Territorial jurisdiction defect in tribunal proceedings is a nullity and can justify rectification from the record.

A Tribunal order passed by a bench lacking territorial jurisdiction is a nullity, because competence cannot be cured by waiver or by the fact that the point was not raised earlier. The territorial allocation placed Moga within the Amritsar Bench, not the Chandigarh Bench, so the Chandigarh Bench could not validly hear the appeal. That jurisdictional defect was also a mistake apparent from the record under Section 254(2) of the Income-tax Act, since the record itself showed the bench's lack of territorial competence. The Tribunal's order was therefore recalled and the matter remitted to the competent Amritsar Bench for fresh decision.

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Issues: (i) Whether the Chandigarh Bench of the Tribunal lacked territorial jurisdiction to hear the appeal and, if so, whether the order passed by it was a nullity. (ii) Whether such lack of territorial jurisdiction constituted a mistake apparent from the record warranting rectification under Section 254(2) of the Income-tax Act, 1961.

Issue (i): Whether the Chandigarh Bench of the Tribunal lacked territorial jurisdiction to hear the appeal and, if so, whether the order passed by it was a nullity.

Analysis: The territorial allocation of matters showed that Moga fell within the jurisdiction of the Amritsar Bench and not the Chandigarh Bench. A decision rendered by a forum lacking competence on the subject matter cannot be sustained merely because the point of jurisdiction was not raised earlier or because the decision may otherwise appear correct on merits.

Conclusion: The Chandigarh Bench lacked territorial jurisdiction and its order was a nullity.

Issue (ii): Whether such lack of territorial jurisdiction constituted a mistake apparent from the record warranting rectification under Section 254(2) of the Income-tax Act, 1961.

Analysis: Section 254(2) permits amendment of an order to rectify a mistake apparent from the record. Where the record itself shows that the appeal was heard by a bench without territorial competence, the jurisdictional defect is patent and cannot be ignored on the ground that it was not raised during the original hearing.

Conclusion: The jurisdictional defect amounted to a mistake apparent from the record and justified recall of the Tribunal's order.

Final Conclusion: The impugned Tribunal orders were set aside and the matter was remitted to the competent Amritsar Bench for fresh decision, with the revenue's appeal succeeding.

Ratio Decidendi: An order passed by a forum lacking territorial jurisdiction is a nullity, and a patent jurisdictional defect apparent from the record is amenable to rectification under Section 254(2) of the Income-tax Act, 1961.

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