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Under section 254(2) of the Income-tax Act, 1961, the Appellate Tribunal may, ” with a view to rectifying any mistake apparent from the record “, amend any order passed by it. It is an accepted position under law that the Tribunal does not have any power to review its own order except in case of an order passed ex parte. Thus the only power, which the Tribunal possesses, is to rectify any mistake in its own order, which is apparent from the record. The extent of this power of rectification was considered by the Supreme Court in the case of T. S. Balaram, ITO v. Volkart Brothers (82 ITR 50). The Supreme Court held that:

” A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. ”

The Patna High Court in the case of ITO Vs. Income-tax Appellate Tribunal (229ITR651) in this regard held that an order passed on a reappraisal of the material facts and circumstances and on a fresh application of the legal position is liable to be set aside as unsustainable in law and in excess of jurisdiction.

The Bombay High Court in the case of Commissioner of Income-tax Vs. Ramesh Electric and Trading Co. (203ITR497) held that 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.

The Orissa High Court in the case of Commissioner of Income-tax Vs. Income-tax Appellate Tribunal (196ITR590) held that in order to attract the application of section 254(2), the mistake must exist and in must be apparent from the record. “Mistake” means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error; a fault; a misunderstanding; a misconception. “Apparent” means visible; capable of being seen; easily seen; obvious; plain. A mistake which can be rectified under section 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration.

The Kerala High Court in the case of Jose T. Mooken Vs. Commissioner of Income-tax (117ITR921) held that if the judgment has expounded a wrong construction of the Act or made any mistake, other than a clerical or accidental error, an appeal against it is open. There is no other procedure by which such mistake could be corrected.

The Allahabad High Court in the case of Commissioner of Income-tax v. Income-tax Appellate Tribunal (227ITR443) further held that reviewing and recalling an order is one thing and rectifying a mistake in the order which is apparent from the record is quite another. In exercise of power to review and recall an order, even the whole result can be reversed whereas in exercise of power to rectify a mistake apparent from the record arithmetical or clerical mistakes can be corrected.

The P&H High Court in the case of Popular Engineering Co. Vs. Income-tax Appellate Tribunal (248ITR577) also held that the possibility of forming a different opinion than the one expressed in the order passed under section 254(1) cannot be treated as a ground for entertaining an application under section 254(2).

The Delhi Bench of the Tribunal very recently in the case of Karan & Co. v. ITAT (118TAX473) dated 20.07.01 held that the scope and ambit of an application under section 254(2) is very limited.

The Tribunal in the case of CIT v. Anamika Builders (P.) Ltd. (2001) 117TAX356 firstly held that the rental income derived by the assessee as income chargeable under the head house property. Later in an application u/s 256(2) to rectify mistake apparent from record the Tribunal held such income as assessee’s business income. The Revenue before the Calcutta High Court challenged this action of the Tribunal. The High Court held that once a possible view has been taken in the appeal order that cannot be changed on a miscellaneous application. Looking at this any view taken by the Tribunal howsoever illogical or impossible it may look like yet it would remain to be a possible view once so taken and hence in such a case no fruitful result can be achieved from an application u/s 254(2).

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