TaxTMI 
TaxTMI 
2010 (1) TMI 51
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....jotting down of estimates. The applicant in para 7 of its miscellaneous application points out that certain errors have crept in the order of the Tribunal on account of the under-mentioned grounds: "(a) The conclusion is based on erroneous facts and/or on misappreciation of the facts on record; and (b) vital issues/grounds and legal contentions which go to the root of the very addition are remained to be dealt with and/or considered." 3. Thereafter, the applicant in para 7.1 has elaborated on the facts of the case, which are as under: "(A) One of the main basis for confirming the action of the AO is that the appellant had balance at Rs. 98 only which, according to the Hon'ble Tribunal, disproved the claim of the applicant regarding the availability of cash in hand. Here, the point that has been missed is that the claim of the appellant was that he had about Rs. 11 lakhs balance available with him on the basis of which he had made the estimates for future years, after demise of his father. In other words, the issue was regarding the availability of money with the applicant at a particular point of time when he set out to chalk out his future planning. It was nobody's cas....
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..... Further, the applicant in para 7.2 has elaborated on the non-dealing and non-consideration of vital issues raised. The plea of the applicant is that apart from dealing with the two of the judgments relied upon by the assessee, the other legal issues have not been dealt with and one of the important legal issue was legality of invoking the presumption under s. 132(4A) of the Act at the time of framing the assessment. The applicant also pointed out that the earlier miscellaneous application moved by the assessee was rejected by the Tribunal vide order dt. 12th Dec., 2006. The applicant further submits that the points and issues raised in the present application was not dealt in the earlier order. The plea of the assessee was to rectify the mistakes which had crept in the order of the Tribunal. 5. The learned Authorised Representative for the assessee submitted that the present miscellaneous application is the second miscellaneous application filed against the order itself, which is permissible in law. The learned Authorised Representative further submitted that during the course of search certain loose papers were found and a presumption was drawn under s. 132(4A) of the Act on ....
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....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 possible views, the case cannot be said to be covered by an error apparent on the face of the record." 7. Regarding the power to rectify the mistakes, their Lordships of Hon'ble Bombay High Court in CIT vs. Ramesh Electric & Trading Co. (1993) 203 ITR 497 (Bom) had held as under: "It is an accepted position that the Tribunal does not have any power to review its own orders under the provisions of the Act. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order. The power of rectification under s. 254(2) can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. Failure of the Tribunal to co....
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....ous application on the same issue on 28th May, 2006 and the Tribunal vide order dt. 12th Dec., 2006 in the MA No. 307/Mum/2006 had dismissed the miscellaneous application. Not satisfied with the said order, the assessee has filed another miscellaneous application as mentioned above. 3. Briefly stated, the facts of the case are that a search under s. 132 of the IT Act had been conducted at the premises of the assessee and a document being the page No. 18 of Annex. A-1 was found from the residence of the assessee and seized on 16th Dec., 1997. The said document a copy of which has been produced at p. 3 of the assessment order contained entry for availability of cash balance of Rs. 11 lacs giving the details of currency notes of different denominations. Thereafter datewise incurring of expenses starting from 1st April, 1995 had been given upto June, 1996. In between, periodically, the assessee after considering the expenses incurred had also drawn balances such as balance as on 1st Aug., 1995 was shown at Rs. 6,41,000 and final balance as on 19th Sept., 1997 had been shown at Rs. 2 lacs. This document was admittedly in the handwriting of the assessee. The assessee explained that th....
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....oney available on various dates if there was no money available with the assessee. The Tribunal also noted that the cash balance drawn on 19th Sept., 1997 was the cash actually found which was not explained satisfactorily as cash balance available as per the bank account was only Rs. 98 after withdrawing amount vide various cheques and money withdrawn by family members was only sufficient to meet their household expenses. The Tribunal further noted that the document found was in the assessee's own handwriting. The Tribunal therefore concluded that no satisfactory explanation had been given by the assessee regarding the notings on the document found and addition was confirmed. The Tribunal had however also observed that the presumption under s. 132(4A) of the IT Act about the contents of the seized documents stood established in the absence of assessee proving otherwise. 4. On receipt of the order of the Tribunal, the assessee filed miscellaneous application being the MA No. 307/Mum/2006 on 28th May, 2006 requesting for rectification of order of Tribunal in relation to the addition of Rs. 11 lacs. The assessee at the time of hearing of the application submitted that in the intere....
