COMMISSIONER OF INCOME-TAX VS GOKUL CHAND AGARWAL
1994 P T D 183
[Calcutta High Court (India)]
[202 ITR 14]
Before Ajit K Sengupta and Shyamal Kumar Sen, JJ
COMMISSIONER OF INCOME-TAX
Versus
GOKUL CHAND AGARWAL
Income Tax Reference No.242 of 1991, decided on 09/04/1992.
Income-tax---
----Appeal to Appellate Tribunal---Powers of Tribunal---Rectification of mistakes---Scope of power---Only mistake apparent from the record can be corrected---Tribunal cannot review its order---Indian Income Tax Act, 1961, S.254(2).
Section 254(2) of the Indian Income Tax Act, 1961, empowers the Tribunal to amend its order passed under section 254(1) to rectify any mistake apparent from the record either suo mote or on application. The jurisdiction of the Tribunal to amend its order thus depends on whether or not there is a mistake apparent from the record. If, in its order, there is no mistake, which is patent and obvious on the basis of the record, the exercise of the jurisdiction by the Tribunal under section 254(2) will be illegal and improper. An oversight of a fact cannot constitute an apparent mistake rectifiable under section 254(2). This might, at the worst, lead to perversity of the order for which the remedy available to the assessee is not under section 254(2) but a reference proceeding under section 256. The normal rule is that the remedy by way of review is a creature of the statute and, unless clothed with such power by the statute, no authority can exercise the power. Review proceedings imply proceedings where a party, as of right, can apply for reconsideration of the matter, already decided upon, after a fresh hearing on the merits of the controversy between the parties. Such remedy is certainly not provided by the Income Tax Act, 1961, in respect of proceedings before the Tribunal.
An amount of Rs.3,50,000 was added to the income of the assessee as income from undisclosed sources in the assessment year 1983-84. This was confirmed by the Tribunal. However, on an application for rectification of mistake, the Tribunal held that the amount of Rs.3,50,000 could not be assessed in the hands of the assessee on the basis of facts brought before it and in the appellate order and that it committed a mistake in holding that this amount could be assessed in the hands of the assessee. It directed the Income Tax Officer to delete this sum from the assessment. On a reference:
Held, that on a consideration of the facts and circumstances of the case and the manner in which the Tribunal proceeded to recall its order, it appeared that there was no mistake apparent from the record liable to rectification by the Tribunal under section 254(2). In fact, the order of the Tribunal could not be construed as re-evaluation of the total effect of the facts found by it and the Tribunal in effect assumed the power of review which the Tribunal was not entitled to do in law. Its order was not valid and was liable to be set aside.
S.K. Mitra for the Commissioner.
Nemo for the Assessee.
JUDGMENT
AJIT K. SENGUPTA, J: --In this reference under section 256(1) of the Income Tax Act, 1961, for the assessment year 1983-84, the following questions of law have been referred to this Court:
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in recalling its earlier order, dated August 7, 1990, without recording a finding that the said order suffered from a mistake apparent from the records?
(2) Without prejudice to question No.l, whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the miscellaneous application of the assessee on the ground that its order, dated August 7, 1990, suffers from mistakes apparent from the records?
(3) Whether, on the facts and in the circumstances of the case, the order of the Tribunal is liable to be set aside on the ground that the Tribunal has no inherent power like a Court of law to review its own order?"
Shortly stated, the facts are that the Assessing Officer found from the loose sheet seized with serial No.2 containing several entries such as payment of Rs.2,50,000 to one Anup Babu made on July 5,1982, and Rs.1,50,000 paid to one Sri Manikji on July 3, 1982. A receipt of Rs.50,000 on July 3, 1982,, from R.T. Co., Delhi was also found. The Assessing Officer held that the assessee could not explain the above payments and receipts. The Assessing Officer treated the net investment of Rs.3,50,000 as the assessee's income from undisclosed sources and added the same to the total income of the assessee.
The Commissioner of Income-tax (Appeals) observed that narration in the loose sheet indicated a sort of memorandum inasmuch as instruction was given by the person writing to verify the correctness. He further observed that the Assessing Officer has i4o direct proof that the assessee had made the investments.
When the Revenue disputed the order of the Commissioner of Income talc (Appeals) before the Tribunal, the Tribunal by its order, dated August 7,1990, allowed the Revenue's appeal. Thereafter, the assessee made a Miscellaneous Application No.110/(Cal) of 1990 for rectification of certain mistakes apparent on the face of the order of the Tribunal dated August 7, 1990. The Tribunal called back this order and allowed the assessee's miscellaneous application. The matter had been remitted to the file of the Assessing Officer. The Tribunal held that the amount involved in question, Rs.3,50,000 cannot assessed in the hands of the assessee on the basis of facts brought before it and in the appellate order and that it committed a mistake in holding that this amount can be assessed in the hands of the assessee. The Tribunal found that the amount belonged to Messrs Kamal Brothers Family Benefit Trust and, therefore, the same should have been assessed in the hands of the said family trust. Therefore, the Tribunal accordingly directed the Assessing Officer to assess the said amount in the hands of the said family trust. There was a mistake apparent in holding that the amount added in the hands of the assessee by the Assessing Officer was to be taxed in the hands of the assessee instead of Messrs Kamal Brothers Family Benefit Trust.
