Rectification for apparent mistake allowed where Tribunal overlooked CBDT circular exception on low tax effect and law-enforcement information.

Section 254(2) permits rectification only of a mistake apparent from the record, not a review on merits; however, where the Tribunal overlooks a binding CBDT circular amendment affecting maintainability, recall is permissible. Here, the earlier dismissal of the departmental appeal on low tax effect was recalled because the assessment was stated to be based on information from the CBI, bringing the matter within the circular exception for such cases. That omission was treated as a patent error requiring correction, and the Tribunal's restoration of the appeal for fresh hearing was upheld.

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Issues: (i) Whether the Income Tax Appellate Tribunal exceeded its jurisdiction under Section 254(2) of the Income-tax Act, 1961 in allowing the Miscellaneous Application and recalling its earlier order; (ii) Whether the earlier dismissal of the departmental appeal on low tax effect could be recalled on the ground that the case fell within the CBDT circular exception relating to additions based on information from law enforcement agencies.

Issue (i): Whether the Income Tax Appellate Tribunal exceeded its jurisdiction under Section 254(2) of the Income-tax Act, 1961 in allowing the Miscellaneous Application and recalling its earlier order.

Analysis: Rectification under Section 254(2) is confined to correction of a mistake apparent from the record. A patent, manifest and self-evident error that does not require elaborate reasoning may be corrected, but the power cannot be used for a review or for a fresh adjudication on merits. On the facts, the earlier order had proceeded without considering the legal effect of the relevant CBDT circular amendment, and that omission constituted an apparent mistake capable of rectification.

Conclusion: The Tribunal did not exceed its jurisdiction, and the order recalling the earlier decision was valid.

Issue (ii): Whether the earlier dismissal of the departmental appeal on low tax effect could be recalled on the ground that the case fell within the CBDT circular exception relating to additions based on information from law enforcement agencies.

Analysis: The assessment was stated to have been made on information received from the CBI, and the amended circular expressly provided that adverse judgments in such cases were to be contested on merits notwithstanding the monetary limit. The Tribunal's earlier order had overlooked this amended exception. That omission directly affected the maintainability of the departmental appeal and was not a debatable issue requiring a fresh merits review.

Conclusion: The recall was justified because the case fell within the circular exception and the earlier order suffered from an apparent mistake.

Final Conclusion: The writ petition failed, and the Tribunal's order allowing the Miscellaneous Application and restoring the appeal for fresh hearing was sustained.

Ratio Decidendi: Section 254(2) permits rectification only of a patent mistake apparent from the record, and where an earlier order overlooks a binding circular or amendment that materially affects the maintainability of the appeal, recall of the order is permissible without amounting to an impermissible review.

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