| (A) Non conside-ration of
binding decision not cited in hearing does not constitute a
mistake apparent on the record. |
In CIT vs. Jagabandhu Roul (1984) 145
ITR 153 (Orissa) the Tribunal upheld the levy of penalty
under Section 271(1)(c). The assessee moved a Miscellaneous
Application pointing out that an earlier decision of the
Orissa High Court had not been referred to by the Tribunal
in disposing of the appeal. The Tribunal took the view that
the ratio of the earlier decision applied and therefore
rectified the order. The High Court held that the Tribunal
had exceeded its jurisdiction in considering the earlier
decision on the ground that the said decision had not been
placed before the Tribunal when it decided the appeal. It
was therefore held that the non-consideration of the earlier
case was not a mistake apparent from the record. This line
of reasoning is somewhat irreconcilable with the cases
referred to in (c) below. |
| (B) Oversight of fact not a
mistake apparent on the record. |
In CIT vs. Gokulchand Agarwal (1993)
203 ITR 14 the Calcutta High Court had to consider a
case where there was a mistake brought about through an
oversight of certain facts. The High Court held that an
oversight of a fact cannot constitute an apparent mistake
rectifiable under Section 254(2). This might at worst lead
to perversity of the order for which the remedy available to
the assessee is not under Section 254(2) but reference
proceedings under Section 256. |
| (C) Erroneous order in the
light of subsequent decision of jurisdictional High Court
not rectifiable. |
The question as to whether an order of
the Tribunal can be recalled and reversed on the basis of a
subsequent decision of a jurisdictional High Court came up
for consideration in Kishanchand J. Bhavnani HUF vs. WTO
(1989) 29 ITD 383. |
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At the time of the original order there
were conflicting decisions of High Courts and that conflict
had not come to an end before deciding the rectification
application. The Tribunal held in Kishanchand J. Bhavnani
HUF vs. WTO (1989) 29 ITD 383 that the Tribunal had no
power to rectify its earlier order as it would amount to a
reconsideration of the entire controversy and not a
rectification of its order. The said decision of the
Tribunal has exhaustively considered the various other
decisions relating to the powers of rectification in the
light of decisions of the High Courts either available prior
to the decision of the Tribunal or subsequent to the
decision of the Tribunal and provides an exhaustive
lodestone for accessing decisions on the subject. See also
Kil Kotagiri Tea and Coffee Estates Co. Ltd. vs. ITAT
(1988) 174 ITR 579 (Kar), Neeta S. Shah vs. CIT (1991) 191
ITR 77 (Kar), Indian Card Clothing Co. Ltd. vs. ITO (1983) 5
ITD 38 (Bom.) |
| (D) Recalling of order under
Sectioin 254(2) not possible. |
In CIT vs ITAT (1992) 196
ITR 683 (Orissa) the Orissa High Court held that the
power under Section 254(2) is merely to "amend" an order
passed under Section 254(1). "Amendment" of order does not
mean obliteration of the order originally passed and its
substitution by a new order. Recalling the entire order
obviously would mean passing of a fresh order which was not
the legislative intent. It is submitted, with respect, that
the decision of the Orissa High Court is erroneous in as
much as it would depend on the facts and circumstances of
each case as to whether the mistake is such as to justify
recalling of the whole order. For instance, if the entire
basis of the order is an erroneous assumption then, there is
no question of amendment of the order except by way of
recalling the order, correcting the erroneous assumption and
disposing it of afresh. |
| (E) Order rejecting
Miscellaneous Application cannot be rectified. |
In CIT vs. ITAT (1992) 196 ITR 838,
the Orissa High Court took the view that an order rejecting
an application for rectification under Section 254(2) is not
an order passed under Section 254(1) and therefore it cannot
be rectified under Section 254(2). It is submitted, however,
that a second Miscellaneous Application would lie if the
mistake which is sought to be corrected is in the original
order made under Section 254(1). |
| |
76 TTJ 224 Shristhi Pal
vs. ITO Assessee has moved an application under
254(2), the same was rejected on merits. The Assessee
thereafter moved a second miscellaneous application raising
similar grounds and contentions. The Tribunal dismissed the
second application on two counts (a) an order deciding an
application under 254(2) is not an order u ITR s 254(1) and
therefore no application for rectification there against
lies and (b) second application for rectification is not
maintainable. |
| (F) Order contrary to
pronounce-ment constitutes mistake apparent on the record. |
A decision which is rendered contrary to
a pronouncement made in open court would constitute a
mistake rectifiable. This is so because once an announcement
is made in the open court, then that is the order of the
Tribunal and the order which is written subsequently merely
contains the reasons for it to come to the conclusion which
it did. If the written order is at variance with the
announcement there is a mistake in the written order which
can be rectified. CIT vs. G. Sagar Suri and Sons (1990)
185 ITR 484. (Del). Also see 76 TTJ 234 Bansal
Trading Co vs. ACIT and lso see 78 TTJ 815 - Auto
Piston Mfg. Co. (P) Ltd. vs. DCIT |
| (G) Order made under
misconception or misappre-hension rectifiable. |
In Maharaja Martant Singh Ju Deo vs.
