Rectification under Section 254(2): Tribunal rejects revenue's attempts to convert merits review into rectification, dismisses applications

Applications seeking rectification under Section 254(2) were assessed as impermissible attempts to re open merits rather than corrections of a mistake apparent on the face of the record. The Tribunal held that Section 254(2) is confined to obvious, patent errors and does not permit re deciding debatable points of law or mixed questions of fact and law; non speaking dismissal of SLPs does not convert a High Court view into binding Supreme Court precedent; reliance on non jurisdictional High Court decisions or dismissed SLPs, absent a clear manifest error, cannot convert merit disputes into rectifiable mistakes. Accordingly, the miscellaneous applications were dismissed.

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Issues: Whether the miscellaneous applications filed by the revenue under Section 254(2) of the Income-tax Act, 1961 seeking rectification of the Tribunal's consolidated order dated 09.06.2023 on the ground that the Tribunal erred in quashing penalty orders, constitute a permissible rectification for a "mistake apparent from record" or are impermissible attempts to review merits of the Tribunal's order.

Analysis: The scope of Section 254(2) is limited to correcting an obvious, patent mistake apparent on the face of the record and does not extend to re deciding debatable points of law or fact or to review merits. Non-speaking dismissal of Special Leave Petitions does not operate as merger of the High Court's order with that of the Supreme Court and cannot be treated as creating binding Supreme Court precedent for the purpose of rectification. Reliance on decisions of non jurisdictional High Courts or on dismissed SLPs, without showing that such authority was not before the Tribunal and that a clear, manifest error apparent from record exists, does not convert a merits dispute into a rectifiable mistake. Distinctions of fact and the existence of mixed questions of fact and law prevent characterization of the Tribunal's conclusions as mistakes apparent on the record.

Conclusion: The miscellaneous applications under Section 254(2) of the Income-tax Act, 1961 are not maintainable as requests for review of the Tribunal's merits-based decision and do not disclose any mistake apparent from the record; accordingly, all such miscellaneous applications filed by the revenue are dismissed.

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