Commissioner of Income Tax vs S.K. Gupta

The Income Tax Appellate Tribunal, Allahabad has referred the following questions of law u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this Court:

Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was correct in law in holding that the mistakes pointed out by the assessee had really crept in the order of the Income Tax Appellate Tribunal and that such mistakes went to the root of the matter ?

Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was correct in law in ordering that the appeal be heard de novo ?

Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal had powers to recall and quash its own order in I. T. A. Nos. 760, 761 and 762 (Alld) of 1978-79 dated November 29, 1978 and in directing that the appeal be heard de novo on the merits ?

Whether on the facts and in the circumstances of the case, it can be said that the Income Tax Appellate Tribunal''s order dated November 20, 1978 in I. T. A. Nos. 760, 761 and 762 (Alld) of 1978-79 had become final and that it was not entitled to revise its decision in a subsequent proceedings on the basis of an application filed by the assessee ?

Whether on the facts and in the circumstances of the case, it can be said that the Income Tax Appellate Tribunal had no powers to recall its judgment dated November 29, 1978, in I. T. A. Nos. 760, 761 and 762 (Alld) of 1978-79 ?

Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal had inherent powers to review its earlier order, to recall the same and to order that the appeal be heard de novo ?

The reference relates to the assessment years 1974-75 and 1976-77.

Briefly stated, the facts giving rise to the present reference are as follows:

The Tribunal had dismissed the appeal filed by the Department. Thereafter, an application u/s 254(2) of the Act was filed by the respondent pointing out that some factual mistakes have crept in the order of the Tribunal. The contention of the respondent was that the mistakes go to the root of the matter and, therefore, the appeal is to be heard once again. From the order dated April 30, 1979 of the Tribunal passed on the application u/s 254(2) of the Act, we find that it was not disputed that the mistakes pointed out had crept in the order of the Tribunal. The only stand taken by the Department was that there is no necessity of hearing the appeal de novo to get the mistake corrected. The Tribunal, on finding that the mistakes crept in, had recalled its earlier order and directed the appeal to be heard de novo on the merits.

We have heard Sri A. N. Mahajan, learned Counsel for the Department.

We find that u/s 254(2) of the Act the Tribunal has power to rectify the mistakes which are apparent on the record. Admittedly, in the present case, the mistakes had crept in the order, therefore, the Tribunal could have corrected it. If the mistakes, which have been pointed out, go to the root of the matter, it is the discretion of the Tribunal to correct the mistakes in the facts of the judgment/order, operative portion of the order or hear the appeal de novo. The Tribunal, having exercised its discretion to hear the appeal de novo cannot be said to have exercised the power without jurisdiction.

We, therefore, answer the questions referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue.

There shall be no order as to costs.