TaxTMI 
TaxTMI 
2008 (9) TMI 11
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....ier order passed on October 27, 2000 in ITA No. 69/Rjt/2000. 2. Shortly stated the facts of the case are that Saurashtra Kutch Stock Exchange Ltd.- respondent herein is an assessee under the Income Tax Act, 1961 (hereinafter referred to as `the Act'). It is a Company registered under Section 25 of the Companies Act, 1956. The assessee is a `Stock Exchange' duly recognized under the Securities Contracts (Regulation) Act, 1956. As a `Stock Exchange', it is a `charitable institution' entitled to exemption under Sections 11 and 12 of the Act from payment of income-tax. The assessee, therefore, made an application on February 10, 1992 for registration under Section 12A of the Act. The Commissioner of Income Tax, Rajkot registered it on July 8, 1996. The assessee filed its return of income on October 29, 1996 for the assessment year 1996-97 declaring its total taxable income as `Nil', claiming exemption under Section 11 of the Act although the assessee had not been registered under Section 12A of the Act. The return was processed under sub-section (1)(a) of Section 143 of the Act. On November 7, 1997, a notice was issued to the assessee by the Commissioner of Income ....
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....ove, was dismissed by the High Court. Hence, the present appeal. 8. On December 19, 2003, notice was issued by this Court and in the meantime, further proceedings before the Tribunal were stayed. Leave was granted on February 16, 2004 and stay was ordered to continue. On February 25, 2008, a Bench presided over by Hon'ble the Chief Justice of India ordered the Registry to list the appeal for final hearing during summer vacation. Accordingly, the matter has been placed before us. 9. We have heard learned counsel for the parties. 10. The learned counsel for the Revenue submitted that the Tribunal committed an error of law and of jurisdiction in exercising power under sub-section (2) of Section 254 of the Act and in recalling its earlier order passed in appeal. It was submitted that the Tribunal is a statutory authority (though not an `income tax authority' under Section 116) and is exercising power conferred by the Act. It has no `plenary' powers. It has no power to review its own decisions. Power under Section 254(2) can be exercised in case of any `mistake apparent from the record'. According to the counsel, even if the order passed by the Tribunal was incorrect ....
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....n which fell for consideration before the Income Tax Authorities related to exemption in favour of `trust'. The issue came up for consideration before the High Court of Gujarat in Hiralal Bhagwati whether a `trust' was entitled to exemption from payment of tax under the Act. The High Court held that the `trust' could claim such exemption. All authorities under the Act, including the Tribunal, were bound by the said decision. Unfortunately, however, the attention of the Court was not invited to the said decision at the time when the case of the assessee was considered and orders were passed under the Act. Subsequently, however, the assessee came to know about the said judgment and hence an application under Section 254 (2) was filed bringing it to the notice of the Tribunal. There was thus a `mistake apparent from the record' and the Tribunal was bound to recall its earlier order which has been done. No illegality can be said to have been committed by the Tribunal in allowing the application and in recalling the order and no grievance can be made against such action of the Tribunal. Moreover, no prejudice had been caused to the Revenue inasmuch as the Tribunal has no....
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.... tax under Section 11 of the Act. We, therefore, refrain from expressing any opinion on the second question. 19. The learned counsel for the parties drew our attention to the relevant provisions of the Act. Section 252 of the Act provides for constitution of Income Tax Appellate Tribunal by the Central Government consisting of as many judicial and accountant members as it thinks fit to exercise the powers and discharge the functions conferred on such Tribunal under the Act. It also provides for qualification of Members. It enacts that the Central Government shall ordinarily appoint a judicial member of the Tribunal to be the President thereof. Section 253 enables an assessee aggrieved by any of the orders mentioned in the said section to appeal to Tribunal. Section 254 deals with orders passed by the Tribunal and is material for the purpose of controversy raised in the present appeal. The section as stood then read thus; 254. Orders of Appellate Tribunal (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Appellate Tribunal may, at any time, within four years from ....
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....eas the learned counsel for the Revenue submitted that in the guise of exercise of power under sub-section (2) of Section 254 of the Act, really the Tribunal has exercised power of `review' not conferred on it by the Act, the counsel for the assessee urged that the power exercised by the Tribunal was of rectification of `mistake apparent from the record' which was strictly within the four corners of the said provision and no exception can be taken against such action. 25. The learned counsel for the Revenue contended that the normal principle of law is that once a judgment is pronounced or order is made, a Court, Tribunal or Adjudicating Authority becomes functus officio [ceases to have control over the matter]. Such judgment or order is `final' and cannot be altered, changed, varied or modified. It was also submitted that Income Tax Tribunal is a Tribunal constituted under the Act. It is not a `Court' having plenary powers, but a statutory Tribunal functioning under the Act of 1961. It, therefore, cannot act outside or de hors the Act nor can exercise powers not expressly and specifically conferred by law. It is well-settled that the power of review is not an inhe....
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....cases that it is very difficult to define an "error apparent on the face of the record" precisely, scientifically and with certainty. 31. In the leading case of Hari Vishnu Kamath v. Syed Ahmad Ishaque, (1955) 1 SCR 1104, the Constitution Bench of this Court quoted the observations of Chagla, C.J. in Batuk K. Vyas v. Surat Municipality, ILR 1953 Bom 191 : 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. 32. The Court stated; "It may therefore be taken as settled that a writ of certiorari ....
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.... is not entitled to act as an appellate Court. This limitation necessarily means that findings of fact reached by the inferior Court or Tribunal as a result of the appreciation of evidence cannot be reopened or questioned in writ proceedings. An error of law which is apparent on the face of the record can be corrected by a writ, but not an error of fact, however grave it may appear to be. In regard to a finding of fact recorded by the Tribunal a writ of certiorari can be issued if it is shown that in recording the said finding, the Tribunal had erroneously refused to admit admissible and material evidence, or had erroneously admitted inadmissible evidence which has influenced the impugned finding. Similarly, if a finding of fact is based on no evidence, that would be regarded as an error of law which can be corrected by a writ of certiorari. In dealing with this category of cases, however, we must always bear in mind that a finding of fact recorded by the Tribunal cannot be challenged in proceedings for a writ of certiorari on the ground that the relevant and material evidence adduced before the Tribunal was insufficient or inadequate to sustain the impugned finding. The adequacy o....
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....he nature and scope of the legal provision which is alleged to have been misconstrued or contravened". (emphasis supplied) 37. In our judgment, therefore, 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 travel beyond the record to see whether the judgment is correct or not. An error apparent on the face of the record means an error which strikes on mere looking and does not need long- drawn-out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest and clear that no Court would permit it to remain on record. If the view accepted by the Court in the original judgment is one of the possible views, the case cannot be said to be covered by an error apparent on the face of the record. 38. Though the learned counsel for the assessee submitted that the phrase "....
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....erently, even where an earlier decision of the Court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. 43. Salmond in his well-known work states; " The theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicatae or accounts that have been settled in the meantime". (emphasis supplied) 44. It is no doubt true that after a historic decision in Golak Nath v. Union of India, (1967) 2 SCR 762, this Court has accepted the doctrine of `prospective overruling'. It is based on the philosophy: "The past cannot always be erased by a new judicial declaration". It may, however, be stated that this is an exception to the general rule of the doctrine of precedent. 45. Rectification of an order stems from the fundamental principle that ....