Dr A.S Anand, C.J

1. This writ appeal is directed against the judgment of a learned Judge of this Court in Writ Petition No. 13800 of 1990.

2. The appellant is an income-tax assessee. During the year ending 31.3.1981 he filed a return of income on 5.11.1982 The appellant was a partner through its Kartha in the firm called M/s. Muthukumaraswamy Chetty Co. The firm carried on business of marketing edible oil. The partnership firm gave interest-free loan to the minor son of the appellant who is also a member of the Hindu undivided family. The appellant made recurring deposit with M/s. Thanjavur Per-manent Bank out of the amounts taken as loan from the firm. The deposits matured and a sum of Rs 40 000 including interest was returned on the 22.7.1980 That amount was credited to the loan account standing in the name of the son of the appellant. During the assessment year 1981-82, the appellant filed his return of income. It was pleaded that the provisions of S. 64 of the Income-tax Act were inapplicable and that the interest income out of the recurring deposit would not be subjected to tax in the hands of the appellant in as much as the income belonged to the minor son. That plea was rejected by the Income-tax Officer. Aggrieved by the said order, the appellant preferred an appeal before the Appellate Assistant Commissioner of Income tax The appeal failed and the appellant preferred a second appeal before the Income-tax Appellate Tribunal By order dated 26 10.1989 the Appellate Tribunal dismissed the appeal. The appellant thereafter filed an application which is available at page 8 of the typed set of papers seeking recalling or modification of the order dated 26.10.1989 on the ground that certain mistakes had crept in in the order of the Appellate Tribunal. By communication dated 29.5.1990 from the Assistant Registrar of the Income-tax Appellate Tribunal, the appellant was informed, in response to his letter dated 24th January, 1990, that his request to recall or modify the order of the Tribunal dated 26.10.1989 stood dismissed. Aggrieved, the appellant filed the writ petition which was dismissed by the learned single Judge. Hence this appeal.

3. Learned counsel for the appellant had submitted before the learned single Judge that the application filed by the appellant under S. 254(2) of the Income tax Act was dismissed without any hearing and relying upon the judgment of the Delhi High Court in Smart (P) Ltd. v. Itat 182 I.T.R 384. had argued that the dismissal of that application, for recalling or modification of the earlier order dated 26.10.1989 by the Tribunal, without granting any opportunity of hearing to him violated the principles of natural justice, thereby vitiating the order. The learned single Judge, however, found that since there had been no varying of the tax liability, by the rejection of the application, there was no necessity to provide an opportunity to the appellant and thus there had been no violation of the rules of natural justice. Learned counsel for the appellant has questioned that finding and has reiterated the same plea which had been advanced before the learned single Judge.

4. To appreciate the argument of the learned counsel it is desirable to first notice the provisions of S 254(2) of the Income-tax Act, That section reads as follows:

“The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub S (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the (assessing) Officer. Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard.”

A bare reading of the section shows that the Tribunal has been invested with the power to rectify its mistakes which are apparent from the record. Rectification is, therefore, not permissible in any other case. An application for rectification cannot be treated as an appeal in disguise. Power of rectification can be exercised only for the limited purpose under section 254(2) of the Act. The proviso to sub-S.(2) of S. 254, which makes it incumbent upon the Tribunal to issue notice to the parties comes into play only when the rectification has the effect of enhancing the assessment or reducing the refund or otherwise increasing the liability of the assessee. In other cases, the proviso has no application. The Legislature, thus, confined the issuance of notice and the grant of opportunity of hearing only to the specified cases detailed in the proviso and that appears logical also because after the parries bad full dressed arguments before the assessing authority. Appellate Assistant Commissioner and the Appellate Tribunal, the necessary of granting hearing in an application seeking rectification of the order of the Tribunal would arise only in cases mentioned in the proviso and not where no rectification is being made. Admittedly, the communication which was impugned in the writ petition had neither the effect of er hancing the assessment nor reducing the refund or in any other manner increasing the liability of the assessee. By rejecting the application seeking rectification of the order of the Appellate Tribunal, no settled rights of the appellant were altered to its prejudice; Under the circumstances, the issuance of notice or grant of hearing was not necessary in the facts of the instant case.

