TaxTMI 
TaxTMI 
2012 (12) TMI 809
X X X X Extracts X X X X
X X X X Extracts X X X X
....ers, Ld Shri R.K. Gupta, Judicial Member and Ld. Shri P.K. Bansal, Accountant Member. The order could not be finalised within 60 days. Therefore, the case was deheard and re-fixed. 3. The so-called mistakes pointed out by the assessee in the Miscellaneous Application are reproduced as under:- "Mistake No. 1 5.1 The order passed by the Hon'ble ITAT on this issue related to validity of Block assessment order dated 30.01.2001 under section 158BC, is at variance from the pronouncement made in the open court to the effect as mentioned in para 4 hereinfore. 5.2 Further, even after having taken note of the categorical findings of the ld. CIT(A) to the effect that there existed no "warrant of authorization for requisition under section 132A" in the name of the assessee/appellant (kind attention is invited to para 5.3 of the order under reference), the Hon'ble ITAT could not have upheld the validity of the said block assessment order even to the limited extent, by referring to and relying upon the case ; (i) Chatturam v. CIT reported in [1947] 15 ITR 302, stated to have been noted with the approval of apex Court ; (ii) CIT v. Jai Prakash Singh reported in [1996] 219 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the same as has been discussed in para 4 above. As stated above, the Hon'ble ITAT had declared appeal as heard just after it got apprised of the fact that there existed no warrant of authorization in the name of the assessee. It is a trite law that no adverse order can be passed without the affected person being given an opportunity of being heard. 6.2 Notwithstanding the aforesaid, the view expressed by the Hon'ble ITAT (on the issue of applicability of section 158BD) comes in direct conflict with the decision of Hon'ble Supreme Court in the case of Manish Maheshwari v. Asstt. Commissioner of Income-tax reported in (2007) 289 ITR 341, wherein at page 348 their lordships have observed and held as under :- "The condition precedent for invoking a block assessment is that a search has been conducted under section 132, or documents or assets have been requisitioned under section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under section 132A or documents or assets have been requisitioned under section 132A. Section 158BD, however provides for taking resource to a block assessment in terms of section 158BC in respect ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....15 (Guj.), Premijibhai and Sons v. Joint CIT(A) [2001] 251 ITR 625 (Guj.), and by the Kerala High Court in CIT v. Deep Arts [2005] 274 ITR 571, CIT v. Don Bosco Card Center [2007] 289 ITR 329 (Ker.) and by the Madhya Pradesh High Court in CIT v. Smt. Maya Chotrani [2007] 288 ITR 175." (349 & 350) A plain reading of the said passage goes to show that requisite satisfaction has to be recorded by the Assessing Officer having jurisdiction in the case of the "persons subjected to search/requisition". In the present case, admittedly no satisfaction has been recorded by the Assessing Officer having jurisdiction in the case of Neel Kamal Courier Services (who is the person subjected to requisition under section 132A) 6.3 It is very relevant to mention here that as per the finding given by the Hon'ble ITAT, the proceedings have been initiated at the behest of the Additional Director of Income-tax (Investigation), Calcutta who falls within the definition of the Assessing Officer as given in Section 2(7A). Be is so, the fact remains that such an "Authority" was not holding jurisdiction as Assessing Officer" in the case of Neel Kamal Courier Services (supra). Therefore, initiation of proceed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ive argued the M.A. on the basis of contents and submissions made in the M.A. which are reproduced above. Ld. Authorised Representative submitted that at the time of hearing the Bench enquired whether it was correct that there was no warrant of authorization in the name of the assessee. On being apprised of the categorical finding recorded by the first appellate authority to the effect that there was no warrant of authorization in the name of the assessee, the Bench was pleased to announce in the open court that the issue stood settled in favour of the assessee and the appeal shall be decided accordingly. The ld. Authorised Representative submitted that in the light of facts, no further argument took place thereafter from either side nor any further argument on the rest of the issues were considered necessary by the Bench. 