Om Prakash, J.:— The question arising for consideration at the inception in this case is whether there is an alternative remedy available to the petitioner and, if so, whether we can refuse to exercise our extraordinary jurisdiction under article 226 of the Constitition on that ground.

2. The petitioner, a registered firm, filed a return showing loss for the assessment year 1974-75, but the assessment was made at Rs. 1,00,710 giving set off of Rs. 48,666 shown as loss in the revised return. In the books of the petitioner, cash credits aggregating to Rs. 1,49,360 were noticed and the genuineness of all of them was not accepted by the Income-tax Officer. He, therefore, treated the amount of cash credits as the income of the petitioner from undisclosed sources. On appeal, the Appellate Assistant Commissioner remanded the case to the Income-tax Officer with a direction that he should examine the creditors. On further appeal, the Tribunal affirmed the remand order of the Appellate Assistant Commissioner modifying the direction that the petitioner might examine any creditor it liked and if it was in need of the assistance of the assessing authority to force the appearance of the reluctant creditors, then the same could be sought from the assessing authority. After remand, the Income-tax Officer reiterated his view that the cash credits were not genuine. On appeal, the Commissioner (Appeals) accepted cash credits aggregating to Rs. 1,38,660 and refused to accept the remaining cash credits aggregating to Rs. 9,700. The matter was taken to the Tribunal on second round and the Tribunal reversed the order of the Commissioner (Appeals) regarding the cash credits aggregating to Rs. 1,38,660. The result was that the order of the Income-tax Officer was restored. Against such order of the Tribunal dated March 13, 1987, the assessee made an application seeking rectification under section 254(2) of the Income-tax Act, 1961 (“the Act”), which was rejected by the Tribunal by order dated November 16, 1987 (annexure 15 to the writ petition) Aggrieved by the aforesaid order, the petitioner has filed the instant writ petition praying that the Tribunal's order dated November 16, 1987, rejecting the application for rectification be quashed, that the Tribunal be directed to decide the rectification application afresh and that respondents Nos. 2 and 3 be restrained from effecting the recovery of tax, penalty and other amounts and from taking other penal action against the petitioner.

3. In paragraph 45, it is averred that the Tribunal held in CIT v. M.P Sugar Mills Co. (P.) Ltd., [1987] 23 ITD 6 (All), that an order rejecting a rectification application is not an order under section 254 and hence no reference under section 256(1) of the Act lies. This is why it is averred in paragraph 44 that the Tribunal's order rejecting the rectification application under section 254(2) is final and no reference is maintainable against that.

4. On the other hand, the contention of learned senior standing counsel is that reference under section 256(1) lies against the order passed under section 254(2) rejecting the rectification application and there being an alternative remedy, the petitioner cannot invoke the writ jurisdiction of this court under article 226 of the Constitution. Under section 256(1), reference can be made against any order passed by the Tribunal under section 254. Sub-section (2), whereunder the Tribunal has passed the impugned order dated November 16, 1987, is part of section 254 and, therefore, taking a semantic view of section 254, it has to be held that reference under section 256(1) will lie from the impugned order dated November 16, 1987.

5. The learned Advocate-General to support his view-point, that no reference lies against the order passed under section 254(2) rejecting the rectification application of the petitioner, relied on Niranjan and Co. Ltd. v. ITAT, [1980] 122 ITR 519 (Cal), Popular Engg. Co. v. CIT, [1983] 140 ITR 398 (MP) and CIT v. N.J Dadabai, [1978] 115 ITR 317 (AP).

6. None of the aforesaid authorities, in our opinion, lays down a rule that no reference will lie against the Tribunal's order passed under section 254(2) rejecting a rectification application or that an order passed under section 254(2) is not an order under section 254, against which reference will lie under section 256(1). All these authorities were rendered in different contexts and on entirely different facts and circumstances and, therefore, they are clearly distinguishable.

7. In Niranjan and Co. Ltd.'s case, [1980] 122 ITR 519, the Calcutta High Court took the view that the Tribunal's jurisdiction under section 254(2) was limited and there was no power to review the earlier order, that where the Tribunal acted without jurisdiction in that it reviewed its earlier order under section 254(2) and there being a question of jurisdiction, an alternative remedy by way of reference to the High Court was no bar and the court could, in its discretion, exercise its jurisdiction in entertaining the writ petition. Thus, a question of jurisdiction arose and, therefore, the Calcutta High Court took the view that that question could well be considered in the writ jurisdiction and the alternative remedy of reference to the High Court was no bar.

8. In Popular Engg. Co.'s case, [1983] 140 ITR 398, the Madhya Pradesh High Court, however, took the view that where no reference is sought in respect of the appellate order passed under section 254(1), the same becomes final under section 254(4) and no reference from the order rejecting an application for rectification of any mistake is tenable under section 256(1). The approach was that when the order passed under section 254(1) by the Tribunal was not interfered with under section 2.54(2) in any way, then what remains is the order passed under section 254(1) and a reference would lie against that order. In the instant case, it is stated at the bar that a reference application was made against the order passed under section 254(1) and, therefore, this authority is clearly distinguishable. In the case in hand, the order under section 254(1) has not become final inasmuch as an application under section 256(1) was made against that to the Tribunal.

