Debatable legal issues cannot be corrected as apparent mistakes under Section 254(2), preserving limits on rectification jurisdiction

Rectification under Section 254(2) of the Income-tax Act, 1961 is limited to an obvious and patent mistake apparent from the record. It cannot be used to revisit a debatable legal issue on which two reasonable views are possible. The assessment of income from property devolving upon members of a Dayabhaga family raised such a controversy because the members had defined and ascertainable shares and no unity of ownership. A precedent relied upon by the assessee was treated as distinguishable. Accordingly, the alleged legal error did not satisfy the standard for rectification, and the Tribunal's order was not capable of correction under Section 254(2).

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Issues: Whether the Tribunal's order could be rectified under Section 254(2) of the Income-tax Act, 1961 on the ground that its view regarding assessment of income from property devolving upon members of a Dayabhaga family was an apparent error of law.

Analysis: Rectification under Section 254(2) is confined to an obvious and patent mistake apparent from the record and cannot be invoked where the disputed legal issue admits of two possible views. The question whether property inherited by members of a Dayabhaga family, having defined and ascertainable shares and no unity of ownership, could be assessed as income of the Hindu undivided family involved a genuine legal controversy. The decision relied upon by the assessee was distinguishable, and the alleged error therefore did not meet the standard for rectification.

Conclusion: The Tribunal's order was not capable of rectification under Section 254(2) of the Income-tax Act, 1961. The referred question was answered in the negative and in favour of the Revenue.

Ratio Decidendi: An order cannot be rectified under Section 254(2) of the Income-tax Act, 1961 where the alleged mistake concerns a debatable legal issue on which two views are reasonably possible.

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