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TMI Blog2021 (3) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... resh consideration of the ground No.3, which the writ applicant is talking about. The power to rectify an order under Section 254(2) of the Act is extremely limited, as observed by the Delhi High Court in the case of Maruti Insurance[ 2012 (9) TMI 266 - DELHI HIGH COURT] . It does not extend to correcting the errors of law or re appreciating the factual findings. Those properly fall within the appellate review of an order of Court of first instance. What legitimately falls for consideration are errors (mistakes) apparent from the record. We are of the view that we should not interfere with the impugned order passed by the Appellate Tribunal. Writ application fails and is hereby rejected. - R/SPECIAL CIVIL APPLICATION NO. 18617 of 2018 - - - Dated:- 18-3-2021 - HONOURABLE MR. JUSTICE J.B.PARDIWALA And HONOURABLE MR. JUSTICE ILESH J. VORA MR DARSHAN R PATEL(8486) FOR THE PETITIONER(S) NO. 1 MRS MAUNA M BHATT(174) WITH MR KARAN SANGHANI, ADVOCATE FOR THE RESPONDENT(S) NO. 2 NOTICE SERVED BY DS(5) FOR THE RESPONDENT(S) NO. 1,3,4 JUDGMENT (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 By this writ application under Article 226 of the Constitution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners to be bogus. 2. The Ld. CIT(A) erred on facts and in law in confirming addition of ₹ 10,81,710/ by holding purchase of raw cotton from the relatives of the partners to be unexplained / unsubstantiated. 3. The Ld. CIT(A) erred on facts and in law in confirming addition of ₹ 67,59,613/ for alleged suppression in value of closing stock by discarding / disregarding the method of valuation consistently followed in and accepted in past assessments. 5 The Appellate Authority partly allowed the appeal filed by the firm holding as under: 11. In the present case, ld. CIT(A) has rightly observed that the assessee has not followed either of the method of valuation of closing stock, i.e., either on the basis of cost price or market price, whichever is lower, rather the assessee has followed net realizable value which is purely an ad hoc method and without any basis. He also held that the net realization method is neither based on cost price nor calculated on the basis of market price; thus, there is no scientific method of calculation of the net realizable value. In view of these facts and circumstances of the case and considering the judgment of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in the case of Chainrup Sampatram vs. CIT 24 ITR 481 (SC). Due to this reason income has been taxed twice. (b) Non consideration of decision of Hon'ble Rajasthan High Court in the case of CIT vs. Singhal Natural Stone (P) Ltd (2011) 243 CTR (Raj) 414 holding that the assessee is entitled to value closing stock at reduced rate particularly when the same has been sold in the succeeding period at a lesser rate. (c) Closing stock was sold at a substantially lower value in succeeding year. 8 The Miscellaneous Application filed by the firm came to be rejected by the Appellate Tribunal vide order dated 8th October 2018 holding as under: 4. We have considered rival submissions and gone through the record carefully, we find that the power of rectification under section 254 of the Income Tax Act can be exercised only when the mistake, which is sought to be rectified, is an obvious patent mistake and apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. We find the error pointed out by the assessee qua gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that can be seen, or is visible; obvious; plain. A mistake which can be rectified under Section 254(2) is one which is patent, obvious and whose discovery is not dependent on argument. The language used in Section 254(2) is permissible where it is brought to the notice of the Tribunal that there is any mistake apparent from the record. The amendment of an order therefore, does not mean obliteration of the order originally passed and its substitution by a new order which is not permissible, under the provisions of Section 254(2). Further, where an error is far from self evident, it ceases to be an apparent error. Undoubtedly, a mistake capable of rectification under Section 254(2) is not confined to clerical or arithmetical mistakes. At the same time, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by the Supreme Court in Master Construction Co. (P) Ltd. v. State of Orissa (1966) 17 STC 360, an error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. A similar view was also expressed in Sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order obviously would mean passing of a fresh order. That does not appear to be the legislative intent. The order passed by the Tribunal under Section 254(1) is the effective order so far as the appeal is concerned. Any order passed under Section 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining unamended is the effective order for all practical purposes. The same continues to be an order under Section 254(1). That is the final order in the appeal. An order under Section 254(2) does not have existence de hors the order under Section 254(1). Recalling of the order is not permissible under Section 254(2). Recalling of an order automatically necessitates re hearing and readjudication of the entire subject matter of appeal. The dispute no longer remains restricted to any mistake sought to be rectified. Power to recall an order is prescribed in terms or Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, and that too only in cases where the assessed shows that it had a reasonable cause for being absent at a time when the appeal was taken up and was decided ex parte. This position was highlig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so noticed and held that: It must be remembered that this is not a power of review but is restricted to rectifying mistakes apparent from the record. A liberal approach might constitute an invitation to parties to allow the period for filing an appeal to expire, anticipate a change of coram of the bench that heard the appeal in the first instance, and then at their own sweet will take a chance by filing a rectification application on any fancy imagined 'mistake apparent from the record' at any time before the expiry of four years. The Supreme Court also, in T.S. Balaram, Income Tax Officer, Company Circle IV, Bombay v. Volkart Brothers, Bombay [1971] 82 ITR 50 (SC) placed similar interpretation on the expression with a view to rectifying any mistake apparent from the record an expression common in section 254(2) and section 154 of the Act, holding: From what has been said above, it is clear that the question whether Section 17(1) of the Indian Income tax Act, 1922 was applicable to the case of the first respondent is not free from doubt. Therefore the Income tax Officer was not justified in thinking that on that question there can be no two o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservations made in para 4 therein. 17 On the other hand, the argument of the learned Senior Standing Counsel appearing for the Revenue, while opposing the present writ application, is that no error, not to speak of any error of law could be said to have been committed by the Tribunal in passing the impugned order. 18 The stance of the Tribunal, as it reflects on plain reading of the impugned order, is that the ground which the writ applicant is talking about relating to addition of ₹ 67,59,613/ on account of suppression in the value of closing stock has been discussed. While disposing of the application, the Tribunal took the view that the scope of sub section (2) of Section 254 of the Act is restricted to rectify any mistake in the order apparent on the face of it and would not extend to review the order. 19 Having regard to the materials on record, we find it difficult to take the view that the ground No.3, which the writ applicant is talking about, has not been dealt with at all by the Appellate Tribunal. The Appellate Tribunal, in its own way, has discussed the said issue and recorded a particular finding. If the writ applicant is dissatisfied, then it is alway ..... X X X X Extracts X X X X X X X X Extracts X X X X
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