1. The Income-tax Appellate Tribunal, Delhi, has referred the following question of law under section 256(2) of the Income-tax Act, 1961 (herein-after referred to as “the Act”), for the opinion to this court:
“Whether, on the facts and circumstances of the case, the Tribunal was justified in reviewing its earlier order ?”
2. Briefly stated, the facts giving rise to the present reference are as follows:
The respondent-assessee is a registered firm. The year of assessment involved is 1973-74, for which the previous year ended November 5, 1972. The Income-tax Officer in the course of the assessment proceedings noticed that the assessee had claimed a sum of Rs. 94,232 under the head “stores account”. The Income-tax Officer after scrutinizing the stores account found that a sum of Rs. 2,34,479 was debited under this head. As against this, the assessee had credited a sum of Rs. 35,624 as closing stock and Rs. 4,623 as sales of certain items of stores. The Income-tax Officer also found that under this head the assessee had made substantial claims for purchases of spare rolls and kali chaddar, for example, a sum of Rs. 38,120 had been debited on June 24, 1972 on account of purchase of spare rolls from M/s. Polymex, Poland and another sum of Rs. 47,495 had been debited on August 25, 1972 and the narration for this entry had been made as “purchased kali chaddar from Calcutta for the use in the pipe of the machinery”. Similarly, a sum of Rs. 2,994 had been debited on June 5, 1972, for ball bearing Rs. 1,191 on August 25, 1972, for spare rolls, etc. The Income-tax Officer was of the view that the facts are exactly similar to those pertaining to the assessment year 1970-71. The Tribunal in that year had upheld the addition made by the Department. Thus, the Income-tax Officer estimated a sum of Rs. 25,000 as capital expenditure and disallowed the same under the stores account. The Income-tax Officer directed that the depreciation would be allowed on this figure. Before the Appellate Assistant Commissioner, it was submitted on behalf of the assessee that the system followed by the appellant was that whatever purchases were made were claimed as revenue expenses although they might not be uti-lized in the same year. However, as and when they were required they were taken out from the stores and used. Learned counsel further con-tended that the unconsumed stocks were not shown in the closing stock of the appellant even if they were not used. The Appellate Assistant Commissioner after considering the aforesaid facts and the finding of the Tribunal in earlier years sustained the addition.
3. Before the Tribunal, on behalf of the assessee it was contended that the Appellate Assistant Commissioner was wrong in sustaining the addition of Rs. 25,000. The assessee had furnished details of stores accounts before the Income-tax Officer. According to him, the amount had been spent on spare rolls, was of revenue nature and was an admissible expenditure. Out of purchases of kali chaddar amounting to Rs. 35,495 kali chaddar worth Rs. 35,624 had been shown in the closing stock. Thus, it was contended that the Income-tax Officer was wrong in adding a sum of Rs. 25,000 as capital expenditure. The departmental representative contended that the facts of this year are identical with the facts of the assessment year 1970-71. In that year the Tribunal sustained the addition of Rs. 25,000. In this year it is not the case of the assessee that the facts of this year are not identical with the facts of the assessment year 1970-71.
4. The Tribunal gave consideration to the above arguments and perused the evidence on record and upheld the above addition of Rs. 25,000 by observing as under:
“We have heard the parties and perused the entire evidence on record. It is correct that the assessee has purchased kali chaddar worth Rs. 35,624 and the same was disclosed in the closing stock but the authorities below found other facts also. According to the assess-ment order the assessee has claimed a sum of Rs. 94,232 under the head ‘Stores account’ as revenue expenditure. The Income-tax Officer after going through the stores account found that, in fact, a sum of Rs. 1,34,489 was debited under this head. As against this, the assessee had credited a sum of Rs. 35,624 as closing stock and Rs. 4,624 as sales of certain items of stores. The Income-tax Officer pointed out other facts also in the assessment order.”