5. Ld. Departmental Representative submitted that there may be error in the order but there is no apparent mistake which can be rectified under section 254(2) of the Act. 6. We have heard the ld. Representatives of the parties, records perused and gone through the M.A. including the decisions cited. The issue to be examined in the case under consideration wheth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record." This view of the Supreme Court has held the field for a long time, and has been followed by other High Courts. Thus, for example, in the case of V.P. Minocha, ITO v. ITAT [1977] 106 ITR 691, the Gujarat High Court relying upon Balaram's case [1971] 82 ITR 50 (SC), said that a decision given by the Tribunal on a debatable point of law cannot be subsequently considered as showing any mistake apparent from the record which the Tribunal could consequently rectify. Similarly, the Madras High Court in the case of CIT v. R. Chelladurai [1979] 118 ITR 108, said that the Tribunal's power under section 254(2) is not to review its earlier order but only to amend it with a view to rectifying any error apparent from the record." 9. The Hon'ble High Court of Madhya Pradesh in the case of CIT v. K.D. Wires (P.) Ltd. [2010] 323 ITR 257 held as under :- (Pages 259-260) "From a perusal of the section 254(2), it is luculent that rectification under that section implies amendment if the mistake is brought to the notice of the Tribunal by the assessee or the Assessing Officer. Le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ew of an order can be achieved indirectly, by seeking a rectification of that order. This is even more significant in light of the fact that under the Act there is no express power given to the Tribunal to review its own orders. A reference may be made to the observation of the Hon'ble Supreme Court in S. Nagaraj v. State of Karnataka [1993] Suppl. 4 SCC 595 that "rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and not for disturbing finality". The first significant decision in this regard is K.L. Bhatia's case (supra). The facts of that case were that the assessee filed an application before the Tribunal under section 254(2) of the Act stating that certain material facts were not correctly noted by the Tribunal in its order dated 27-6-1985 in which it concluded that the property claimed by the assessee as belonging to his wife, in fact belonged to him and that the wife was only a benamidar. The Tribunal accepted this application and came to the conclusion that there was a mistake in the earlier order dated 27-6-1985 and as such the order was required to be recalled. One of the questions raised in the ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in K.L. Bhatia's case (supra) it was observed :- "The Income-tax Act is a self-contained Code. The Income-tax Appellate Tribunal is a creation of the statute and its powers are circumscribed by the provisions of the Act. Appeals are filed before it under section 253 of the Act. Section 254(1) contemplates disposal of the said appeal after giving an opportunity to both the parties of being heard. Sub-section (2) of section 254 enables the Tribunal to rectify any mistake apparent from the record. Sub-section (4) of section 254 specifies that save as provided in section 256, the order passed by the Appellate Tribunal on appeal are final. A reading of section 254 shows that the orders which are passed under section 254 are final except under two circumstances: (1) if a rectification is called for, then such an order can be passed under section 254(2), and (2) a reference can be made on questions of law arising out of this order under the provisions of section 256. As far as the Tribunal is concerned, section 254(4) provides that the orders passed by it on appeal are final." (p. 364-65) Importantly this Court in K.L. Bhatia's case (supra) drew a distinction between the power under s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the letter dated 21-2-1995, there is no mistake apparent from record calling for rectification under section 254(2) of the Act and restricting the appellant to the material on record sans additional evidence, was in order and not a mistake apparent from record. We, therefore, find no merit in these applications and dismiss the same." (p. 406) Before this Court, the question that again arose was whether the Tribunal had erred in rejecting the applications for rectification. This Court formulated the question and answered it as under :- "Could any relief have been allowed to the petitioners in exercise of jurisdiction conferred by section 254(2) of the Act amending the order passed by the Tribunal with a view to rectify any mistake apparent from the record? The language of the provisions is clear. The foundation for exercising the jurisdiction is 'with a view to rectify any mistake apparent on the record' and the object is achieved by 'amending any order passed by it'. The power so conferred does not contemplate a rehearing which would have the effect of rewriting an order affecting the merits of the case. Even there would be no distinction between a power to review and a power to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be