CIT (1988) 171 ITR 586 (MP) the Tribunal rectified its
order and substituted its earlier findings with fresh
findings. The High Court held that the earlier findings were
recorded by the Tribunal under some misapprehension or
misconception. Therefore when the Tribunal corrected its
earlier order it had rightly exercised its power under
Section 254(2) and it was not a review of its earlier order. |
| (H) Failure to consider
preliminary objection or deal with a ground of appeal
rectifiable |
In Laxmi Electronic
Corporation Ltd. vs. CIT (1991) 188 ITR 398 (All) the
Tribunal had omitted to consider a preliminary objection
that the appeals were barred by time although the same had
been urged in arguments before the Tribunal. The Court held
that the proposition that a contention urged but not dealt
with by the Tribunal can be taken as having been negatived
is not inconsistent with the power of the Tribunal to reopen
the appeal where it is brought to its notice that an
important contention raised by the party was not dealt with
by the Tribunal in its order. The Court held that such a
power must be held to be inherent in the Tribunal since it
would be a case where the party has suffered prejudice for
no fault of his and on account of the mistake or error on
the part of the Tribunal. It held that the failure to deal
with the preliminary objection relating to the
maintainability of the appeal on the ground of limitation
amounted to an error apparent on the face of the record
which empowered the Tribunal to reopen the appeal and
rectify the mistake if it was so satisfied. |
| |
To the same effect is the decision of the
Allahabad High Court in CIT vs. Keshav Fruit Mart (1993)
199 ITR 771 and ITO vs. ITAT (1965) 58 ITR 634 |
| (I) Failure to consider
alternative argument rectifiable |
In CIT vs. ITAT (1988) 172 ITR 158
(MP) the issue which arose before the Tribunal was as
regards the genuineness of certain cash credits and an
alternative argument was raised that in any event only the
peak ought to have been added. The Tribunal rejected the
main contention but omitted to give its findings on the
alterative ground raised. On a Miscellaneous Application
moved the Tribunal held that the non-consideration of the
alternative ground as regards the excessiveness of the
addition was a mistake apparent on record. The High Court
upheld the order of the Tribunal. |
| (J) Failure to consider
material on record rectifiable |
In CIT vs. Mithalal
Ashokkumar (1986) 158 ITR 755 the Madhya Pradesh High
Court laid down the principle that although the Appellate
Tribunal has no power to review it own order yet it can
certainly correct its mistakes by rectifying the same in
case it is brought to its notice that the material which was
already on record before deciding the appeal on merits was
not considered by it. |
| (K) Order based on erroneous
assumptions rectifiable |
In CIT vs. Shakuntala Rajeshwar (1986)
160 ITR 840 (Del) the assessee had made a certain
concession as to market value before the Tribunal. The said
concession was based on the mistaken impression that in the
case of a co-owner a certain value had been determined.