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....nd has not taken into account any irrelevant material in basing its conclusions, the decision of the Tribunal is not liable to the interfered with, unless, of course, the conclusions arrived at by the Tribunal are perverse. 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 the 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. 4.2 The Tribunal after considering the facts and circumstances as mentioned above rejected the miscellaneous application moved by the assessee. 5. Thereafter the assessee has filed a fresh miscellaneous application on 2nd April, 2007 being the MA No. 246/Mum/2007 on the same issue of addition of Rs. 11 lacs. A perusal of the said miscellaneous application shows that the paras 1 to 8 are just copies of the miscellaneous application dt. 28th May, 2006 filed earlier. In subsequent paras the assessee has only mentioned that the Tribunal had dismissed the petition without considering t....
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....cision of the Coordinate Bench of the Tribunal mentioned above has to be rejected on this ground alone that the second miscellaneous application on the same issue is not maintainable. 6. Even on merits, in our view, the assessee has no case for any rectification. The sole, ground argued in the second miscellaneous application is that the Tribunal had based its decision on presumption under s. 132(4A) which is not available in relation to regular assessment as held by Hon'ble Supreme Court in case of P.R. Metrani. As per the said judgment, presumption under s. 132(4A) is restricted to the summary assessment, for retention of sufficient assets to meet tax and penalty and the presumption does not pertain to regular assessment. It has therefore been argued that since the decision of the Tribunal to rely on presumption under s. 132(4A) was contrary to the judgment of apex Court, decision suffered from a mistake apparent from record. Reliance has been placed on the judgment of Hon'ble Supreme Court in case of Saurashtra Kutch Stock Exchange Ltd. in which it has been held that failure to apply the judgment of jurisdictional High Court is a mistake apparent from record. 6.1 It may be....
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....d to explain the entries in the document and after due consideration of the explanation given, the authorities below held that the same was not acceptable. The Tribunal after careful appraisal of the finding of lower authorities and material on record agreed that the explanation of the assessee was not satisfactory. Thus mere reference to provisions of s. 132(4A) by the Tribunal which were not relevant to the facts of the case, it cannot be said that there is error in the order of Tribunal particularly when the Tribunal decided the issue on merit after considering the explanation of the assessee. In other words, even after considering the judgment of Hon'ble Supreme Court relied upon by the assessee, there will be no change in the decision taken by the Tribunal as the decision was not based only on presumption. Thus there is no apparent mistake which requires rectification. The non-consideration of the judgment of the apex Court would have resulted into an apparent mistake provided consideration of the judgment would have led to a different conclusion by the Tribunal, which is not so in this case. The judgment is not applicable to the facts of the present case as there is no disput....
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.... of P.R. Metrani was whether presumption under s. 132(4A) would apply to regular assessment. The issue whether the presumption under s. 110 of the Evidence Act would be available to AO in the assessment was not before Supreme Court in that case. The said issue had been decided in case of Chuharmal. Thus even if there was no specific provision of presumption in relation to the assessment, such presumption was always available to the AO under the provisions of Evidence Act which he could always apply. In any case, such presumption as pointed out earlier in this case is not relevant as the assessee raised no disputes regarding the ownership of document which was admittedly in his own handwriting and the contents were also not denied. The AO also did not apply the provisions of s. 132 (4A) and decided the matter under the specific provisions of block assessment. The assessee had given certain explanation regarding the entries in the documents which after considering the facts and circumstances of the case was no found acceptable by the lower authorities and their finding was confirmed by the Tribunal by way of a reasoned and speaking order. The judgment of Supreme Court in case of P.R.....
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....d the appeal of the assessee in part. Cross-appeals filed by both the sides in IT(SS)A Nos. 78 and 614/Mum/2003 before the Tribunal were heard by the Bench. The appeal filed by the Revenue was dismissed. Out of three grounds raised by the assessee, ground Nos. 1 and 2 were allowed. However the 3rd ground assailing the sustenance of addition of Rs. 11 lakhs came to be dismissed by the Tribunal. 3. At this juncture it will be relevant to note the facts leading to the sustenance of addition of Rs. 11 lakhs. During the course of search, one page marked as No. 18 of Annex. A-1 containing notings of working of money available and expenses incurred, was found and seized from the residence of the assessee. The said paper was claimed by the assessee to be a proposed planner and not the actual incurring of expenses mentioned on it. The AO did not accept the assessee's contention for the reasons set out in the assessment order as reproduced by the learned AM in his separate instant order. The AO made addition of Rs. 11 lakhs by treating it as income from undisclosed sources. No relief was allowed by the learned CIT(A) as well who reproduced the entries appearing on p. 18 of Annex. A-1 in d....
