Rectification power is not review: final appellate orders cannot be reopened under section 254(2) absent an apparent record error.

Rectification under section 254(2) of the Income-tax Act, 1961 is limited to correcting a mistake apparent from the record and does not extend to review. A concluded appellate order cannot be reopened merely because a later precedent is cited or relied upon after the original decision, especially where that precedent was not placed before the Tribunal earlier. On that basis, the Tribunal could not lawfully reverse its final appellate decision or vacate the penalty under its rectification power. The operative principle is that section 254(2) cannot be used to re-examine or unsettle an earlier final appellate determination in the absence of an apparent error.

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Issues: Whether the Appellate Tribunal could, under its rectification power, reverse its final appellate decision by applying a later-cited precedent and vacate the penalty.

Analysis: The rectification power under section 254(2) is confined to correcting a mistake apparent from the record and does not confer a power of review. A concluded appellate order cannot be reopened merely because another decision, not placed before the Tribunal earlier, is later relied upon. Since the Tribunal had already upheld the penalty in appeal, its subsequent attempt to unsettle that conclusion on the basis of Dhadi Sahu amounted in substance to a review and lay beyond section 254(2).

Conclusion: The Tribunal was not legally competent to reverse its final decision in exercise of powers under section 254(2) of the Income-tax Act, 1961.

Final Conclusion: Rectification under section 254(2) cannot be used to re-examine or reopen an earlier final appellate decision in the absence of an apparent error on the record.

Ratio Decidendi: The statutory power of rectification is limited to correcting an apparent mistake and does not include a power of review.

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