Ultimately, it transpired that the concession was made under
a mistaken and erroneous presumption. The Tribunal held that
the earlier order of the Tribunal was founded on a mistaken
assumption on the part of all concerned, including the
Tribunal, which assumption was subsequently found to be
clearly wrong. The Tribunal held (and the High Court
concurred with it) that when the assumption apparent from
its order and record was found to be erroneous the Tribunal
was justified in involving its power under Section 254(2). |
| (L) Order based on a
decision subsequently reversed rectifiable |
In Kil Kotagiri Tea and
Coffee Estates Company Ltd. vs. ITAT (1988) 174 ITR 579
the Kerala High Court held that where the Tribunal had
relied on a decision of a single Judge of the Kerala High
Court which was subsequently overruled the order passed by
the Appellate Tribunal disclosed a mistake apparent from the
record and that the Tribunal ought to have exercised its
powers under Section 254(2) and rectified its order on the
basis of the assessees application for rectification. |
| (M) Non-considera-tion of
relevant provision of law rectifiable. |
Non consideration of a
provision of law which would have material bearing on the
decision is a glaring obvious and self-evident mistake
apparent from the record. Such a mistake would be required
to be corrected (CIT vs. Quilon Marine Produce Co. (1986)
157 ITR 448). Modu Finblo vs. 1st WTO (1995) 53 ITD 53 (Pune)
(TM) ITO vs. Gilard Electronics (1986) 18 ITD 176 (JP), ACIT
vs. Sornamy Alkington Ltd. (1994) 49 ITD 207 (Delhi).
Similarly, non consideration of a Rule World also be
rectifiable CIT vs. Ballabh Prasad Agarwalla (1997) 90
Taxman 283 (Cal.) |
| (N) Decisions not cited
referred to in order. |
Sometimes, one finds that the
order of the Tribunal refers to certain decisions which were
not referred to either in any of the orders below or in the
course of arguments before the Tribunal. It is submitted
that such a reference to decisions would render an order
liable for rectification under Section 254(2). In this
connection, a graphic illustration is provided by the
decision of the Calcutta High Court in Lakhmini Mewal Das
vs. ITO (1972) 84 ITR 649. In that case, the Honble
Single Judge delivered a judgement on 20th February 1970
dismissing the writ petition challenging a reopening under
Section 147. In the course of rendering the judgment, a
decision of the Supreme Court was referred to and a passage
therefrom was quoted and relied on in the judgment. After
the judgement had been dictated, on 6th March 1970 Counsel
for the Petitioner pointed out that the decision referred to
and relied on in the Judgment had not been put to Counsel
who was therefore denied an opportunity of dealing with it.
The Honble Judge therefore gave an opportunity to Counsel
for the Petitioner to make his submissions on the said
decision. As it happend, the submissions of the Counsel were
accepted on the said decision, and accordingly, the findings
of the learned Single Judge were given on the decision which
was not referred to in the course of the arguments. It is
submitted therefore that in a case where the Tribunal refers
to any decision not referred to in the course of arguments
or in the orders below, it would be in the fitness of things
for the Tribunal to hear both parties on the said judgment
and accordingly modify its order in exercise of this power. |
| |
In 83 ITD 614 V.
Bhaskaran vs. ACIT A converse situation existed, viz.
a miscellaneous application was filed to rectify an order
passed without considering a decision; the application was
dismissed on the ground that it was not the contention of
the applicant that the decision was cited during the course
of the hearing and therefore at most the decision could be
regarded as per incuriam, but it cannot be said that
there was a mistake apparent from the record. |
| O) Order can be amended in
the light of retrospective amendment |
It is of course well settled by the
decision in M. K. Venkatachalam vs. Bombay Dyeing and
Mfg. Co. Ltd. (1958) 34 ITR 143 that an amendment with
retrospective effect would require an amendment and
rectification consequent to the retrospective amendment. See
also CIT vs. Eva Raha (1980) 121 ITR 293 (Gau); CIT vs.
