A. PASAYAT. - The point involved in this writ application is whether the Income-tax Appellate Tribunal, Cuttack Bench (in short 'the Tribunal'), was justified in recalling its order dated April 14, 1989, in I.T.A. No. 76/CTK of 1986 and C.O. No. 28 (CTK) of 1986, in purported exercise of the powers under section 254(2) of the Income-tax Act, 1961 (in short 'the Act').
The background facts, shorn of unnecessary details, are as follows :
A partnership-firm styled M/s. Bombay Hotel (hereinafter referred to as 'the assessee') runs a hotel and, for the assessment year 1982-83, was assessed to income-tax by the Income-tax Officer, Ward-A, Special Investigation Circle, Bhubaneswar. On the basis of certain documents seized during a search of the premises of the assessee on August 24, 1981, the figures submitted by the assessee were rejected and an addition of Rs. 60,540 to the declared income was made. In appeal, the addition was reduced by Rs. 60,540 to the declared income was made. In appeal, the addition was reduced by Rs. 50,540 by the commissioner of Income-tax (Appeals), Orissa. The Revenue challenged the relief granted to the assessee by the Commission of Income-tax (Appeals), while the assessee filed a cross-objection supporting the order of the Commissioner of Income-tax (Appeals). The Tribunal, in order to ascertain whether the books of account were maintained in a regular and truthful manner, verified certain registers which were produced at the time of hearing. On verification, the Tribunal came to hold that the maintenance of books of account was defective. If recorded a specific finding that the assessees counsel fairly conceded that the books of account maintained by the assessee even after the date of entry were defective. The Tribunal in detail discussed a particular entry dated August 24, 1981. After taking into consideration certain other materials, the Tribunal restored the addition made by the Assessing Officer and set aside the relief granted by the commissioner of Income-tax (Appeals).
An application was filed by the assessee before the Tribunal purporting to be one under section 254 of the Act. The following reasons were indicated to warrant action under section 254.
'(i) The order does not record as to from where the information relating to the advance amount of Rs. 20 was obtained.
(ii) It is not essential to obtain the signature of the customer on the bills issued by the assessee.
(iii) After recording the fall of lodging receipts from Rs. 36,946 per month during the period before the raid to Rs. 22,104 per month during the period after the raid, the order completely ignores the said finding and proceeds on the basis as if there has been no such fall at all.
(iv) If is common knowledge worthy of taking judicial notice that no tea stall or restaurant gives bills or cash memos for ready made tea or coffee sold by it.'
These were indicated to be mistakes apparent from the record.The motion for rectification was objected to by the Revenue. However, the Tribunal held that though technically one can say that it is in the discretion of the Tribunal as to what should be the addition; in a discrepancy of Rs. 11, the addition of Rs. 60,540 appeared to be beyond justification. As indicated above, the stand of the assessee before the Tribunal in support of the application for rectification was that, even if accepting that there was a discrepancy of Rs. 11, the same could have justified an addition of Rs. 100 and, instead of that, if it is made Rs. 1,00,000, though technically it may not be, but certainly in the real sense is an apparent mistake on record. This plea found favour with the Tribunal, which set aside the original order dated April 14, 1989, and directed rehearing of the appeal. According to the Tribunal, for the discrepancy of Rs. 11, addition of Rs. 60,540 did not appear to be justified. It also found that the ground indicated about fall of receipts is acceptable because there appeared to be dispute amongst the partners.
The action of the Tribunal in recalling its order for rehearing is assailed before us by the Revenue on the ground that the same was beyond the scope and ambit of section 254(2). Learned counsel for the assessee, however, submitted that the addition restored by the Tribunal was so shockingly high that it touched the conscience of the Bench hearing the rectification application and in the ends of justice, it set aside the original order. It is submitted further that the approach of the Tribunal was erroneous and not in consonance with the accepted principles of accountancy.
A bare look at section 254(2) makes it clear that a 'mistake apparent from the record' is rectifiable. In order to attract the application of section 254(2), the mistake must exist and the Same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. '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. As the facts of the present case clearly go to show, the Tribunal came to the conclusion based on several facts that the addition made by the Assessing Officer was in order. It referred to certain circumstances. As appears from the order impugned in this writ application, the Tribunal was of the view that the enhancement as made appeared to be on the higher side and, therefore, thorough it to be unjust. The Tribunal was conscious that technically it did not have the jurisdiction to exercise power under section 254(2) because what would be the enhancement is a matter dependent on several factors. Even the assessee itself accepted that, technically, it was not an apparent mistake, but submitted that it was in the real sense apparent on the record. The Tribunal was not rehearing the appeal. It was sitting in judgment over the correctness of the conclusions arrived at earlier in the appellate order under section 254. Its view was that, for a discrepancy of Rs. 11, addition of Rs. 60,540 appeared to be beyond justification. The enhancement may have been excessive, but certainly it cannot be characterized to be one 'beyond justification' as observed by the Tribunal. What would be an appropriate enhancement would be dependent on several factors. Even if it is assumed that the enhancement, as originally held reasonable by if it is assumed that the enhancement, as originally held reasonable by the Tribunal, was in reality excessive and disproportionate, it cannot certainly be held that the Tribunal acted beyond jurisdiction in coming to the conclusion. The question of enhancement is a question of discretion of the Tribunal to be exercised with reference to facts. Even if, for a nominal discrepancy, an exhorbitant enhancement is made, it may be improper but not outside the jurisdiction of the Tribunal. While dealing with the application for rectification, the Tribunal was not considering whether the enhancement made was justified in the circumstances of the case. It was considering the application for rectification of mistakes allegedly apparent from the record. Therefore, the order to the Tribunal recalling the earlier order is indefensible. The Tribunal also does not appear to have noticed that enhancement of Rs. 60,540 was not made merely for a discrepancy of Rs. 11 as was claimed in the application for rectification. In view of our conclusion that the Tribunals action in recalling the order is interdicted consequently the impugned order, annexure-4, is set aside.
We notice that the Tribunal, consequent upon acceptance of the prayer for rectification, has dismissed the reference applications of both the assessee and the Commissioner as infructuous. As a consequence of our setting aside the impugned order, annexure-4, the reference applications are to be restored to file. They shall be disposed by the Tribunal in accordance with law. Any view expressed by us above should to be considered to be an expression of opinion on the merits of the assessment, because we have referred to certain factual aspects as are relevant for disposal of the present writ application and, in that context, we have made our observations.
The writ application is allowed. No costs.
S. K. MOHANTY J. - I agree.