inflate stocks hypothecated with the bank, with a view to avail higher overdraft facilities, was not found to be prevalent in business community, the court could decide the matter on such presumption. The Delhi High Court in Lachman Dass Bhatia Hingwala (P) Ltd Vs. Assistant Commissioner of Income-Tax [2011 (330) ITR 243], relying upon both the judgements, namely, Saurashtra Kutch Stock Exchange Ltd (Supra) and in Honda Siel Power Products Ltd (Supra) and Saurashtra Kutch Stock Exchange Ltd (Supra), has elaborated the powers of the Tribunal under Section 254 (2) of the Act. The discussion in the judgment is quoted as follows:- But what has been stated by the apex co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent to the order proposed to be rectified; (g) After the mistake is corrected, consequential order must follow, and the tribunal has power to pass all necesary consequential orders." On the basis of the said conclusions, the writ court affirmed the order of recall passed by the tribunal. the aforesaid decision was challenged by the Revenue before the apex court and their Lordships in Asstt. CIT. Saurashtra Kutch Stock Exchange Ltd [2008] 305 ITR 227 (SC) cam to hold as follows (page 240): "The core issue, therefore, is whether non-consideration of a decision of jurisdictional court (in this case a decision of the high Court of Gujarat) or of the Supreme Court can be said to be a 'mistake apparent from the record'? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a 'mistake apparent from the record' which could be rectified under section 254 (2)." (emphasis supplied] Thereafter, their Lordships proceeded to state as follows (page 21): "Rectification of an order stems for the of an order stems from the fundamental principle that justice above all. It is exercised to remove the error and to disturb the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hindustan Coca Cola Beverages (P) Ltd [2007] 293 ITR 226 (SC). We have carefully perused the decisions rendered by the High Courts of Madras, Bombay, Karnakata and Rajasthan which have been commended to us by Mr. Mehta and we notice that the decision was distinguished on the factual score and none of the decisions have proceeded to say that it is not a precedent for the proposition that the tribunal under no circumstances can recall its own order.", In the present case though the Tribunal had referred to the judgment in M/s. Swadeshi Cotton Mills (Supra), but later on, on the application given by the assessee that it wrongly applied the principle of law in M/s. Swadeshi Cotton Mills to the present case, found that there is difference between hypothecation and pledge of the stock. The hypothecation of the goods could not be treated as same as in the case of pledge. The Tribunal realized its mistake in wrongly applying the principles laid down in M/s. Swadeshi Cotton Mills, and rectified the mistake. In the absence of power of review, where the tribunal finds that there was apparent mistake in its order, which has caused serious prejudice to the assessee, in view of the judgments i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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