Error apparent on the record held factual, so no referable question of law arose in the taxability dispute.

The High Court held that the Accountant Member's earlier note, which merely stated that he had no comments to add because the interest income was small, did not amount to a merits decision on taxability under section 13(2)(a) of the Income-tax Act, 1961. The Tribunal was therefore justified in treating the omission as an error apparent on the face of the record, entertaining the assessee's miscellaneous application, and referring the matter to a third Member under section 255(4). The Court further held that whether such an error existed was essentially a question of fact and did not give rise to a referable question of law under the reference provisions.

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Issues: Whether the Tribunal was justified in holding that the Accountant Member's earlier order did not decide the taxability issue on merits and that the assessee's miscellaneous application disclosed an error apparent on the face of the record, so that no referable question of law arose under the reference provisions.

Analysis: The Accountant Member's initial order merely stated that, since the interest income was small, he had "no comments to add", and did not record a decision on the merits of the issue under section 13(2)(a) of the Income-tax Act, 1961. The Tribunal therefore treated the omission as an error apparent and reconsidered the matter, after which the issue was referred to a third Member under section 255(4) of the Income-tax Act, 1961. The High Court held that whether such an error existed was essentially a question of fact and that the Tribunal's view did not give rise to a referable question of law.

Conclusion: The Tribunal's finding that the miscellaneous application was maintainable and that no question of law arose was upheld, and the Revenue's petition under section 256(2) of the Income-tax Act, 1961 failed.

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