Tribunal's rectification order quashed for erroneously rejecting transportation loss claim without proper evidence under section 254

The HC set aside and quashed the Tribunal's rectification order under section 254. The Tribunal had erroneously rejected the assessee's claim for transportation loss of coal, stating the loss should have been claimed from the transporter without evidence. The HC found the Commissioner had correctly accepted the loss based on proper internal control systems and accounting details. The Tribunal's finding that the Commissioner failed to observe whether shortage was passed to transporters was deemed an error apparent, as it made factual determinations based on surmise rather than evidence. The HC ruled the Tribunal exceeded its jurisdiction in making unsupported factual findings.

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Issues Involved:
The issues involved in the judgment are the interpretation of Section 254 of the Income Tax Act, 1961, regarding rectification of mistakes apparent from the record by the Income Tax Appellate Tribunal (ITAT), and the assessment of transportation loss of coal by the assessee for the assessment year 2009-10.

Interpretation of Section 254 of the Income Tax Act, 1961:
The petitioner, represented by Mr. Singh, challenged the order of the ITAT invoking power under sub-section (2) of Section 254, alleging an error apparent in the Tribunal's disposal of the appeal. The Tribunal refused to rectify the mistake as per Section 254(2), stating that it is the last forum to ascertain facts and any aggrieved party can appeal under Section 260-A.

Assessment of Transportation Loss of Coal:
The petitioner contended that the Tribunal erred in its order by not accepting the transportation loss of coal claimed by the assessee. The Commissioner had deleted the addition based on proper records maintained by the assessee regarding the shortage of coal supplied by Mahanadi Coal Field. However, the Tribunal reversed this decision, stating that the assessee must have claimed the loss from the responsible transporters, which was not shown in the case.

The Tribunal's order highlighted discrepancies in the assessee's explanation regarding the claimed shortage of coal and the lack of evidence provided to support the claim. The Tribunal opined that the assessee should have passed on the shortage to the transporters, which was not adequately addressed.

The High Court found that the Tribunal's decision was based on a surmise and not on actual facts, leading to an error apparent in the judgment. The Court set aside the impugned order, emphasizing that the Commissioner's conclusion on the internal control system of the assessee was correct and the Tribunal's decision lacked a factual basis.

The judgment was delivered by Justice Arindam Sinha and Justice Sanjay Kumar Mishra of the Orissa High Court, with Mr. S.K. Singh representing the petitioner and Mr. Tushar Kanti Satapathy as the Senior Standing Counsel for the Revenue.

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