TaxTMI 
TaxTMI 
2012 (9) TMI 266
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....agent. It filed a return for AY 2006-07 declaring an income of Rs. 2,66,26,206/-. The AO issued notice under Section 143 (2) and the assessee filed its reply. The AO held that the assessee had debited Rs. 8,99,89,136/- as commission paid to Maruti dealers, on a total sum of Rs. 6,29,92,392/-. This amounted to 70% of the total receipts of insurance commission. For the preceding years, (A) 2005-06,2004-05 and 2003-04) the payments made to Maruti dealers were 70%, 79% and 93.66%. The AO restricted the commission to 60% and thus disallowed Rs. 89,98,913/-. The assessee's appeal challenging this addition succeeded. The revenue preferred an appeal. The ITAT in its order dated 30-11-2009 (in ITA 2866/Del/09) allowed the appeal, reasoning that the revenue's argument that since commission payable during the initial years after setting up of business might have been warranted, whereas for the AY 2006-07 a decline in such commission could be justified. The matter was remitted for reconsideration to the AO to decide the matter afresh. 3. After the above order was made, the assessee preferred an application under Section 254 (2) contending that a rectification of the previous order (dated 30-1....
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....ous year (which could have been shown at the time of original disposal of the revenue's appeal on 30-11-2009) did not in any way constitute a rectifiable error. Counsel stressed on the fact that the Tribunal could not have rectified its order, and substituted the previous order resulting in an entirely different direction. 6. The assessee filed its counter affidavit, and has relied upon it, and the contents of its recrification. Mr. Ajay Vohra, its learned counsel, argued that the ITAT's order, impugned in this case, cannot be faulted for procedural impropriety or jurisdictional excess. It was contended that the Tribunal was appraised of the fact that there was no justification on the record for it to assume that the commission expenses would have reduced over the years. Counsel emphasized that the number of Maruti dealerships and workshops remained the same; the CIT (A) had in the previous year dealt with an identical situation, and directed the deletion of disallowance. He again followed the same path for the assessment year in question, i.e 2006-07. However, the Tribunal had affirmed the appellate commissioner's order for 2005-06 and for the later year, without any factual basi....
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....rectified must be one apparent from the record. A decision on the debatable point of law or undisputed question of fact, is not a mistake apparent from the record. 9. The contours of the jurisdiction under Section 254 (2) were examined repeatedly by Division Benches of this Court. In Commissioner of Income Tax v. Income Tax Appellate Tribunal (2005) 204 CTR Del 349, it was held that: "6. It is evident from the above that the power available to the Tribunal is not in the nature of a review as is understood in legal parlance. The power is limited to correction of mistakes apparent from the record. What is significant is that the section envisages amendment of the original order of the Tribunal and not a total substitution thereof. That position is fairly well-settled by two decisions of this Court in Ms. Deeksha Suri v. ITAT and Karan and Co. v. ITAT [2002] 253 ITR 131. This Court has in both these decisions held that the foundation for the exercise of the jurisdiction lies in the rectification of a mistake apparent from the record which object is ensued by amending the order passed by the Tribunal. The said power does not however, contemplate a re-hearing of the appeal for a fresh....
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....ainst the order. Any such error may however fall short of constituting a mistake apparent from the record within the meaning of Section 254(2) of the Act. More importantly just because a point is debatable (which is one of the reasons given by the Tribunal in the instant case) would hardly provide a justification for recalling the order and fixing the appeal for a de novo hearing. While doing so, the Tribunal has no doubt made certain observations in regard to the levy of interest under Section 158BFA being statutory in nature with no power vested in any authority or Tribunal to condone the same, but the very fact that the Tribunal has made those observations would not render valid the order of recall passed by it. The net result of the order made by the Tribunal continues to remain the same viz, the appeal has to be heard again simply because one of the issues decided by the Tribunal is debatable or the Tribunal has not noticed an earlier decision rendered by another Bench. Both these reasons were insufficient to justify the order of recall made by the Tribunal." In Commissioner of Income Tax v Honda Siel Power Products (2007) 293 ITR 132 (Del) the Court held that: "It ma....
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....vanappa Tirumale [1960]1SCR890 this Court while spelling out the scope of the power of a High Court under Article 226 of the Constitution ruled that an error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record-see Sidhramappa v. Commissioner of Income-tax, Bombay [1952]21ITR333(Bom) . The power of the officers mentioned in Section 154 of the Income-tax Act, 1961 to correct "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an "error apparent on the face of the record''. 10. It can be seen from the preceding discussion that the power to rectify an order, under Section 254 (2) is extremely limited. It does not extend to correcting errors of law, or re-appreciating factual findings. Those, properly fall within appellate review of an order of court of first instance. What legitimately falls for consideration are errors (mistakes) apparent from the record. Here, whether the dealer comm....