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TMI Blog1988 (8) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... see and the Wealth-tax Officer. The assessee in his computation, while not treating as an asset the advance tax paid by the company and shown as an asset in the balance-sheet as per clause (i)(a) of Explanation II to Rule 1D, treated the gross provision for taxation as a liability without reducing it by the advance tax in order to determine the extent of excess over the tax payable with reference to the book profits under clause (ii)(e) of the said Explanation. The Wealth-tax Officer, in his computation, on the other hand, reduced the amount representing the gross provision for taxation by the amount of advance tax paid in order to determine the extent of excess over the tax payable with reference to the book profits under clause (ii)(e) of the said Explanation. 3. The action of the assessee in nor reducing the gross provision for taxation by the advance tax under clause (ii)(e) of the said Explanation was in conformity with the decisions of the Gujarat High Court in CWT v. Ashok K. Parikh [1981] 129 ITR 46 and CWT v. Arvindbhai Chinubhai [1982] 133 ITR 800. The action of the Wealth-tax Officer, on the other hand, in reducing the gross provision for taxation by the advance tax wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there were no decisions of the High Courts which took the view that an order of the Tribunal could not be rectified solely on the basis of the subsequent decision of the jurisdictional High Court. Relying on the decision of the Bombay High Court in the case of CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589 in which it has been held that if there was one decision of any High Court on any point that decision is binding on all the Benches of the Tribunal anywhere in India, the prayer in the Miscellaneous Application is that we should follow the above mentioned decisions and hold that there was a mistake apparent on record in the order of the Tribunal dated 24-11-1986 and we should rectify that mistake by reversing that decision and allow the appeals of the assessee. 7. We have narrated the facts in the Miscellaneous Application No. 90/Bom/87 in detail. The facts in other applications need not be stated. It is sufficient to state that in all these applications, rectification of the orders of the Tribunal is sought solely on the basis of the subsequent decision of the Bombay High Court in the case of Pratap Bhogilal. In all these cases, the Tribunal has uniformly held that adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of High Court decisions in preference to other set of decisions which were available at the relevant time, solely because in subsequent decision the Bombay High Court has taken a view contrary to the view taken by the Tribunal. We are not dealing with a case where the legal point at issue at the time of decision of the appeal was not a debatable point or where due to inadvertence certain vital aspects were lost sight of or where controversy was finally settled by the Supreme Court on the date of rectification. We do not express any opinion on those types of cases. 10. In support of the submission that rectification in obligatory on the sole basis of subsequent decision of jurisdictional High Court even when there were conflicting decisions on the point at issue at the time when the Tribunal decided the appeal and even when the controversy had not been finally settled by the Supreme Court following decisions were cited on behalf of the assessee : Devendra Prakash v. ITO [1969] 72 ITR 151 (All.), Omega Sports Radio Works v. CIT [1982] 134 ITR 28 (All.), CIT v. Ramjibhai Hirjibhai Sons [1977] 110 ITR 411 (Guj.), CIT v. Mohan Lal Kansal [1978] 114 ITR 583 (Punj. Har.), Stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e much amendment, if the mistake is brought to its notice by the assessee or the Income-tax officer. 14. Reading these two provisions together, the first basic principle that emerges is that so long as High Court has not reversed the view taken by the Tribunal in decision on reference u/s. 256 of the Act, the appellate decision of the Tribunal is final. Finality is save as provided in section 256, and not, save as provided in sub-section (2) of section 254. The finality cannot be impaired by any other subsequent order except order under section 256 by the High Court on reference. Sub-section (2) of section 254 provides only for correction of a mistake apparent from record. Such mistake could be some inadvertent mistake. It could be a mistake which is obvious and about which there would not be two conceivable opinions. Such mistakes can be corrected. For correcting such mistakes, even an application by any party would not be necessary. It could be corrected suo motu. From this it follows as a logical corollary, that when there are conceivably two opinions on a point and the Tribunal has taken one of the two views, that view cannot be replaced by the other view under the garb of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of an appellate decision on a debatable point was not permissible by rectification solely on the basis of decision of jurisdictional High Court as that would amount to review of order as distinguished from rectification of an apparent mistake. In V.R. Sonti's case the Calcutta High Court considered the difference between review of a decision and rectification of an apparent mistake in a decision and observed that in rectification proceeding what is decisive is not the fact that jurisdictional High Court has taken a different view but the fact that there was divergence of opinion on that point of law and two conceivable opinions are possible. 17. As far as a decision of the Supreme Court is concerned, the law declared therein has effect not only from the date of the decision but also from the inception of the statutory provisions and as such, it is now well settled that orders can be rectified on the basis of a subsequent decision of the Supreme Court. The effect of decision of Supreme Court is akin to retrospective amendment of a statute. The submission on behalf of the assessee is that the same principle would apply in respect of the subsequent decision of the jurisdictional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of settling the controversy finally once for all so as to render the earlier decision on the interpretation of a provision of an all India Statute such that it could be said that there was a mistake apparent from record. 