Rectification u/s 254(2) Cannot Become Review; Tribunal Recall Order Set Aside, Original Order Restored

HC held that the Tribunal exceeded its jurisdiction under section 254(2) by recalling its earlier order on the assessee's rectification application. The alleged "mistake apparent from the record" was in substance a reappraisal of facts and a de novo exercise of judicial discretion, amounting to an impermissible review. Since all issues had already been considered under section 254(1) and no specific apparent error was demonstrated, section 254(2) could not be invoked. Any perceived perversity in the original order was remediable only through reference proceedings under section 256. Consequently, the HC held the recall order unsustainable in law and restored the Tribunal's original order, restraining it from rehearing the appeal on merits under the guise of rectification.

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Issues involved:
The judgment involves questions regarding the Tribunal's authority to recall its order without a finding of a mistake apparent from the records, the justification of allowing the assessee's miscellaneous application, and the Tribunal's inherent power to review its own order.

Recalling Tribunal's Order:
The Assessing Officer found discrepancies in payments and receipts, treating the net investment as undisclosed income. The Commissioner of Income-tax (Appeals) noted the loose sheet as a memorandum and lacked direct proof of the investments. The Tribunal recalled its order, directing the amount to be assessed in the hands of a family trust, not the assessee, as it belonged to the trust. The Tribunal's recall was based on re-evaluation of facts, not a mistake apparent from the record, leading to the conclusion that the Tribunal exceeded its authority by recalling the order without a clear mistake.

Miscellaneous Application:
The Tribunal allowed the assessee's miscellaneous application, stating that the amount should be assessed in the family trust's hands, not the assessee's. The Tribunal's recall was deemed improper as it was for re-evaluation, not rectification of a clear mistake. The Tribunal's recall was seen as a review of the case, which is not within its jurisdiction under the Income-tax Act.

Tribunal's Authority:
The Tribunal's recall was challenged under section 254(2) of the Income-tax Act, which allows rectification of mistakes apparent from the record. The Tribunal's recall was considered a re-evaluation of facts, not rectification of a clear mistake. The Tribunal's recall was viewed as exceeding its authority, as it amounted to a review of the case, not permitted under the Act.

Conclusion:
The High Court held that the Tribunal erred in recalling its order without a mistake apparent from the record. The Tribunal's recall was deemed a re-evaluation of facts, exceeding its authority and engaging in a review not permitted under the Income-tax Act. The questions were answered in favor of the Revenue, with no costs awarded.

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