TaxTMI 
TaxTMI 
2015 (4) TMI 412
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....ome, the Assessing Officer found that the assessee had received rental income of Rs. 9,75,000/- and 72,00,000/- for the land and building leased out to M/s.Borosil Glass Work Ltd., Mumbai. Hence, notice under Section 17 of the Wealth Tax Act was issued to the assessee, since as per Section 2(ea) of the Wealth Tax act, any building or land appurtenant thereto used for commercial purpose attracts levy of wealth-tax. Thereafter, the assessee filed return of wealth-tax under Section 14(1) of the Wealth Tax Act on 24.11.2003 admitting 'nil' income. After hearing the objections of the assessee, the Assessing Officer rejected the said objections and passed an order under Section 16(3) read with Section 17 of the Wealth Tax Act by determining total wealth of Rs. 8,35,00,000/- each for both the assessment years. 3. Aggrieved by the same, the assessee preferred appeals before the Commissioner of Wealth Tax (Appeals), who dismissed the appeals both on jurisdiction as well as on merit. 4. As against the said order, the assessee pursued the matter before the Income Tax Appellate Tribunal. The Tribunal, by a final order dated 16.2.2007 in W.T.A.Nos.5....
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.... to the relevant years. In short, the ITAT have wrongly applied the amended provisions in the present years i.e. 1997-98 and 1998-99. 8. It is noticed that the assessee has no case that it will get exemption to the applicability of section 2(ea) under any of the exclusion clauses of (1), (2) or (3) for the relevant assessment year. In the above context the issue whether the lease asset remanded a commercial asset or not has no implication for deciding the liability for wealth-tax. 9. For the above reasons and such other reason as may be adduced at the time of hearing it is prayed that the Hon'ble ITAT may rectify their order on the above appeal and render justice." (emphasis supplied) 9. Consequent upon the filing of the above Miscellaneous Petitions, the Tribunal, by order dated 18.1.2013 passed an order recalling the earlier final order dated 13.3.2012, which was in favour of the assessee and posted the appeals for re-hearing. The relevant portion of the order dated 18.1.2013 reads as follows: "These miscellaneous petitions are filed by the Revenue. These are in the nature of rectification petitions. They relate to the assessment years....
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...., had no jurisdiction to recall the order and pass a fresh order on the plea which was not raised by the Revenue before the Tribunal at the earliest point of time. It was pointed out by the learned counsel appearing for the assessee and conceded by the learned Standing Counsel appearing for the Revenue that in number of cases Miscellaneous Petitions for rectification is filed and allowed and consequently, earlier orders are recalled and fresh orders are passed. Here is a case, where there is no mistake apparent on the face of the record. On the contrary, the Department has raised a legal plea, which according to the Department, the Tribunal failed to address. Learned counsel appearing for the assessee pointed out that the Department, if aggrieved against the wrong interpretation or failure to consider the case in correct perspective, should have filed an appeal against the said first order of the Tribunal dated 13.3.2012, which is against the Revenue. Instead, they attempted and filed petitions to recall the order in the guise of rectification. He further submitted that the scope of rectification of mistake apparent on the face of record has been....
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....is Court. 16. To appreciate the submissions raised at the Bar, we shall refer to the provision contained in Section 35(1)(e) of the Wealth Tax Act relating to rectification. It reads as follows : "Rectification of mistakes. 35(1) With a view to rectifying any mistake apparent from the record - (a).... (b).... (c)... (d)... (e) the Appellate Tribunal may amend any order passed by it under section 24. " 17. In the light of the above provision, in the case of CIT V. Bhatia (K.L.) reported in [1990] 182 ITR 361 (Delhi), while dealing with the power of the Tribunal under Section 254(2) of the Act, which is pari materia to Section 35(1)(e) of the Wealth Tax Act, the Delhi High Court has dealt with the provision and held thus: "The Income-tax Act is a self-contained code. The Income-tax Appellate Tribunal is a creation of the statute and its powers are cir cumscribed 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-sect....
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....istake apparent from the record. The power of review, as is well known, must be conferred expressly or by necessary implication upon the statutory or quasi-judicial authorities. The Tribunal has no inherent power of review. It is thus axiomatic that while exercising its jurisdiction to amend its order on the ground of rectification of mistake it cannot recall its order passed on the merits." 20. A reading of the above-said decisions reveals that the power under Section 35(1)(e) of the Wealth Tax Act extends only to rectify the mistake apparent from the face of the record. An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the record means an error which strikes one on mere looking and does not need a long drawn out process of reasoning. Under the garb of rectification of mistake, it is not possible for a party to take further chance of rearguing the appeal already decided. What can be rectified under Section 35(1)(e) is a mistake which is apparent and patent. A patent, manifest and self-evident error, which does not require elaborate disc....