done indirectly. The review of its own order by the Tribunal is forbidden in law, it cannot be permitted to achieve the same object by exercising its power under sub-section (2) of section 254. The Income-tax Appellate Tribunal does not have an inherent power of review." (p. 21) In Vichtra Construction (P.) Ltd.'s case (supra), the Tribunal decided to recall the earlier order in its entirety while accepting the application for rectification. This Court held that such an order by the Tribunal was beyond the scope of the section 254(2). It was held as under:- "In view of the provisions and judicial pronouncement indicated hereinabove, we are of the view that the power to rectify a mistake under section 254(2) cannot be used for recalling the entire order. No power of review has been given to the Tribunal under the Income-tax Act. Thus, what it cannot do directly, cannot be allowed to be done indirectly. If the assessee was aggrieved, it was open for him to approach the appropriate forum but the Tribunal could not have reviewed the entire judgment delivered by it earlier in the garb of exercising its power under section 254(2). Accordingly, the answer is required to be given in f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g unamended is the effective order for all practical purposes. The same continues to be an order under section 254(1). That is the final order in the appeal. An order under section 254(2) does not have existence de hors the order under section 254(1). Recalling of the order is not permissible under section 254(2). Recalling of an order automatically necessitates re-hearing and readjudication of the entire subject-matter of appeal. The dispute no longer remains restricted to any mistake sought to be rectified. Power to recall an order is prescribed in terms or rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963, and that too only in cases where the assessee shows that it had a reasonable cause for being absent at a time when the appeal was taken up and was decided ex parte. This position was highlighted by one of us (Justice Arijit Pasayat, Chief Justice) in CIT v. ITAT [1992] 196 ITR 640 (Ori.). Judged in the above background, the order passed by the Tribunal is indefensible'" (p.136) That being the legal position, the Tribunal was not in our opinion justified in recalling the order passed by it in toto and setting the matter down for a fresh hearing. Just because a pronoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) of the Act or of the decisions of this Court in the numerous cases noticed hereinabove. The decisions cited by Mr. Syali in K. Venkatachalam's case (supra), S.A.L. Narayan Row's case (supra) turned on their own facts. K. Venkatachalam pertained to the power under section 35 of the 1922 Act. As observed by Division Bench of this Court in K.L. Bhatia's case (supra) section 35 of the 1922 Act did not provide for a further reference to the High Court against the decision thereunder whereas under the present Act a reference under section 256 is permissible in respect of a decision under section 254. In S.A.L. Narayan Row's case (supra) a subsequent legislative change related back to the assessment period covered by the assessment order in question necessitating its recall. This was not an instance of a mistake on record. Karamchand Premchand (P.) Ltd.'s case (supra) involved section 256(1) of the Companies (Profits) Surtax Act and not section 254(2) of the Income-tax Act, 1961. Not surprisingly, therefore, the said decision in Karamchand Premchand (P.) Ltd.'s case (supra) does not refer to any of the decisions discussed hereinabove and is, therefore, distinguishable on that ground it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t under section 254(2) the limitation for filing an application for rectification is an unusually long period of four years. Contrasted with far lesser periods of limitation for filing appeals, it underscores the need for the Tribunal to be circumspect about the instances where it will entertain applications for rectification. It must be remembered that this is not a power of review but is restricted to rectifying mistakes "apparent from the record". A liberal approach might constitute an invitation to parties to allow the period for filing an appeal to expire, anticipate a change of Coram of the Bench that heard the appeal in the first instance, and then at their own sweet will 'take a chance' by filing a rectification application on any fancy imagined "mistake apparent from the record" at any time before the expiry of four years. The likelihood of ingenuous lowering resulting in the abuse of the provision cannot be ruled out. In the circumstances, we would caution against the Tribunal interpreting the narrow power of rectification wider than what it is. In conclusion, we are of the view that the impugned order of the Tribunal dated 10-9-2003 by which it recalled and reversed its....