Kelvin Jute Co. Ltd. (1980) 126 ITR 679 (Cal.) Even if a
reference has been made ITO vs. Homi Mehta & Sons (P)
Ltd. (1985) 14 ITD 64 (Bom). |
| (P) Failure to consider
argument advanced not an error apparent on the record |
In CIT vs. Ramesh Electric
and Trading Co. (1993) 203 ITR 497 (Bom) the question
arose as to whether the non consideration of an argument
constitutes a mistake apparent on the record. The Bombay
High Court held that such non-consideration would be an
error of judgement but not an error apparent on record. It
is submitted with respect that a blanket application of such
a principle would be erroneous. The ratio of the decision
must be considered in the light of the facts therein and in
view of the observation of the court that one of the alleged
failures was attributed to the Income-tax Officer and not
the Tribunal. This is also because the Bombay High Court in
Khushalchand B. Daga vs. ITO (1972) 85 ITR 48 has
endorsed the principle that a Tribunal has an inherent
jurisdiction to rectify a wrong committed by itself when
that wrong causes prejudice to a party for which that party
was not responsible. Unfortunately the High Courts attention
had not been drawn to Dagas case in Ramesh Electric. |
| (Q) Order can be amended in
the light of a subsequent Supreme Court decision. |
It is well settled that where no further
investigation of facts is called for, and on the facts
found, the principle of law declared by the Supreme Court
may be straightaway applied with the consequence of
rendering an existing order mistaken, it would be a case of
a mistake apparent from the record. [See Walchandnagar
Industries Ltd. vs. V. S. Gaitonde (1962) 44 ITR 260).
CBDT Circular No.68 dated 17-11-1971 Chaturvedi & Pithisaria.
Circular Book Vol.II Page 1847. ITD vs. Shashi Raj Kapoor
(1987) 21 ITD 406 (Bom); His Highners Sir Rama Varma
vs. ITO (1982) 2 ITD 491 (Coch) but not where limitation
had expired Soorajmull Nagarmull vs. CIT (1984) 20 TTJ
145 (Cal.) |
| (R) Mistake committed in an
application under section 256(1) certifiable under inherent
powers. |
Although the provisions of
section 254(2) are not applicable in respect of an order
under section 256(1) the mistake in that order can be set
right in exercise of the inherent powers of the Tribunal.
CIT vs. Kerala Import Co. (1996) 59 ITD 615 (Coch.) |
| |
Although the provisions of
section 254(2) are not applicable in respect of an order
under section 256(1) the mistake in that order can be set
right in exercise of the inherent powers of the Tribunal.
CIT vs. Kerala Import Co. (1996) 59 ITD 615 (Coch.) |
| (S) Errors in
reasoning of order not affecting operative part no
rectifiable |
237 ITR 348 Asian Techs
Ltd. vs. ITAT & Ors. The Assessee filled an
application for admission of additional ground; however had
not taken due care to have it registered and posted from
1992 to 1998 consequently the application was not before the
members when the appeal was heard. The Assessee filed his
application for rectification on the ground that the
additional ground had not been considered. The Tribunal
rejected the MA on the ground that Assessee has not taken
proper care to have the application numbered registered and
posted. The Assessee carried the matter to the High Court;