5. The Delhi High Court in Smart (P) Ltd., v. Itat, after analysing the provisions of S. 254(2) of the Income-tax Act, opined that by virtue of the proviso to S. 254(2). the Tribunal can pass orders on an application under that section only after granting opportunity to the applicant. The Delhi High Court has read into S 254(2) the necessity to provide hearing even if the case is not the one wnich was covered by the proviso to sub-S.(2) of S. 254. With great respect to the learned Judges of the Delhi High Court, we find ourselves unable to subscribe to that view, which runs counter to the legislative mandate. Extension of the rule of audi-alteram-partem, where the legislature has confined its applicability, beyond what the legislature provided for, is not permissible.

6. It is settled law that the rules of natural justice can supplement the law but cannot supplant it. Where a statutory provision either specifically or by inevitable implication excluded the application of the rules of natural justice, then the court cannot ignore the mandate of the Legislature and extend the application of the rules even to the excluded categories. Where the language of the statute is clear, nothing more can be read into it and in any event, not for defeating the intention of the Legislature. In Swadeshi Cotton Mills v. Union of India A.I.R 1981 S.C 818., the Apex Court opined:

“The rules of natural justice can operate only in areas not covered by any law valitly made They can supplement the law but cannot supplant it. (Per Hegde, J. in A K. Kraipak, ibid) If a statutory provision either specifically or by inevitable implication excludes the application of the rules of natural justice, then the court cannot ignore the mandate of the Legislature. Whether or not the application of the principles of natural justice in a given case has been excluded, wholly or in part, in the exercise of statutory power, depends upon the language and basic scheme of the provision conferring the power, the nature of the power, the purpose for which it is conferred and the eflect of the exercise of that power.”

The aforesaid principle of law has received the seal of approval by a five Judge Bench of the apex Court in Union of India v. Tulsiram Patel A.I.R 1985 S.C 1416..

7. The compliance with the rules of natural justice is aimed at securing justice or to prevent miscarriage of justice. Where the Legislature in its supreme wisdom excludes the application of the rules of natural justice, it is improper for the Courts to ignore the mandate of the Legislature. These rules, therefore, operate in areas not covered by any law validly made. In Union of India v. J.N Sinha A.I.R 1971 S.C 40., their Lordships opined:

‘If a statutory provision can be read consistently with the principles cf natural justice, the courts should do so. But if a statutory provision either specifically or by necessary implication excludes the application of any rules of natural justice then the Court cannot ignore the mandate of the legislature or the statutory authority and read into the concerned provision the principles of natural justice. Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the express words of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred and the effect of the exercise of that power.”

Going by the plain and clear phraseology of sub-S (2) of S. 254 of the Act and the scheme of the said provision, we are clearly of the opinion that the principles of natural justice cannot be pressed into aid in cases which are not covered by the proviso to sub-S (2) of S. 254. The purpose for which the power of rectification is conferred by S. 254(2) of the Act, when considered with the effect of exercise of that power also unmistakably exposes the sound logic for confining the right of hearing only to the cases covered by the proviso and not to others. Principles of natural justice do not operate in a vacuum and their compliance depends on the facts and circumstances of each case.

8. So far as the facts of the present case are concerned, we find that the case of the appellant before the Income-tax authorities as well as before the Appellate Assistant Commissioner was the same as was projected before the Income-tax Appellate Tribunal. The appellant had the opportunity before the original as well as the appellate authority. Even before the Tribunal, it had been provided with an opportunity of hearing. If the appellant chose not to avail the same, it has to thank itself for it. Principles of natural justice had been duly complied with at all stages till the order was made by the Tribunal on 26-10-1989. The appellant, while filing the application for rectification, attempted to raise the same pleas which had been raised in the appeal filed before the Appellate Assistant Commissioner as well as the Income-tax Appellate Tribunal again. The Tribunal obviously did not find any mistake “apparent from the record” and declined to interfere, with the result that the earlier order was not altered at all. No hearing was, therefore, necessary to be provided to the appellant before the rejection of its application filed under S. 254(2). Learned counsel was even unable to point out any such mistake which was'apparent from the record'and as a matter of fact, his effort was to question the basic findings concurrently recorded by all the authorities. Scope of an application under S. 254(2) of the Act did not permit it and keeping in view the limited scope of the provision, the Tribunal rightly declined to interfere with its earlier order. The learned single Judge was, therefore, perfectly justified in dismissing the writ petition.

9. Thus, for what we have said above, we do not find any cause to interfere with the judgment of the learned single Judge. This writ appeal consequently fails and is dismissed.

10. We would like to clarify that the reference arising out of the order of the Appellate Tribunal dated 26-10-1989, which we are informed is still pending, shall be decided on its own merits and nothing said hereinabove should be construed as an expression of opinion on the merits of the case.

RR/VCS.