October 2010
Appellate Tribunal : Rectification u/s.254(2) of Income-tax Act, 1961 : A.Y. 1994-95 : Appellate order u/s.254(1) gets merged in rectification order only on issues raised in rectification application and not on other issues decided by Tribunal in appeal,
By K. B. Bhujle | Advocate
New Page 2
1 Appellate Tribunal :
Rectification u/s.254(2) of Income-tax Act, 1961 : A.Y. 1994-95 : Appellate
order u/s.254(1) gets merged in rectification order only on issues raised in
rectification application and not on other issues decided by Tribunal in appeal,
Appellate order u/s.254(1) survives and is available for rectification again on
any other issue on an application filed by either of parties : Once
rectification application filed by one of parties is considered and decided by
Tribunal rightly or wrongly, another rectification application on same issue is
not maintainable.
[CIT v. Aiswarya Trading
Co., 192 Taxman 385 (Ker.)]
For the A.Y. 1994-95, while
deciding the appeal, the Tribunal did not consider one of the grounds raised by
the assessee pertaining to the levy of interest u/s.220(2) of the Income-tax
Act, 1961. Therefore, the assessee filed rectification application before the
Tribunal to rectify the Appellate order, which was allowed by the Tribunal. The
Department thereafter filed a rectification application for rectifying the order
issued by the Tribunal in the assessee’s rectification application. The Tribunal
held that the Department’s rectification application was on the very same issue
agitated by the assessee in its rectification application and allowed by the
Tribunal and, therefore, it was not maintainable u/s.254(2).
On appeal, the Revenue
contended that by virtue of the merger of the rectification order in the
Appellate order, the application filed u/s.254(2) by the Revenue was still
maintainable.
The Kerala High Court upheld
the decision of the Tribunal and held as under :
“(i) The second
application on the very same issue is not maintainable before the Tribunal.
In fact, merger applies only on issues decided in rectification proceedings
and the Tribunal’s order issued u/s.254(1) will remain unaffected on all
matters other than those covered by the rectification order issued
u/s.254(2). In other words, even after the Tribunal rectifies the Appellate
order u/s.254(2) on any issue raised, still the original order can be
rectified on any other issue decided by the Tribunal.
(ii) However, if the
rectification application filed by one of the parties is allowed or rejected
by the Tribunal, the very same issue cannot be agitated in another
rectification application by the opposite party. If this is done and allowed
to be entertained by the Tribunal, then what happens is that the Tribunal
gets an opportunity to review its own order for which it has no powers under
the statute. Therefore, once the rectification application filed by one of
the parties is considered and decided by the Tribunal rightly or wrongly,
another rectification application on the same issue is not maintainable
against the order issued by the Tribunal u/s.254(2).
(iii) In the instant
case, the question of liability for interest payable by the assessee u/s.
220(2) rightly or wrongly was decided by the Tribunal in the rectification
application filed by the assessee in its favour and, therefore, the
Department could not seek to rectify the very same order again u/s.254(2) by
filing another application.
(iv) Consequently, the
order of the Tribunal was to be upheld.”
