1996 (12) TMI 107 - AT - Income Tax

Tribunal Corrects Mistake on Cash Payment Disallowance: Genuineness Issue Emphasized

COMMISSIONER OF INCOME TAX. Versus EASTERN SUPPLY CORPORATION.

COMMISSIONER OF INCOME TAX. Versus EASTERN SUPPLY CORPORATION. - TTJ 058, 534, Issues:1. Whether the Tribunal erred in recalling its final order under s. 254Rs.2. Does the Tribunal have the power to review its orderRs.3. Can a reference be made under s. 256 based on an order passed on a miscellaneous applicationRs.Analysis:1. The reference application stemmed from the Tribunal's decision to recall its order in response to a miscellaneous application filed by the assessee. The original order disallowed a cash payment under s. 40A(3) as not genuine. The Tribunal recalled the order citing a mistake apparent from the record regarding the genuineness of the payment.2. The Departmental Representative argued that the Tribunal's action amounted to a review disguised as rectification, citing various court decisions. The assessee's counsel contended that the Tribunal's decision was not a review but a correction of a mistake, emphasizing that the genuineness of the payment was not a departmental concern during the disallowance.3. The Tribunal clarified that it did not pass a final order but merely recalled the original order due to a lack of proper opportunity for the assessee to address the genuineness issue. The Tribunal's power to recall its order was discussed in light of various court decisions, ultimately concluding that the order on the miscellaneous application was not subject to a reference under s. 256.4. The Tribunal highlighted the distinction between final orders under s. 254(2) and orders passed on miscellaneous applications, citing relevant court judgments. It was emphasized that a reference could only be made against orders falling within the scope of s. 254, and not miscellaneous orders for rehearing appeals.5. In rejecting the reference application, the Tribunal underscored that the order in question did not constitute a final order under s. 254(2), making it ineligible for reference under s. 256(1). The decision was based on the understanding that a reference could not be made against an order arising from a miscellaneous application for rehearing.This detailed analysis of the judgment delves into the issues surrounding the Tribunal's decision to recall its order, the power of the Tribunal to review its decisions, and the eligibility of orders from miscellaneous applications for references under the relevant sections of the Act.