TaxTMI 
TaxTMI 
TaxTMI 
2004 (7) TMI 40
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....ber 29, 1998. Ground No. 1 dealt with by the Tribunal in its order dated October 29, 1998, was against the sustenance of addition on account of interest on securities/debentures on accrual basis. There was no dispute that the interest income was accounted for and taken into the books of account by the appellant on accrual basis following the mercantile system. However, while computing the income under the provisions of the Income-tax Act for levy of tax, the assessee has shown lesser income as it had reduced its interest income shown in the books by the amount which was not declared and did not become receivable during the accounting year relevant to the assessment year in question. The assessee claimed that section 145, which is a machinery provision and is not charging section, has not really made any alteration in the method adopted by the assessee. The Assessing Officer has rejected the claim of the assessee and enhanced the income declared by the assessee by disallowing the claim of the assessee for reducing its income which was claimed to have not become due to be received during the relevant accounting period. The Tribunal found in this connection that in the present case....
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....w these facts and following our decision cited supra, the Assessing Officer is directed to allow the claim of interest paid by the assessee on account of securities/debentures." Apparently, the order which was agreed to be passed in consonance with the order dated October 29, 1998 did not communicate in its essence by the aforesaid statement of conclusion inasmuch as no claim to deduction was made by the assessee on account of interest paid by it on debentures or securities. It claimed exclusion of such interest receivable by him, right to receive which has arisen after the close of the relevant accounting year. This led to the making of an application under section 254(2) by the assessee for rectification of the above statement by bringing it in consonance with the direction contained in the order dated October 29, 1998. Other mistakes were also pointed out with which we are not concerned. So far as the present controversy is concerned, the prayer made by the assessee was in the following terms: "It is submitted that as per the grounds of appeal, i.e., ground No. 1, the relief sought was that the interest on securities/debentures should be taxed on due basis and not on accrual....
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....es that "to the controversy with respect to ground No. 1, it is directed to recall the decision on ground No. 1". Why and on what reason the decision is recalled which was in consonance with the admitted grounds is not discernible. No finding is recorded whether there was any mistake apparent on the face of the record and regarding finding on issue No. 1. If so, what was that mistake apparent from the record which is required to be rectified. Whether rectification of such mistakes will result in recalling the order? All these questions face monumental silence. If the Tribunal was of the opinion that there was a mistake apparent on the face of the record which required to be corrected, then the rectification should have been made in the order dated October 12, 2001, itself by bringing it in consonance with the order dated October 29, 1998, which was the only mistake that was pointed out by the applicant. If it was not satisfied with its earlier finding, following the decision dated October 29,1998, and wanted to come to a different conclusion or to elaborate its own finding recorded in the order dated October 29, 1998, obviously that exercise would not fall within the domain of rec....
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.... during which according to the Tribunal it had become due to be received by the assessee. But the Tribunal vide its order dated October 12, 2001, had recalled the finding on ground No. 1 and directed it to be reheard on the merits, as if it were to decide the issue on the merits again afresh after hearing the parties. This order, in our opinion, was wholly beyond the scope of rectification proceedings on the facts of the present case. The Tribunal intended to pass the order on ground No. 1 in consonance with the order dated October 29, 1998 on agreement of learned counsel for the respective parties stating that the same fully governs the case of the assessee, therefore, the Tribunal ought to have allowed the rectification application by substituting in the order dated February 22, 2000 the expression "allow the claim of the assessee in respect of interest paid by him as interest on securities/debentures" in para. 4 with the directions as were contained in the order dated October 29, 1998 and no more. However, instead of doing that the Tribunal opted for the approach as if it was deciding the question afresh after hearing the parties ignoring that the parties had made their submis....
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....fication proceedings to reconsider and go into the true scope of a provision of law. Nor can it reappreciate the evidence and reach a new finding. Likewise, considering a similar provision under the Orissa Sales Tax Act, the Supreme Court in Master Construction Co. (Pvt.) Ltd. v. State of Orissa [1966] 17 STC 360 said that an error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. Keeping in view the above principles, we find that before the Tribunal on the claim of the assessee to exclude such interest on stock and debentures which has accrued for the period relevant to the assessment year in question but became receivable in a subsequent year, as it depended on other facts, the controversy was covered by the earlier decision of the Tribunal in the assessee's own case for the earlier year. On this aspect, the representations of the assessee as well as the Department were ad idem. The Tribunal accepting that, made an order following its own decision. However, in giving effect to this conclusion instead of referring to the claim of the assessee to exclusion of such in....