TaxTMI 
TaxTMI 
2014 (8) TMI 487
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....peration was conducted by the Income Tax authorities under section 132 of the Act at the residential premises of the assessee resulting in the seizure of certain unexplained assets. A diary was also seized during the search operation. The Assessing Officer passed the assessment order making various additions inclusive of the addition of Rs. 4,90,000/- made on the basis of the entry appearing in the seized diary and passed the assessment order for the Assessment Year 1984- 85. Then in appeal, the learned CIT(A) vide his order dated 19.7.1998 confirmed the addition of Rs. 4,90,000/ made on the basis of entries appearing in the seized diary, as above. On certain grounds, the CIT(A) restored other additions to the file of the AO. The assessee preferred appeal being ITA No. 2344/Ahd/88 before the learned Tribunal against the order of the CIT(A). During the pendency of the said appeal to the learned Tribunal, the AO to whom the matter was restored by the CIT(A) reframed afresh assessment on 27.3.1991, inter alia, making an addition of Rs. 3,33,413/- on the basis of the seized diary. Against the order of the AO, the assessee preferred appeal before the CIT(A) and CIT(A) vide his order dat....
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....y impugned order dated, the learned Tribunal (Bench consisting of different members), allowed the said Misc. Application and recalled the order dated 6.6.1995 passed by the learned Tribunal in ITA Nos. 2344/1988 and 4895/A/91. 5. That, as the Revenue was of the view that the learned Tribunal ought not to have entertained the second rectification application on the same ground on which the first rectification application was dismissed, and therefore, the learned Tribunal ought not to have passed the impugned order. Therefore, the Revenue has filed the present Reference seeking opinion of this Court on the following substantial question of law: "Whether the Appellate Tribunal is right in law in entertaining the assessee's miscellaneous application again when once the MA has been considered and rejected by the same authority?" 6. Mr. Manish R. Bhatt learned advocate appearing on behalf of the appellant-Revenue has vehemently submitted that the learned Tribunal has erred in entertaining the second Misc. Application once the assessee's earlier Misc. Application came to be rejected by the learned Tribunal, which was submitted for pointing out similar mistake in the order of the ....
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....error apparent on the face of the record, then and then only, and to that extent, the powers under sec. 254(2) of the Act can be exercised. It is submitted that in the present case, as such, there was no error apparent on the face of the record, more particularly, with respect to the finding recorded by the learned Tribunal on considering the panchnama of the seized article/pocket diary. It is further submitted that, therefore, the learned Tribunal has materially erred in allowing the second rectification application, and has, materially erred in re-calling the earlier order passed by the learned Tribunal in appeal. It is submitted that as such, the impugned order passed by the learned Tribunal in second rectification application in exercise of powers under section 254(2) of the Act, is beyond the scope and ambit of section 254(2) of the Act. Mr. Bhatt has heavily relied on the decision of the Hon'ble Supreme Court in the case of T.S. Balaram, Income-Tax Officer, Company Circle IV, Bombay vs. Volkart Brothers & Others, reported in [1971] 82 ITR 50 (SC) on the scope and ambit of the powers under section 154 of the Act. 8. It is further submitted that, as such, by passing the impu....
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....servations made in para-8 and 9 about the seized material i.e. diary by submitting that certain material facts could not be considered. It is not in dispute that the said rectification application came to be rejected by the learned Tribunal vide order dated 11.4.1996 by observing that the attempt on the part of the assessee is to get the review of the order of the Tribunal which is beyond the scope of Sec. 254(2) of the Act. At this juncture, it is required to be noted that such rectification application (first rectification application) was decided by the same members, who have, earlier decided and disposed of the appeal. It appears that, thereafter, assessee preferred second rectification application for rectification of the order passed by the learned Tribunal on the same ground on which the earlier rectification application preferred which was rejected by the learned Tribunal, and by impugned order, not only the Tribunal has entertained the second rectification application on the same ground on which the earlier first application was made but has also allowed the same and has re-called/renewed its earlier order passed in appeal. Therefore, the question is whether the learned Tr....
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....clothe the court to modify judgment on the merits. The scope of power of rectification has been repeatedly considered, inter alia, in Volkart Brothers [1971] 82 ITR 50 (SC) , Deva Metal [2007] 10 VST 751; [2008] 2 SCC 439 Saurashtra Kutch [2008] 305 ITR 227 (SC) and such power is limited to correcting an error apparent on the face of record and not to an error to be discovered by long drawn process of reasoning. Thus, neither by invoking the inherent power nor the principle of mistake of court not prejudicing a litigant nor by invoking the doctrine of incidental power, the Tribunal could reverse a decision on the merits. Power available to a court of record, ex debito justitiae, or power to be invoked where an order may be nullity, on account of having been passed without service on a party, stand on a different footing." 15. In the case of Commissioner of Income-Tax vs. Panchu Arunachalam (supra), the Madras High Court has held that once the powers for rectification of the earlier order is invoked/exercised and an order is passed and such order merges with the earlier order of the Tribunal on the ground that a mistake apparent from the record had occurred, another application f....
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....ances, the learned Tribunal has materially erred in entertaining the second rectification application and passing the impugned order of re-calling its earlier order in exercise of powers under section 254(2) of the Act. Once the second rectification application on the same issue was not maintainable, the learned Tribunal erred in entertaining the application and allowing the same. 18. Once it is held that the second rectification application on the same issue was not maintainable, and therefore, was not required to be entertained, thereafter, a further question, whether in the facts and circumstances of the case, the Tribunal is justified in allowing the second rectification application on merits and re-calling the order passed in an appeal is as such not required to be considered. However, when the submissions have been made, we are considering whether even on merits the Tribunal was justified in re-calling the order passed in appeal on merits or not. Considering the impugned order passed by the Tribunal, we are of the view that while passing the impugned order, the Tribunal has gone beyond the scope and ambit of section 254(2) of the Act. The order passed by the Tribunal in ap....