5. The Tribunal had further found that before the Appellate Assistant Commissioner on behalf of the assessee it was contended that whatever purchases were made were claimed as revenue expenditure although they might not be utilized in the same year. It was also explained that as and when they were required they were taken from the stores and used. Learned counsel for the assessee admitted that the unaccounted stocks were not shown in the closing stock even if they were not used. Learned counsel for the assessee could not produce any convincing evidence either before the Income-tax Officer or the Appellate Assistant Commissioner showing that unused stock was not of capital nature. From the admission of the assessee's counsel, it became clear that there was unconsumed stock and the same was not shown in the closing stock. Such stock was esti-mated by the Income-tax Officer as capital asset and in his opinion such expenditure of Rs. 25,000 was not allowable. It was not the case of the assessee before us that this expenditure was excessive. Looking to the aforesaid facts and the finding of the Tribunal in the assessment year 1970-71, the addition was quite reasonable and no interference was called for.
6. After the aforesaid decision of the Tribunal the assessee filed miscellane-ous application bearing No. 60.Delhi of 1979. It was contended therein that in view of page 138 of the assessee's paper book, the Tribunal had relied on irrelevant facts in para. 34 of the order. It was, therefore, submitted that the addition of Rs. 25,000 as sustained came to be made on the basis of wrong facts. The said application was resisted by the Revenue and it was urged that the miscellaneous application was misconceived. The Tribunal, after considering the above arguments, recalled its order in the matter of the said addition of Rs. 25,000 for disposal afresh in accordance with law by observing as under:
“After hearing both the parties and perusing the contents of the miscellaneous application we find that the contention of learned counsel for the assessee is correct because para. 34 of the Tribunal's order does contain factual inaccuracy which has led to the inference as drawn by the Tribunal. In that view of the matter, we respectfully following the ratio of the decision laid down in Mangat Ram Kuthiala v. CIT, [1960] 38 ITR 1 (Punj), exercising our inherent right, recall the order of the Tribunal to our file for a fresh disposal in accordance with law”.
7. We have heard Sri A.N Mahajan, the learned standing counsel for the Revenue, and Shri S.N Singh who has filed his appearance on behalf of the respondent-assessee.
8. Learned counsel for the Revenue submitted that under the Income-tax Act there is no provision which permits the Income-tax Appellate Tribunal to review its order and in the absence of any such provisions the Tribunal was not justified in reviewing the order dated January 27, 1979.
9. He referred to a Division Bench decision of this court in the case of Laxmi Electronic Corporation Ltd. v. CIT, [1991] 188 ITR 398, wherein this court has held that the Tribunal has no power to review. Its only power is one of rectification conferred by sub-section (2) of section 254 of the Act. He also relied upon a decision of the hon'ble Supreme Court in the case of Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, (1971) 3 SCC 844 : AIR 1970 SC 1273, wherein the apex court has held that the power to review is not an inherent power and it must be conferred by law either specifically or by necessary implication. In the case of Dr. Smt. Kuntesh Gupta v. Manage-ment of Hindu Kanya Mahavidyalaya, AIR 1987 SC 2186; [1987] 4 SCC 525, the apex court has held that it is now well established that a quasi-judicial authority cannot review its own order, unless the power of review is expressly conferred on it by the statute under which it derives its juris-diction. Thus, it is now well-settled that in the absence of any specific power conferred by the statute or inferred by implication, the Tribunal which has been constituted under the Act cannot exercise any power of review. No such power can be inferred by implication nor is there any specific pro-vision in the Act providing for review. However, if an error falls within the provisions of section 254(2) of the Act, then surely the Tribunal can exercise the power conferred under the said Act and rectify its mistake. It is well-settled that, if the facts of a particular case have been recorded incorrectly or some error has crept in, which does not require any debate and is appar-ent on the record, such a mistake can be corrected in exercise of powers under section 254(2) of the Act. The present one is one of such cases where the Tribunal had incorrectly recorded certain factual aspect in its order which, upon an application being made, it had deleted such portion and restored the appeal to its file to be decided afresh. The Tribunal cannot be said to have committed any illegality as the mistake was apparent on the face of the record which falls within the provisions of section 254(2) of the Act.
10. In view of the foregoing discussion we answer the aforesaid question of law referred to us by observing that the case was not of review but of a rectification. The reference is disposed of However, the parties shall bear their own costs.