Rectification of apparent error extends to final Tribunal orders where retrospective amendment makes a deduction non-deductible.

Retrospective amendment making wealth-tax non-deductible rendered an earlier Tribunal order allowing the deduction contrary to the law deemed always to have been in force. A mistake created by such a deeming provision was treated as a mistake apparent from the record, so rectification was available under section 254(2) even against a final appellate order. The Tribunal's power under section 254(2) was therefore broad enough to correct the error, and the miscellaneous application should not have been dismissed.

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Issues: Whether the Tribunal was right in holding that there was no rectifiable error in its order allowing deduction of wealth-tax, and in dismissing the departmental application under section 254(2) of the Income-tax Act, 1961.

Analysis: The retrospective effect of the Income-tax (Amendment) Act, 1972, by which wealth-tax was made nondeductible, meant that the earlier order allowing such deduction stood contrary to the law deemed to have always been in force. A mistake created by a deeming provision is a mistake apparent from the record. The amplitude of section 254(2) extends to any order of the Appellate Tribunal, including a final appellate order, and permits rectification where such an apparent mistake exists. The order in question was therefore capable of rectification notwithstanding its finality.

Conclusion: The Tribunal was wrong in dismissing the miscellaneous application, and the answer was in favour of the Revenue.

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