21. We do not have any direct decision of the Bombay High Court on the point that a subsequent decision of jurisdictional High Court would by itself be sufficient to empower the Tribunal to exercise powers of rectification when there was conflict of decisions even on the date of rectification. The learned counsels for the assessees have strongly relied on the decision of the Bombay High Court in the case of Bhagwandas Kevaldas v. N.D. Mehrotra [1959] 36 ITR 538. This was not a case of rectification of mistake either u/s. 154 or 254(2) of the Income-tax Act. This was a case where the petitioner had prayed for issue of writ of certiorari which could be issued by the High Court only if there was error of law apparent from record in the order of the lower authority. The High Court came to the conclusion that there was error of law apparent from record and as such writ of certiorari was issued. One of the arguments raised was that prior to decision by lower author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have held that there was no error of law apparent on record in the order of lower authority. The High Court had no enforce its own view about what the law was and decide whether there was error of law apparent from record. The extraordinary powers of writ are to used to correct the errors which creep in the orders of lower authorities. The power of High Court to issue writ to correct an error of law in the order of lower authority is not qualitatively similar to one to be exercised by the Tribunal to correct an apparent error of law in its own earlier order in the exercise of powers under section 254(2) of the Act. In exercising these powers, the fact that there were conflicting decisions of High Courts on the date on which appellate order had been passed and that the Tribunal adopted one of the two conflicting views in deciding the controversy is extremely significant and this makes all the difference. To recall an order of this nature on the basis of subsequent decision of jurisdictional High Court is nothing short of reviewing the earlier order as distinguished from correcting an apparent error. Hence above decision of Bombay High Court is of no assistance. 23. Another decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectification, the point was debatable and had not been settled finally by Supreme Court decision. Hence, above decision of the Tribunal would not apply. 26. Now let us examine one more aspect of the problem. The assessees state that there was error apparent on record because when a jurisdictional High Court decides a point of law, that decision is binding on the Tribunal, and further that the law laid down in said decision should be regarded as always had been, even on the date when the appellate order was passed. Now these two attributes of a decision of a jurisdictional High Court apply equally to decision of any High Court as is clear from decision of Bombay High Court in CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589. If we accept the principle canvassed on behalf of assessees, the result would be that if an appeal is decided on a point on which there was no decision of any High Court on the date of the appellate order, the said appellate order would be liable to be recalled in exercise of powers of rectification as soon as an order of any High Court taking a contrary view becomes available in spite of the fact that the point was not obvious and two interpretations were po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rb of rectification of mistake when the law provides for rectification of not mistake of each and every category but only a mistake which can be reasonably be said to be one apparent from record or one on which there could conceivably no two opinions and when sub-section (4) expressly states that order of the Tribunal shall be final save as provided in section 256. 30. It helps the assessees in these cases to say that rectification power was exercisable on the sole basis of decision of jurisdictional High Court on a debatable point. However, if this principle is accepted it would adversely affect large number of assessees in those cases in which subsequent decision of jurisdictional High Court on a debatable point was against the assessees. Large number of decided cases would be liable to be reopened at the instance of the department or even suo motu by the Tribunal. There would be an atmosphere of uncertainty. We are firmly of the opinion that principle canvassed on behalf of the assessees should not be accepted. 31. We may mention here that on an important point regarding claim for weighted deduction, a decision of Bombay High Court in Universal Ferro Allied Chemicals Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account for exercise of powers of rectification. This contention cannot be accepted. The Tribunal is a final fact finding authority. The decision of the Tribunal on facts is final. Consequently, if an apparent error is discovered as a result of subsequent event then in some exceptional cases taking into account peculiar nature of facts power of rectification could be properly exercised. However, there is no scope for exercise of such power when the point itself is debatable and there is conscious decision prefering one set of decisions rather than other. 34. We have given elaborate reasons as to why we do not accept the plea that appellate orders of the Tribunal were liable to be recalled by rectification order and were liable to be reversed. As already stated in the beginning, the decisions of the High Courts on powers of rectification are conflicting and all of them cannot be reconciled and it would be a futile exercise to make an attempt to analyse them. We follow the view taken by some High Courts that an order of the Tribunal cannot be recalled and reversed by purported exercise of power of rectification under section 254(2) of the Act, on the sole basis of subsequent decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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