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....m the record, regardless of the judgment being rendered prior to or subsequent to the order proposed to be rectified ; (g) After the mistake is corrected, consequential order must follow, and the Tribunal has power to pass all necessary consequential orders." (emphasis supplied) 23. On the basis of the said conclusions, the writ court affirmed the order of recall passed by the Tribunal. The aforesaid decision was challenged by the Revenue before the Supreme Court, wherein the Supreme Court held as follows: "The core issue, therefore, is whether non-consideration of a decision of jurisdictional court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a 'mistake apparent from the record'? In our opinion, boththe Tribunal and the High Courtwere right in holding that such a mistake can be said to be a 'mistake apparent from the record' which could be rectified under section 254(2)." 24. In the case of Honda Siel Power Products Ltd. V. Commissioner of Income Tax reported in [2007] 295 ITR 466, the Supreme Court while dealing with the scope of rectification, held as follows: "As stated above, in t....
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....en commended to us by Mr. Mehta and we notice that the decision was distinguished on the factual score and none of the decisions have proceeded to say that it is not a precedent for the proposition that the Tribunal under no circumstances can recall its own order. 33. In view of our aforesaid analysis, we proceed to state our conclusions in seriatim as follows : (A) The decision rendered in Honda Siel Power Products Ltd. [2007] 295 ITR 466 by the apex court is an authority for the proposition that the Income-tax AppellateTribunal under certain circumstances can recall its own order and there is no absolute prohibition. (B) In view of the law laid down in Honda Siel Power Products Ltd. [2007] 295 ITR 466 by the apex court, the decisions rendered by this court in K. L. Bhatia [1990] 182 ITR 361 (Delhi), Deeksha Suri [1998] 232 ITR 395 (Delhi), Karan and Co. [2002] 253 ITR 131 (Delhi), J. N. Sahni [2002] 257 ITR 16 (Delhi) and Smt. Baljeet Jolly [2001] 250 ITR 113 (Delhi) which lay down the principle that the Tribunal under no circumstances can recall its order in entirety do not lay down the correct statement of law. (C) Any other decision or authority which has been rendered&nbs....
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....power of rectification, can recall its order, if it is satisfied that on account of mistake, manifest error or omission attributable to the Tribunal, prejudice is caused to the party. The Tribunal can recall its order for rectification of mistake apparent from the record. Else, the Tribunal has no power to recall its order. 31. The ruling of the Full Bench in paragraph 32(A) of the decision reported in L.D.Bhatia Hingwala (P) Ltd. v. Asst. CIT (Delhi) (FB) reported in [2011] 330 ITR 243 (Delhi) (FB), cannot be misinterpreted that an Appellate Tribunal has got absolute power to recall its order. That power can be exercised only in a case where there is a mistake apparent on the face of the record. The decision of the Supreme Court in the case of Honda Siel Power Products Ltd. V. CIT (supra) makes it clear that on a mere filing of application for rectification, the Tribunal cannot and should not recall its order. Even otherwise, we have to state that recalling the order without even giving reasons would make such order vulnerable to questioning as to its motive behind such an order of recall. As has been emphasised by the Supreme Court in the various de....
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....se considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decision-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need no....
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....cause (nemo debet esse judex propria causa), and (ii) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem). Very soon thereafter a third rule was envisaged and that is that quasi-judicial enquiries must he held in good faith, without bias and not arbitrarily or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice. 38. A similar trend is discernible in the decisions of English courts wherein it has been held that natural justice demands that the decision should be based on some evidence of probative value. (See : R. v. Deputy Industrial Injuries Commissioner ex p. Moore; Mahon v. Air New Zealand Ltd.) 39. The object underlying the rules of natural justice is to prevent miscarriage of justice and secure fair play in action. As pointed out earlier the requirement about recording of reasons for its decision by an administrative authority exercising quasi-judicial functions achieves this object by excluding chances of arbitrariness and ensuring a degree of fairness in the process of decision-making. Keeping in view the expanding horizon of the principles of natur....