We have heard Mr. S.K. Mitra, the learned Advocate for the Revenue. No one appeared for the assessee. The Tribunal, in the appellate order, held as follows:
"We have examined the facts. We have also considered the arguments of the learned Departmental Representative, Shri SK Ghosh, who has strongly supported the order of the Income Tax Officer. He has contended that the view taken by the Commissioner of Income-tax (Appeals) is not correct and his conclusion is based on wrong notion. Learned counsel for the assessee, Shri N.R. Bhattacharjee, has strongly supported the order of the Commissioner of Income-tax (Appeals). He has also relied on the first appellate order of Messrs Kamal Brothers Family Trust. We have already said that the moneys in the name of Shri Santosh Chand Jain, tied to the assessee in the hands of Messrs Kamal Brothers Family Benefit Trust have nothing to do with moneys assessed here in the hands of the assessee. The assessee's explanation does not lead to create any confidence to accept the same. After examining the facts and considering the arguments, we are inclined to conclude that the explanation given by the assessee does not appear to be correct."
However, in the application made by the assessee under section 254(2) of the Act, the assessee raised certain issues allegedly not considered by the Tribunal while passing the appellate order.
The Tribunal recorded in the order allowing the miscellaneous application as follows:
"The important factor now pointed out is that the Assessing Officer added this amount in the hands of Messrs Kamal Brothers Family Benefit Trust and made assessment of the said Trust. The Trust challenged the action of the Income Tax Officer before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) set aside the assessment order and remitted the matter to the file of the Income Tax Officer to make a fresh assessment. According to the learned representative for the assessee, Shri S.R. Das, to confirm this addition in the hands of this assessee would cause injustice to him when the addition made in the said account in the hands of the said Trust is set aside and the matter is pending before the Income Tax Officer for fresh consideration. He has contended that it would be better to recall this order also, to set aside the orders of the Income Tax Officer and the Commissioner of Income-tax (Appeals) in this matter and to remit the matter to the Income Tax Officer to consider the assessment of Messrs Kamal Brothers Family Benefit Trust and the assessee for arriving at a correct conclusion as to in whose hands this addition should be justifiable. This contention appears to be quite proper and this fact is borne out from the record. However, the Tribunal had discussed this fact in paragraph 6 of its order but the Tribunal did not say anything about setting aside the assessment order and the order of the Commissioner of Income-tax (Appeals) in this case and after remitting the matter to the Income Tax Officer's file to consider the assessment of the trust and the assessee at a time to enable him to arrive at a correct finding.
In the interest of justice, it appears just and proper to call back the Tribunal's order, dated August 7, 1990 in I.TA. No.2276 (Cal) of 1988 for the assessment year 1983-84 and to set aside the assessment order and the order of the Commissioner of Income-tax (Appeals) for remitting the matter to the file of the Income Tax Officer. Accordingly, the Tribunal's order is recalled."
Section 254(2) of the 1961 Act empowers the Tribunal to amend its order passed under section 254(1) to rectify any mistake apparent from the record either suo motu or on an application. The jurisdiction of the Tribunal to amend its order thus depends on whether or not there is a mistake apparent f from the record. If, in its order, there is no mistake, which is patent and obvious on the basis of the record, the exercise of the jurisdiction by the Tribunal under section 254(2) will be illegal and improper. In the present case, it is nowhere pointed out by the Tribunal that its original order needed amendment by reason of any mistake apparent from the record, liable to be rectified. The assessee wanted a review of the order in the garb of a rectification petition on certain grounds on which the Tribunal recalled its earlier order. The grounds on which the order is recalled merely show that the recall was not for any apparent mistake but for de novo exercise of judicial discretion on the basis of reappraisal of the facts of the case. The impugned order also makes it clear that the recall is for the purpose of re-evaluation or reconsideration of the facts and circumstances of the case. Earlier, under section 254(1), the Tribunal already heard the parties and considered the facts and circumstances and decided the issue one way or the other. It is not that any issue was left open or was not considered. The recall is occasioned by what the Tribunal afterwards thought to be its oversight of the importance of a particular factual aspect of the case. Such oversight cannot constitute an apparent mistake rectifiable under section 254(2) of the Act. This might, at the worst, lead to perversity of the order for which the remedy available to the assessee is not section 254(2) but a reference proceeding under section 256.
The normal rule is that the remedy by way of review is a creature of the statute and, unless clothed with such power by the statute, no authority can exercise the power. Review proceedings imply those proceedings where a party as of right can apply for reconsideration of the matter, already decided upon, after a fresh hearing on the merits of the controversy between the parties. Such remedy & certainly not provided by the Income Tax Act.
On a consideration of the facts and circumstances of the case and the manner in which the Tribunal proceeded to recall its order, it appears to us that there was no mistake apparent from the record liable to rectification by the Tribunal under section 254(2). In fact, the instant order of the Tribunal cannot but be construed as re-evaluation of the total effect of the facts found by it and the Tribunal in effect assumed the power of review which the D Tribunal is not untitled to do in law.
Having regard to the facts and circumstances of this case, we are of the view that the Tribunal fell into error in recalling its earlier order, dated August 7, 1990, inasmuch as there was no mistake apparent from the record. The Tribunal went into the merits of the contentions raised at the time of hearing the appeal and is, therefore, barred from rehearing and amending its conclusion on merits.
For the reasons aforesaid, we answer the first and second questions in this reference in the negative and the third question in the affirmative, all in favour of the Revenue.
There will be no order as to costs.
SHYAMAL KUMAR SEN, J.---I agree.
M.BA./8/T.F.Question answered.