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.... assessee had a opening balance of Rs. 13,34,782 but three cheques of Rs. 5,69,665, Rs. 3,78,612 and Rs. 6,33,333 have been cleared leaving a balance of Rs. 98 only. Thus disproving the claim of the assessee regarding the availability of cash in his hand. The said document found from the possession of assessee and seized from the residence of the assessee is in the handwriting of the assessee. The presumption under s. 132(4A) of the IT Act about the contents of the seized documents stand established in the absence of the assessee proving otherwise with necessary evidence. During the course of search, cash of exact Rs. 2 lakhs being the balance as per the said document was found, which further proves the case of the Revenue. The withdrawals made by the family members of the assessee including assessee are only sufficient to meet the household expenses and there is no question of any savings from the same. 15. The assessee claims that the copy of the said seized document was not made available to him. But even the perusal of the explanation by way of attachments under s. 154 does not hold the case of the assessee. The facts in the case of CIT vs. Mrugesh Jaykrishna (2000) 162 CTR ....
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....Lordships of Hon'ble Bombay High Court in CIT vs. Ramesh Electric & Trading Co. (1993) 203 ITR 497 (Bom) had held as under: 'It is an accepted position that the Tribunal does not have any power to review its own orders under the provisions of the Act. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order. The power of rectification under s. 254(2) can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. Failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. The Tribunal cannot, in the exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion.' 4. The power conferred under s. 254(2) of the IT Act does not contemplate a rehearing and rearg....
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....on moved by the assessee." 6. Once again the assessee moved another miscellaneous application which was registered and numbered as 246/Mum/2007. This instant miscellaneous application is of 12 pages comprising of 13 paras. The first 8 paras of this application are ditto reproduction of the first miscellaneous application except reference to page Nos. 75K to 75N in para 7.2 as against the earlier page numbers as 73 to 75N in para 7.2 itself. Here again, the only grievance of the assessee is against the sustenance of the addition of Rs. 11 lacs, which has been divided into two broad heads, viz., (a) the conclusion is based on erroneous facts and/or on misappreciation of the facts on record; and (b) vital issues/grounds and legal contentions which go to the root of the very addition are remained to be dealt with and/or considered. After the reproduction of first 8 paras, which constituted the whole of the first miscellaneous application, the assessee has also placed reliance on certain judgments. 7. The learned JM, relying on the judgment of the Hon'ble Supreme Court in the case of Asstt. CIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 219 CTR (SC) 90 : (2008) 12 DTR (SC) 34....
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....ame subject-matter. 9. I have considered the rival submissions and perused the relevant material on record. Sec. 254(1) provides that the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. Sub-s. (2) states that the Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-s. (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the AO. On going through the prescription of sub-s. (2) it clearly emerges that the Tribunal is empowered to rectify the mistake which is apparent from record. Now the question arises that what is mistake apparent from record. The mistake, as envisaged under this sub-section, may be factual or legal or both. However it is not any mistake which can be rectified within the ambit of this section. There are two essential ingredients. Firstly there should be mistake and secondly such mistake must be apparent from record. If it is only a mistake, which is not apparent from record, that goes outside the purview of this sub-sect....
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....rror 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 possible views, the case cannot be said to be covered by an error apparent on the face of the record." 11. A survey of the aforenoted three judgments of the Hon'ble apex Court makes it manifest that the scope of proceedings under s. 254(2) is confined to rectifying any mistake which is apparent on the very face of it. If the point needs to be proved on the strength of different facets of reasoning, the same would become debatable. Once a particular point falls in the realm of "debatable issue" that automatically goes out of the domain of sub-s. (2) of s. 254. Thus the error, capable of rectification under this sub-section, must be one which is apparent on the face of order itself. Further if two views are possible on a particular point and the Tribunal has preferred one view over the other, no rectification application lies for impressing upon the Tribunal to choose the other possible view in preference over the one already adopted ....
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....le. The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake which the Tribunal is entitled to correct is not an error of judgment but a mistake which is apparent from the record itself. No such mistake was apparent from the record. In fact, we doubt if this sort of an exercise could have been done by the Tribunal even if it had the power of review. The Tribunal has patently, far exceeded its jurisdiction under s. 254(2) of the IT Act in redeciding the entire dispute which was before it in this fashion, and the Tribunal has committed a gross and inexplicable error for reasons which we fail to understand." 13. From the above pronouncement of law by the Hon'ble jurisdictional High Court, which is binding on all the authorities under its jurisdiction, it is more than evident that the Tribunal has got the power of rectifying a mistake which is apparent from the record itself and even an error of judgment is outside the ambit of s. 254(2) of the Act. The oft-quoted judgment of the Hon'ble Rajasthan High Court in CIT vs. Ramesh Chand Modi (2000) 163 CTR (Raj) 424 : (2....
