March 2010
Section 254 of the Income-tax Act, 1961 — If an order passed by the Tribunal is not in conformity with the judgment of the Supreme Court or that of the jurisdictional High Court rendered prior to or subsequent to the impugned order, the same constitutes a
By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Chartered Accountants
fiogf49gjkf0d
New Page 1
55 (2009) 34 SOT 541 (Mum.)(TM)
Kailashnath Malhotra vs Jt.CIT
Block period 01.04.1987 to 15.12.1997. Date of order:
12.10.2009.
Section 254 of the Income-tax Act, 1961 — If an order passed
by the Tribunal is not in conformity with the judgment of the Supreme Court or
that of the jurisdictional High Court rendered prior to or subsequent to the
impugned order, the same constitutes a mistake as apparent from records and
capable of rectification u/s 254(2).
Certain additions made by the Assessing Officer were
confirmed by the Tribunal. One miscellaneous application filed by the assessee
u/s 254(2), seeking rectification of the Tribunal’s order was dismissed by the
Tribunal. The assessee once again moved another miscellaneous application u/s
254(2) seeking rectification of the Tribunal’s order.
Facts:
The Judicial Member of the Tribunal, in light of the judgment
of the Supreme Court rendered in the case of P.R.Metrani vs CIT [2006] 287 ITR
209 / 157 Taxman 325, recalled the order of the Tribunal on merits. However, the
Accountant Member did not agree with the Judicial Member and dismissed the
miscellaneous application on the ground that successive miscellaneous
applications were not permissible and, further, the judgment of the Supreme
Court in the case of P.R.Metrani (supra) was not applicable. In view of the
difference of opinion between the members of the Tribunal, the matter was
referred to the Third Member.
Held:
The Third Member held as follows:
1. It is evident that the scope of sub-section (2) is
restricted to rectifying any mistake in the order which is apparent from
records and does not extend to reviewing of the earlier order.
2. It is well-settled that the scope of proceedings u/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”, it automatically goes out of the
domain of sub-section (2) of section 254.
3. 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 by it.
4. If, however, the order passed by the Tribunal is not in
conformity with the judgment of the Supreme Court or that of the
jurisdictional High Court, rendered prior to or subsequent to the impugned
order, the same constitutes a mistake apparent from records and capable of
rectification u/s 254(2).
5. Similarly, it will be an error apparent from records, if
the order is not in conformity with the retrospective amendment carried out to
the statutory provision covering the period and point in dispute, subject to
the fulfilment of other conditions prescribed in the Act such as limitation
period, etc.
