Commissioner of Income Tax vs Nalin C. Doshi

D.A. Mehta, J.—The Income Tax Appellate Tribunal, Ahmedabad Bench ''B'' has referred the following question u/s 256(1) of the Income Tax Act, 1961 (the Act) at the instance of Revenue:

Whether, on the facts and in the circumstances of the case, the ITAT, Bench ''B'', Ahmedabad was right in holding that provisions of Section 249(4) cannot be made applicable to Tribunal by implication?

The dispute pertains to Block Period commencing from June 1984-85 and ending on 5.10.1995. At the relevant point of time, an Appeal lay directly to the Tribunal against Block Assessment framed by the Assessing Officer.

Heard learned Counsel appearing for the respective parties.

while furnishing Return of income on 16.10.1996, the assessee declared undisclosed income at Rs. 2 crores and was liable to pay tax to the tune of Rs. 1.20 crores u/s 140A of the Act, against which only a sum of Rs. 9 lacs had been paid till the assessment was framed. Against the said assessment, when the matter was carried in Appeal before the Tribunal, the assessee also preferred Stay Application against recovery of Rs. 3,94,34,346/-. After hearing the parties, the Tribunal made an order on 09.01.1997 granting partial stay by imposing certain conditions in the said order. The Revenue challenged the said order by way of Rectification Application u/s 254(2) of the Act by referring to provisions of Section 249(4)(a) of the Act, to contend that unless and until the assessee had paid tax duty on the returned income the Appeal was not liable to be admitted.

The Tribunal while passing the impugned order on 05.07.1997, rejected the Rectification Application on two fold grounds : the first being, in absence of any mistake apparent on record, Rectification Application was liable to be rejected; and the second being, on merits of the controversy as to applicability or otherwise of provisions of Section 249(4)(a) of the Act.

As can be seen from order dated 09.01.1997, while granting partial stay against recovery of demand and imposing certain conditions, the Tribunal has recorded as under:

The ld. D.R. has no objection for early hearing of the appeal on merits but he mentioned that a some amount may be ordered to be deposited.

Thereafter, while passing the impugned order, the Tribunal has categorically recorded as under:

...It is notable that this particular ground was not raised by the D.R. before us at the time of hearing of the stay petition. Therefore, there is no mistake apparent from record in our order dated 9.1.1997 and on the short ground itself, the department''s petition u/s 254(2) can be dismissed.

Thus, it is apparent that though the Tribunal has recorded findings on merits of the issue the application was primarily rejected on the ground that in absence of any ground having been raised, the Rectification Application itself was not maintainable.

In the circumstances, there is no legal infirmity in the impugned order of Tribunal holding that there was no apparent mistake which required rectification and hence, Rectification Application u/s 254(2) of the Act was liable to be rejected only on that solitary ground. In these circumstances, the Court does not find it necessary to enter into the controversy on merits of the controversy and the question is accordingly left unanswered in the facts of the case.

The Reference stands disposed of accordingly with no order as to costs.