2004 (3) TMI 41 - HC - Income Tax

Tribunal lacks jurisdiction to recall order for rectification; must amend original order to correct mistakes.

The court held that the Tribunal lacks jurisdiction to recall its appellate order under the guise of rectification. It must only amend the original order ... Recalling of order by tribunal - Review/rectification - Revenue contends that the provisions of section 35 of the Act do not empower or enable the Tribunal to recall its order, even if there was a mistake apparent from the record. It is submitted that even if there is a mistake apparent from the record, all that the Tribunal could do was to rectify such mistake by amending the order passed by it, but there is no power to recall the order and rehear the matter – Revenue’s appeal is allowed and Tribunal is directed to rehear the application for rectification. If the Tribunal feels that there is mistake apparent from the record, requiring exercise of power of rectification under section 35 of the Wealth-tax Act, it shall pass an order amending the original order, instead of recalling the original order. Issues Involved:1. Jurisdiction of the Tribunal to recall its appellate order while exercising the power of rectification under section 35 of the Wealth-tax Act.2. Interpretation of the power to rectify mistakes under section 35 of the Wealth-tax Act.3. Whether recalling an order amounts to review or rectification.Issue-wise Detailed Analysis:1. Jurisdiction of the Tribunal to Recall its Appellate Order:The primary issue was whether the Tribunal had the jurisdiction to recall its appellate order while exercising the power of rectification under section 35 of the Wealth-tax Act. The Revenue contended that section 35 only allowed for the rectification of mistakes by amending the original order, not recalling it. The Tribunal's action of recalling the order was argued to be outside its jurisdiction as it amounted to a review, not rectification.2. Interpretation of the Power to Rectify Mistakes:The judgment examined the scope of rectification under section 35, which is in pari materia with sections 254(2) and 154(1) of the Income-tax Act, 1961. The court referenced several decisions, including those from the Delhi High Court in Karan and Co. v. ITAT [2002] 253 ITR 131 and J.N. Sahni v. ITAT [2002] 257 ITR 16, which held that rectification should be limited to amending the order for mistakes apparent from the record. These decisions emphasized that recalling an order would necessitate rehearing and readjudication, thus amounting to a review, which is not permitted under the rectification provisions.3. Recalling an Order as Review or Rectification:The court considered conflicting views from various High Courts. Decisions such as Blue Star Engineering Co. (Bombay) (P.) Ltd. v. CIT [1969] 73 ITR 283 (Bom) and CIT v. Shakuntala Rajeshwar [1986] 160 ITR 840 (Delhi) supported the view that recalling an order could be part of rectification if the original order contained a fundamental error. However, the court ultimately disagreed with these views, emphasizing that rectification should only involve amending the existing order, not recalling it. The court held that the wording of section 35 was clear and unambiguous, allowing only for amendments to correct mistakes, not for the original order to be recalled and replaced.Judgment:The court concluded that the Tribunal does not have the jurisdiction to recall its appellate order under the guise of rectification. It must amend the original order to correct any mistakes apparent from the record. The appeal by the Revenue was allowed, and the Tribunal was directed to rehear the application for rectification. If the Tribunal finds a mistake apparent from the record, it should amend the original order rather than recalling it. This ensures adherence to the statutory provisions of section 35 of the Wealth-tax Act.