9. Then comes the case of N.J Dadabai, [1978] 115 ITR 317, in which the Andhra Pradesh High Court, on the peculiar facts of that case, took the view that no reference would lie against a rectification order. The facts of that case are that the Tribunal by an order dated October 9, 1973, upheld the view of the Income-tax Officer treating the sum of Rs. 56,604 as capital expenditure. While holding so, the Tribunal directed that obsolescence allowance in respect of an old kiln should be granted under section 32(1)(iii) of the Act. Pursuant to the said order of the Tribunal, the Income-tax Officer examined the books of account and found that the assessee had not written off any amount towards the value in question which is a condition precedent for granting obsolescence allowance under section 32(1)(iii). In view of this, the Department filed a miscellaneous petition under section 254 on March 3, 1974, bringing these facts to the notice of the Tribunal and contending that the assessee is not entitled to the obsolescence allowance. The Tribunal by order dated February 26, 1975, rejected the plea and held that the assessee should be clearly treated as having written off the entire outstanding as scrap and that this fact was inherent in its order dated October 9, 1973. The Department filed a reference application before the Tribunal challenging the entitlement of the assessee to have the obsolescence allowance written off under section 32(1)(iii). The said reference application was rejected by the Tribunal on the ground that the question of law sought to be raised by the Department did not arise from out of the Tribunal's order passed on the rectification application, inasmuch as obsolescence allowance was granted by the Tribunal in the order passed under section 254(1). The Department then filed an application under section 256(2) and then the Andhra Pradesh High Court held that the order passed under section 254(1) remained untouched in the order passed under section 254(2), in that the miscellaneous application was rejected. Therefore, the Andhra Pradesh High Court held that the question of law sought to be raised by the Department about the entitlement of the assessee to claim obsolescence allowance, did not arise from out of the order of the Tribunal passed on the miscellaneous application and a reference, if any, can only be in respect of the main order passed under section 254(1). On these facts, it was held that no reference lay from the Tribunal's order passed on the miscellaneous application. The Andhra Pradesh High Court did not directly consider the question whether or not a reference lies from an order passed under section 254(2), but what was held was that the question sought to be raised from the order passed on a miscellaneous application, in fact, arose from the main order passed under section 254(1) and not from the order passed under section 254(2). In the case in hand, the rectification application was rejected by the Tribunal by the impugned order dated November 16, 1987, holding that the same was misconceived and there was no mistake apparent from the record. To understand as to what mistake apparent from the record was pointed out by the petitioner to the Tribunal in the miscellaneous application, it is necessary to amplify the factual position. The case of the petitioner is that people living in the neighbourhood were interested in buying the prospective products of the petitioner and they had deposited amounts in advance with the sales representatives of the petitioner and when the petitioner started production, the goods had been delivered to them. The Tribunal, in the appellate order dated March 13, 1987, observed that the goods had been delivered to such persons almost at the same time at different rates and, for sample sake, the Tribunal pointed out the supplies made to two parties, namely, Kastoori Lal Khandel Nath and Babu Lal and Company. Both parties belong to Gorakhpur. The petitioner made an application under section 254(2) that there was a mistake apparent from the record in the Tribunal's order dated March 13, 1987, inasmuch as goods had been supplied to both the aforesaid parties at the same rate. The Tribunal, however, did not accept this contention of the petitioner and rejected the rectification application. The question, therefore, is whether, on these facts and circumstances of the case, a mistake apparent from the record arises and whether the Tribunal was right in holding that there was no mistake apparent from the record. This question can arise only from the order passed on the rectification application. There is no overlapping between section 254(1) and section 254(2) and the areas covered by these sections are clearly demarcated. This question could not arise from the order passed under section 254(1) and it could arise only from the order passed under section 254(2). Therefore, it is not correct to say that when the rectification application is rejected, a reference will lie only against the order passed under section 254(1). Section 254(2) covers an entirely different field and the question arising from an order passed thereunder would be different in nature from the one that might arise from the order passed under section 254(1).

10. For the above reasons, we are not impressed by the submission of the learned advocate that no reference lies against the order rejecting the rectification application. Whether or not a question of law arises from an order passed under section 254(2), will depend on the facts and circumstances of each case. In the instant case, the petitioner can state in the reference application before the Tribunal that there was a mistake apparent from the record in that the rate of supplies made to various parties at almost the same time did not vary, but that all supplies had been made at a uniform rate and the inference drawn by the Tribunal was erroneous. We, however, make it clear that whether such a question, if raised, would be a question of law on the facts and in the circumstances of this case — the decision of this question will be entirely within the domain of the Tribunal. So, the petitioner has remedy against the orders passed both under section 254(1) as well as under section 254(2) and the petitioner, in fact, has availed of the remedy of reference against the former. The petitioner having alternative remedy by way of reference under section 256(1) to the Tribunal, we decline to exercise our extraordinary jurisdiction under article 226. The writ petition is accordingly dismissed.