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....54(2). Further, in the garb of an application for rectification, the assessee cannot be permitted to reopen and reargue the whole matter, which is beyond the scope of the section". 14. We need to examine the facts of the instant case, in the face of the aforenoted judgment of the Hon'ble Supreme Court and those of the Hon'ble High Courts, as discussed above, to find out if any mistake can be traced in the original order passed under s. 254(1). Adverting to the facts, it is noticed that the addition of Rs. 11 lakhs was made by the AO on the basis of page No. 18 of Annex. A-1, seized during the course of search. This page contained the detail of denominations of currency notes i.e., Rs. 500 Notes, Rs. 100 Notes (bank seal) and Rs. 100 Notes. Thereafter details have been given for incurring of certain expenses with the relevant dates such as grill terrace, advance wonder kitchen, Papoo for August, wander kitchen extra, stamp duty, NSCI bill etc. etc., with exactitude. Stage by stage certain expenses have been totalled with a remark "spent". The assessee claimed that the expenses mentioned on this page were a planner of expenditure to be incurred in future and not actual spending. A....
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...., came to be accepted by the Tribunal. When the matter came up before the Hon'ble High Court it was held that when the first application was rejected by the Tribunal after taking into consideration all the relevant material, there was no occasion to have moved a second application for rectification. It was noticed that there was no change of the facts except that the incumbent who decided, the matter changed. This approach on the part of the Tribunal was held to be "absolutely erroneous". The observations of the Tribunal that certain documents were not considered by it in the original order or in the order of the first rectification order were found to be importunate by the Hon'ble High Court. Thus the order passed by the Tribunal on the second miscellaneous application was set aside. Similarly the Hon'ble Allahabad High Court in CIT vs. Kamal Bhai Ismilji (2006) 200 CTR (All) 598 : (2007) 288 ITR 297 (All) held that the Tribunal having rejected the miscellaneous application was not justified in entertaining the second application on the same set of facts and recalling its original order. The same was held to be review, a power not possessed by the Tribunal. In still another later ....
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....n'ble Gujarat High Court in CIT vs. Subodhchandra S. Patel (2003) 184 CTR (Guj) 393 : (2004) 265 ITR 445 (Guj). In view of these judgments it is vivid that even if the Hon'ble Supreme Court or the Hon'ble jurisdictional High Court render a judgment after the passing of the order, the same has to be strictly followed. Interpretation of a statutory provision by the Hon'ble Supreme Court is always understood from the inception of the provision and it is never considered as a prospective ruling unless so specified. 17. Now the case of the learned Authorised Representative is that the judgment in the case of P.R. Metrani has rendered the original order passed by the Tribunal as erroneous requiring rectification on the score that it is not in consonance with the view expressed by the Hon'ble Supreme Court. A dip into the facts of the case before the Hon'ble Supreme Court reveals that a search was conducted on the business as well as residential premises. Statement of one Shri J.J. Bakale was recorded at the time of search and Shri P.R. Metrani was away to Rajasthan on a business tour. He was examined after his return to Hubli. He denied the possession of certain documents on the basis....
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....ding statement admitted that it was signed by him and was also in his own handwriting. He however failed to furnish any explanation about the contents of this page with assurance that such clarification will be furnished in due course. There is nothing on record to suggest, even remotely, that the assessee furnished any further clarification except for raising the contention that the entries mentioned on this page were planner and not the amounts actually spent. A casual look on this page clearly demonstrates that the same did not contain any planner but the actual transactions. The mentioning of the denominations of Notes into those of Rs. 500 and Rs. 100 and the further classification of Notes of Rs. 100 into 'sealed' and others, leaves nothing to doubt that it referred to actual amount and not some arbitrary figure. Further, the mentioning of expenditure incurred on certain items on day to day basis with the spending of the amount on regular intervals jettisons the contention of the assessee that it was only a planner. 18. There is a marked difference between raising any presumption as per s. 132(4A) and appreciation of evidence found at the time of search. The presumption un....
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....s included in the undisclosed income, it cannot be said that the authorities have drawn any presumption of income. 19. The authorities below and the Tribunal in its original order did not go by mere presumption about the contents of page No. 18 of Annex. A-1. There is no question of any presumption about this document. Even if the provisions of s. 132(4A) are excluded from consideration, it is not possible to hold that the Tribunal has not taken a possible view on the sustenance of the addition. This issue has been discussed at length by the Tribunal in the order under s. 254(1) and first order under s. 254(2). The decision so rendered by the Tribunal in the present circumstances of the case cannot be called in question. Here is a case in, which the assessee has filed one miscellaneous application after another praying for the recalling of the order on ground No. 3 with a plea that he will explain his case in the fresh proceedings under s. 254(1), without actually furnishing any explanation about page No. 18 either in such miscellaneous applications or in the oral submissions made before me. In my considered opinion the aforenoted judgment of the Hon'ble Supreme Court in P.R. Me....