the appeal was dismissed. |
| (T) Absence of
reasoning no ground for rectification |
240 ITR 579 (Cal) Shaw
Wallace vs. ITAT & Ors. Errors crept in the reasoning
portion of the order will not entitle the Tribunal in
recalling the entire order so long as they do not affect the
operative portion. The High Court also upheld the call to
exercise its writ jurisdiction as an order disposing of a
miscellaneous application was not an order passed in appeal
and hence no appeal u/s 260A lay against such orders. |
| (U) Violation of
natural justice ground for rectification |
248 ITR 577 (P&H) - Popula
Engieneering Co. vs. ITAT Absence of adequate reasons
in an order passed u/s 254(1) cannot per se be regarded as a
mistake apparent within the meaning of 254(2). |
| (V) Period of
Limitation |
257 ITR 440 (Raj) CIT vs.
S.S.Gupta A finding of fact was reached against the
Assessee on the basis of material which was conveyed to the
Tribunal after the hearing was over without affording an
opportunity to the assessee to explain the information,
which information apparently vitiated the order. On a
miscellaneous application filed by the assessee the Tribunal
recalled its order and reheard the appeals. The High Court
on an appeal preferred by the department confirmed the order
of the Tribunal. |
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256 ITR 767(Raj) Harshavardhan
Chemicals & Minerals Ltd. vs. UOI. On writ petition
filed by the assessee against the order of the tribunal
dismissing the miscellaneous application on the ground of
limitation, the Honble High Court setting aside the order
of the Tribunal held that once the application has been
filed by the assessee within 4 years the tribunal cannot
reject it on the ground of limitation by keeping it pending
behind a period of 4 years. |
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81 ITD 282 Bhilai Engineering
Corporation Ltd. vs. DCIT - An interesting decision was
passed by the Nagpur Special Bench holding that the time
limit of 4 years in the context of the suo motu
rectification; where the rectification is to be done at the
instance of the parties, such time-limit is not much
relevant. This has been subsequently overruled by a larger
bench in Arvind Shah vs. ACIT 84 TTJ 725 |
| (W) Appeal decided
without considering pending application rectifiable |
179 CTR 265 (SC) Jyotsna
Suri vs. ITAT The Tribunal decided the matter on
merits without considering the application for adducing
additional evidence pending before it. The Assessee filed a
rectification application which was rejected. The High Court
while deciding the appeal on merits affirmed the view of the
Tribunal and held that no application u ITR s 254(2) would
lie in the circumstances. On an appeal, the Supreme Court
set aside the order of the High Court and remanded the
matter back to the file of the Tribunal to decide the
application u ITR r 29 on merits and thereafter dispose off
the appeal on merits. |
| (X) Reliance on wrong
section, order rectifiable |
261 ITR 49 (Del Seth
Madanlal Modi vs. CIT The Tribunal admittedly relied
on a wrong section while passing the order on merits. The
Assessee filed an application for rectification on that
ground. The Tribunal upheld the application and recalled its
order. The Department went in appeal, the High Court upheld
the decisions of the Tribunal inasmuch as reliance on a
wrong provision of law tantamount to an error apparent on
record. Also see 267 ITR 450 (Mad) Prithviraj Chohan vs..
CIT. |
| (Y) Recording of finding
that there is mistake imperative |
266 ITR 470 (Kar) ACIT vs.
C.N.Ananthram On an appeal by the Department
challenging the order allowing the miscellaneous application
of the Assessee for rectification the High Court held that
before an order u/s 254(2) can be made amending the earlier
order, the Tribunal must be satisfied and must record a
finding that the earlier order suffers form a mistake
apparent from the record, failing which the order is liable
to be set aside. |
| (Z) Signing of MA |
66 TTJ 575 DCIT vs.
Maruti Rextiles Pvt. Ltd. MA signed by the Junior
Departmetnal Representative is bad in law as an MA can be
filed with by the assessee or the AO. The MA dismissed on
this ground. Also see DCIT vs. Saraf Trading Corporation
73 TTJ 741. |
| (ZA) Difference in
reasons of members no ground for rectification |
70 TTJ 76 DCIT vs. Bansilal Syani
An application was filed for rectification on the ground
both members had agreed on the conclusion while disposing of
the appeal but had given different reasons for the same and
prayed that the points of difference be referred to the
President. The Tribunal declined to interfere. |
| (ZB) Delay in passing order
no ground for rectification |
84 ITD 108 Paras Cold Storage & Ice
Factory vs. ACIT rectification of an order was sought
on the ground that the same was passed after a long period
of one year, the Tribunal rejected the application as the
Assessee was not in a position to point out any mistake in
the order and delay is not ground for recalling. |
| (ZC) Tribunal not
following a binding precedent - order rectifiable |
84 TTJ 513 Rati Ram Gotewala vs. DCIT
Non consideration of a third member decision, a higher
precedent as compared to a division bench decision, is a
mistake apparent from the record. |
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