Summary
The Court held that the Income Tax Appellate Tribunal exceeded its rectification jurisdiction by rehearing the merits and recalling its earlier reasoned orders. Section 254(2) permits correction of mistakes apparent from the record, rather than a fresh merits decision. Detailed participation by the Revenue could not enlarge that jurisdiction. The original tribunal orders were restored, while the assessees were permitted to pursue High Court appeals within six weeks without a limitation objection.
Issues
- Whether the tribunal could recall its reasoned merits orders by rehearing the appeals under Section 254(2).
- Whether the Revenue’s detailed submissions conferred jurisdiction beyond the statutory rectification power.
Provisions considered
- Section 254(2), Income-tax Act, 1961Rectification is confined to mistakes apparent from the record and does not authorise a fresh hearing on merits to recall the earlier decision. (¶¶ 3.2, 4, 6)
Held
- The tribunal had effectively reheard the entire appeal when recalling its original order. The power to amend an order to correct an apparent mistake could not be used to revisit and redetermine its merits. An asserted error of fact or law in the original merits decision was to be pursued through an appeal in these circumstances. (¶¶ 3.2, 4)
- Neither detailed submissions on merits nor the Revenue’s participation could confer a power outside Section 254(2). The High Court’s reasons for sustaining the recall did not answer that statutory limit. (¶¶ 5, 6)
- The recall orders and the High Court judgment were set aside and the original tribunal orders restored. Because the assessees had withdrawn their earlier appeals after obtaining recall, appeals filed within six weeks were to be decided according to law and on their merits without a limitation objection. (¶¶ 7, 8, 9)
Result
Revenue appeals allowed. Recall orders and the High Court judgment set aside; original tribunal orders restored. Assessees could file High Court appeals within six weeks without a limitation objection; no costs.