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... true that the Tribunal has not stated in terms that it has considered the cumulative effect of the circumstances pointed out to the Tribunal, but, on the other hand, a plain reading of the judgment of the Tribunal makes it clear that the Tribunal has, in fact, taken into account the cumulative effect of the circumstances on record before the Tribunal. It is not necessary for the Tribunal to state in its judgment specifically or in express words that it has taken into account the cumulative effect of the circumstances or has considered the totality of facts, as if that were a magic formula; if the judgment of the Tribunal shows that it has, in fact, done so, there is no reason to interfere with the decision of the Tribunal. In our opinion, there is no merit in this appeal and it must fail." 12. The Hon'ble High Court of Madras in the case of Express Newspapers Ltd. v. Dy. CIT [2010] 186 Taxman 111 held that a mistake must be one which must be manifest on the face of the record. 13. The Hon'ble High Court of Orissa in the case of CIT v. ITAT [1992] 196 ITR 640/60 Taxman 507 held that the scope and ambit of application of section 254(2) is very limited. The same is restricted to re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t' means visible, capable of being seen, easily seen, obvious plain, open to view, evident, appears, appearing as real and true, conspicuous, manifest, seeming. The plain meaning of the word 'apparent' is that it must be something which appears to be ex-facie and incapable of argument and debate. If such a 'mistake apparent on the face of record' is brought to the notice, section 254(2) empowers the Tribunal to amend the order passed under section 254(1). Amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order. What is mistake apparent on the face of the record or where does a mistake cease to be mere mistake, and become mistake apparent on the face of the record is rather difficult to define precisely, scientifically and with certainty. An element of indefiniteness inherent in its very nature and it must be discernible from the facts of each case by judiciously trained mind. 17. Hon'ble Calcutta High Court in the case of Hindustan Leaver Ltd. v. Jt. CIT [2006] 284 ITR 42 held - "Sub-section (1) of section 154 of the Income-tax Act, 1961 clearly states the circumstances under which the rectification can be made. A mistak....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ution Bench of the Apex Court quoted the observations of Chagla, C.J. in Batuk K. Vyas v. Surat Borough Municipality AIR 1953 Bom. 133 that no error can be said to be apparent on the face of the record if it is not manifest or self-evident and requires an examination or argument to establish it. The Court admitted that though the said test might apply in majority of cases satisfactorily, it proceeded to comment that there might be cases in which it might not work inasmuch as an error of law might be considered by one Judge as apparent, patent and self- evident, but might not be so considered by another Judge. The Court, therefore, concluded that an error apparent on the face of the record cannot be defined exhaustively there being an element of indefiniteness inherent in its very nature and must be left to be determined judicially on the facts of each case. A patent manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of the record and can be corrected while exercising certiorari jurisdiction. An error cannot be said to be apparent on the face of the record if one has to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Hon'ble Apex Court in the case of ITAT Through President v. V.K. Agarwal [1999] 235 ITR 175/[1998] 101 Taxman 382, the relevant finding of the Apex Court is reproduced as under :- (Page 188) "............ rules 34 and 35 of the Income-tax (Appellate Tribunal) Rules, 1963 which regulate the procedure of the Appellate Tribunal. Under rule 34 which deals with final orders to be passed, it is provided as follows :- "Order to be signed and dated.-(1) The order of the Bench shall be in writing and shall be signed and dated by the members constituting it." Rule 35 provides as follows :- "Order to be communicated to parties.-The Tribunal shall, after the order is signed, cause it to be communicated to the assessee and to the Commissioner." Therefore, unless the order of a Bench is signed by all Members constituting it and is dated, it is not an order of the Tribunal. Secondly, this signed and dated order has to be communicated both to the assessee and to the Commissioner. The first respondent has noted in the letter of 30-12-1997, that the first so-called 'order' only bears the signature of one Member. It is not signed by the second Member, nor does it bear any date. ......." 21. I....