2000 (8) TMI 26 - HC - Income Tax

Rectification under s. 254(2) for alleged unexplained investment additions rejected, as dispute involved debatable facts, not obvious record errors

The dominant issue was whether the appellate tribunal could invoke its rectification power under s. 254(2) of the Income-tax Act to correct the order ... Rectification of Mistake - Appellate Tribunal - Power of Rectification - mistake apparent on the face of the record in relation to the addition of unexplained investments - HELD THAT:- A bare look at section 254(2) of the Act makes it clear that a 'mistake apparent from the record' is rectifiable. In order to attract the application of section 254(2), a mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. 'Mistake' means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error; a fault, a misunderstanding, a misconception. 'Apparent' means visible; capable of being seen; easily seen; obvious plain. A mistake which can be rectified under section 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. The language used in section 254(2) makes it clear that only amendment to the order passed under section 254(1) is permissible where it is brought to the notice of the Tribunal that there is any mistake apparent from the record. The word 'mistake' is inherently indefinite in scope, as what may be a mistake for one may not be one for another. It is mostly subjective and the dividing line in border areas is thin and indiscernible. It is something which a duly and judiciously instructed mind can find out from the record. In order to attract the power to rectify under section 254(2) it is not sufficient if there is merely a mistake in the orders sought to be rectified. The mistake to be rectified must be one apparent from the record. A decision on a debatable point of law or disputed question of fact is not a mistake apparent from the record. The plain meaning of the word 'apparent' is that it must be something which appears to be so ex facie and it is incapable of argument or debate. It, therefore, follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification. Thus, we find that there was no mistake apparent from the record which could be rectified under section 254(2) of the Act. The so called inaccuracies or wrong recording of facts as alleged are not patent mistakes which constitute the sine qua non for exercise of power under section 254(2) of the Act. The questions proposed deal with conclusions on facts giving rise to no question of law. The application being without merit is rejected. Issues involved: Application u/s 256(2) of the Income-tax Act, 1961 regarding addition of unexplained investments, refusal to rectify order, source of construction of property, ownership of joint bank account, and questions of law arising from Tribunal's order.Summary:The High Court of Delhi heard an application u/s 256(2) of the Income-tax Act, 1961 concerning the addition of unexplained investments in relation to a miscellaneous application filed u/s 254(2) of the Act for the assessment year 1985-86. The Tribunal held that no mistake was apparent on the face of the record regarding the addition of Rs. 6 lakhs as unexplained investments. The assessee contended that the Tribunal's conclusions were not in line with the facts, stating that the amount received for construction was from a specific source. The Tribunal, after considering the stand of the assessee, concluded that no rectification was warranted u/s 254(2).The petitioner raised nine questions of law challenging the Tribunal's order, including issues related to the source of construction funds, ownership of the joint bank account, and the Tribunal's refusal to rectify its order. The Tribunal maintained that the assessee's stand during the appeal differed from the current contentions, and there was no mistake apparent on record justifying rectification u/s 254(2).The Court analyzed the provisions of section 254(2) of the Act, emphasizing that a mistake must be both existent and apparent from the record to warrant rectification. It clarified that rectification does not entail revising the original order but correcting patent errors. The Court highlighted that rectifiable mistakes are those that are visible and not subject to extensive argument or investigation.In light of precedents, the Court determined that the alleged inaccuracies in the Tribunal's order did not constitute patent mistakes eligible for rectification u/s 254(2). It concluded that the questions raised did not involve legal issues but rather factual conclusions, leading to the rejection of the application.In conclusion, the Court dismissed the application as it found no mistake apparent from the record that would justify rectification u/s 254(2) of the Income-tax Act, 1961.