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TMI Blog2022 (10) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... he circumstances of the case and having regard to the provisions of Section 254(2) of the Income Tax Act, the Tribunal was correct in holding that on the basis of subsequent Supreme Court Judgment the Tribunal cannot rectify its earlier appellate order as a mistake apparent from record? 2) Whether the amendment of earlier order passed by the Tribunal to bring it in conformity with the law propounded by the Supreme Court subsequently amounts to review and not rectification apparent from the record under the provisions of Section 254(2) of the Income Tax Act and Section 27 of the Interest Tax Act?" 4. Before adverting to the substantial questions of law so framed, it would be apposite to briefly dilate on the material facts. In the assessment proceeding for the aforesaid assessment year, appellant (assessee) did not declare any interest on the balance in the "protested bill account". Therefore, assessing officer added a sum of Rs.2,65,51,147.00 as chargeable interest for the said assessment year. 5. Against the aforesaid order of assessment, assessee preferred an appeal before the Commissioner of Income Tax (Appeals). Taking the view that Section 43D of the Act, though introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being considered by the Supreme Court in Lakshmi Sugar Mills Co. Ltd. v. Commissioner of Income Tax (Special Leave to Appeal (C) No.30062 of 2012). Therefore, the present appeal was adjourned sine die with liberty to the parties to move the Court on disposal of the aforementioned case by the Supreme Court. 11. We have been informed at the bar that Lakshmi Sugar Mills Co. Ltd. (supra) is still pending before the Supreme Court. 12. However, considering the fact that the present appeal is of the year 2001 and more than 21 years have gone by since institution of the appeal, we are of the view that the same is required to be decided by this Court one way or the other. 13. Learned counsel for the appellant in support of his submissions has filed a compilation of judgments. He has placed reliance on a decision of the Supreme Court in Assistant Commissioner, Income Tax, Rajkot v. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC) and contends that overruling of a previous decision by a subsequent decision is retrospective. The subsequent decision lays down the correct interpretation of law which should be construed to be the law from day one. This decision of the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was rendered subsequently. She, therefore, submits that the appeal may be dismissed. 15. Submissions made by learned counsel for the parties have received the due consideration of the Court. 16. At the outset, we may consider the first objection raised by learned counsel for the respondent that an appeal under Section 260A of the Act is not maintainable against an order passed by the Tribunal rejecting the application seeking rectification under Section 254(2) of the Act. 17. In Chem Amit's case (supra), Bombay High Court held that where as the consequence of an order passed on the rectification application under Section 254(2) of the Act, there is an amendment in the order passed in the appeal which is amenable to appeal, therefore the order passed in the rectification application, would be amenable to appeal under Section 260A of the Act. Noting that assessee had only challenged the order of the Tribunal rejecting the application for rectification, the appeal filed by the assessee was dismissed. 18. With utmost respect, we are unable to accept the view rendered by the Bombay High Court. The word "appeal" appearing in Section 260A of the Act is required to be given a wider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra), which is now the law of the land. On the face of the aforesaid binding judicial pronouncement, the very foundation of the decision rendered on 22.10.1997 no longer survives. 22. It is in the above backdrop that the order of the Tribunal dated 23.02.2001 refusing to rectify the previous order dated 22.10.1997 is required to be considered. 23. Let us now advert to Section 254 of the Act which deals with orders of Appellate Tribunal. Sub-section (2) of Section 254 of the Act says that the Appellate Tribunal may at any time within four years from the date of the order with a view to rectify any mistake apparent from the record amend any order passed by it under sub-section (1) and shall make such amendment if the mistake is brought to its notice by the assessee or the assessing officer within four years. We may mention that the aforesaid period of four years has since been substituted by six months from the end of the month in which the order is passed by the Tribunal vide the Finance Act, 2016, with effect from 01.06.2016. 24. The expression "mistake apparent from the record" or its equivalent expression "error apparent from the record" has received considerable judicial at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spective. Once the law is settled by the Supreme Court which operates retrospectively, it has to be construed to be the law as it existed when the order was passed by the Tribunal. Therefore, there is clear mistake apparent from the record. The mistake cannot be allowed to remain. The only limitation for rectification is limitation. 28. A Division Bench of this Court in B.V.K.Seshavataram's case was confronted with a similar situation. In that case, this Court was examining the provision of Section 154 of the Act. As submitted by learned counsel for the appellant, Section 154 of the Act provides for rectification of mistake by an income tax authority. As per sub-section (1) thereof, with a view to rectify any mistake apparent from the record, an income tax authority referred to in Section 116 of the Act may amend the order passed by it; amend any intimation or deemed intimation under Section 143(1) of the Act; amend any intimation under sub-section (1) of Section 200A of the Act; and amend any intimation under sub-section (1) of Section 206CB of the Act. In the facts of that case, this Court held that subsequent decision can validly form the basis for rectifying an order of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority for the proposition that a subsequent decision can validly form the basis for rectifying an order of assessment under section 154 of the Income-tax Act, 1961."
29. We respectfully agree with the reasonings given by a coordinate Bench of this Court in B.V.K.Seshavataram (supra); rather we are bound by it. If this position is applicable to Section 154 of the Act, we are of the view that it is equally applicable to Section 254(2) of the Act.
30. Summation of our above discussion is that the Tribunal was not justified in rejecting the rectification application of the appellant.
31. Consequently, we answer question No.1 so framed above in the negative and in favour of the assessee. Resultantly, we set aside the order dated 23.02.2001.
32. In view of our above order, answer to question No.2 so framed is not necessary.
33. The matter is remanded back to the Tribunal for a fresh hearing and decision in M.P.No.2/Hyd/2001 in Interest Tax Appeal No.9/Hyd/1992 for the assessment year 1985-86.
34. The appeal is accordingly allowed.
Miscellaneous applications pending, if any, shall stand closed. However, there shall be no order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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