Income-tax Tribunal Overstepped Jurisdiction; High Court Upholds Commissioner's Orders

The High Court of Orissa held that the Income-tax Appellate Tribunal exceeded its jurisdiction by rewriting the judgment instead of rectifying a mistake apparent from the record under section 254(2) of the Income-tax Act, 1961. The Tribunal's substitution of paragraphs in the original order was deemed impermissible. Consequently, the assessee's appeals for the assessment years 1985-86 to 1988-89 were dismissed, upholding the Commissioner of Income-tax (Appeals) orders. The court emphasized that the Tribunal's power under section 254(2) is limited to rectifying mistakes, not reviewing decisions or rewriting judgments.

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Issues involved: Challenge to the order of the Income-tax Appellate Tribunal u/s 254(2) of the Income-tax Act, 1961 for rewriting the judgment instead of rectifying a mistake apparent from the record.

Judgment Summary:

The High Court of Orissa addressed the challenge to the order of the Income-tax Appellate Tribunal dated October 7, 1991, under sub-section (2) of section 254 of the Income-tax Act, 1961. The main contention was that the Tribunal exceeded its jurisdiction by rewriting the judgment instead of rectifying an apparent mistake. The power u/s 254(2) is specifically to rectify mistakes, not to review decisions or rewrite judgments. The Tribunal's substitution of paragraphs 9 and 10 with a fresh paragraph in the original order was deemed as rewriting the judgment, which is impermissible under the law.

The Tribunal's action of substituting paragraphs in the original order was found to be beyond the scope of rectification of mistakes u/s 254(2) of the Income-tax Act. The High Court clarified that the Tribunal cannot review its own decision or rewrite a fresh judgment under this provision. Consequently, the assessee's appeals for the assessment years 1985-86 to 1988-89 were dismissed, upholding the orders of the Commissioner of Income-tax (Appeals) for those years. The Revenue was deemed to have no further grievance or prejudice in this matter.

In a related argument, it was highlighted that the entertainment of applications for rectification has been increasing, emphasizing the need to settle the law in this regard. Referring to a previous case, the court reiterated that the Tribunal's power u/s 254(2) is limited to rectifying apparent mistakes in the record and not to review decisions or rewrite judgments. The court disposed of the writ application with these observations and directions, without any order as to costs.

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