Dr. S. Muralidhar, J.:— This appeal is directed against an order dated September 13, 2004, passed by the Income-tax Appellate Tribunal, New Delhi (“the HAT”) recalling its earlier order dated July 12, 2002, for the limited purpose of adjudicating upon ground No. 7 in the memo of appeal filed by the respondent-assessee.
2. The brief facts leading to the filing of the present appeal may be recited. By an order dated March 30, 2001, passed by the Assessing Officer (“the AO”) under section 201(1) and 201(1A) of the Income-tax Act, 1961 (“the Act”), the assessee was held to be an “assessee in default” for failure to deduct tax at source in respect of warehousing charges paid to M/s. Pra-deep Oil Corporation. The Assessing Officer negatived the plea of the assessee that these were contractual payments warranting TDS in terms of section 194C of the Act at 2 per cent. The Assessing Officer held that “the composite arrangement is in essence an arrangement for taking the premises on rent. Hence, the payment is covered under section 194-I and tax needs to be deducted from the payment thereof as per section 194-I”. The Assessing Officer determined the amount of short deduction of tax as well as interest payable thereon under section 201(1A). The appeal of the assessee on this aspect was partly allowed by the Commissioner of Income-tax (Appeals) on January 15, 2002, and its appeal before the Income-tax Appellate Tribunal was dismissed on July 12, 2002. The further appeal of the assessee was dismissed by this court on May 21, 2004. Thereafter nearly two years after the Income-tax Appellate Tribunal's order dated July 12, 2002, the respondent-assessee filed an application under section 254(2) of the Act for rectification of the order of the Income-tax Appellate Tribunal on the ground that an alternate plea raised by it in ground No. 7 of the memo of appeal had not been considered by the Income-tax Appellate Tribunal. The rectification application came to be allowed by the Income-tax Appellate Tribunal by the impugned order dated September 13, 2004, holding that:
“This plea of the assessee appears to have been missed by the Tribunal while disposing of the appeal and hence, to that extent, there is a mistake apparent on the record. Not adjudicating upon a particular ground, though raised in the appeal, constitutes a rectifiable mistake under section 254(2) of the Act and hence we recall the order of the Tribunal dated July 12, 2002, for the limited purpose of adjudicating upon this particular ground, i.e, ground No. 7 raised in the memo of appeal.”
3. Mr. R.D Jolly, appearing for the appellant-Revenue submits that the Income-tax Appellate Tribunal erred in holding that while passing the earlier order the point in ground No. 7 had been missed. He referred to several portions of the first order dated July 12, 2002, of the Income-tax Appellate Tribunal to contend that the point was definitely answered by the Income-tax Appellate Tribunal against the assessee. Relying on the judgments in Commissioner Of Income-Tax v. K.L Bhatia., [1990] 182 ITR 361 (Delhi) and CIT v. IT AT, [2007] 293 ITR 118 (Delhi) he urges that the Income-tax Appellate Tribunal was not justified in recalling its order dated July 12, 2002, in relation to ground No. 7 and that this was beyond the scope of section 254(2) of the Act.
4. In reply it is submitted by Mr. Ajay Vohra, learned counsel for the respondent, that the assessee is not disputing that it is an assessee in default or that it is liable to pay interest as determined by the Assessing Officer. However, he submits that the alternate plea raised in ground No. 7 of the memo of appeal before the Income-tax Appellate Tribunal, to the effect that the respondent was not liable to pay the short deduction of tax at all, was not dealt with by the Income-tax Appellate Tribunal. This, according to him, was a mistake apparent from the record warranting rectification under section 254(2). He also placed reliance on a circular dated January 29, 1997, issued by the Central Board of Direct Taxes in this regard. He has placed reliance upon the decisions of the Madhya Pradesh High Court in CIT v. ITAT, [1988] 172 ITR 158, Sardar Machhisingh v. CIT, [2005] 278 ITR 247, the Allahabad High Court in Laxmi Electronic Corporation Ltd. v. CIT, [1991] 188 ITR 398 and this court in CIT v. Escorts Farms P. Ltd., [1989] 180 ITR 280.
5. The central issue revolves around ground No. 7 of the memo of appeal before the Income-tax Appellate Tribunal, which reads as under:
“7. The Commissioner of Income-tax (Appeals) has erred in ignoring the jurisdictional High Court judgment which has held that deduction of tax is subject to regular assessment of the payee. The Commissioner of Income-tax (Appeals) has failed to consider the fact that in the absence of any tax liability of the payee, the differential TDS cannot be realised once again from the payer even though the appellants have submitted documents evidencing refund claims made by the service provider.”
6. In its first order dated July 12, 2002, a Bench of the Income-tax Appellate Tribunal comprising its Vice-President, Shri R.M Mehta and Ms. Diva Singh, Judicial Member, noted the contentions of counsel for the assessee. No specific contention appears to have been urged to the effect that even if the assessee was liable to pay penalty and interest it could not be asked to pay the tax short deducted. However, the following contention urged by the assessee was noted by the Income-tax Appellate Tribunal in its first order dated July 12, 2002:
“That the recipient, namely, Shri J.P Gupta the proprietor of M/s. Pradeep Oil Corporation had certified that during the relevant periods he had claimed a substantial amount of ‘refund’ on account of TDS and the plea in this connection was that as far as the Government was concerned it had recovered its tax dues and it was immaterial whether these were in the form of TDS deducted by the assessee or these were in the form of payments by M/s. Pradeep Oil Corporation in its respective assessments.”
7. In paragraph 21 of its first order dated July 12, 2002, the Income-tax Appellate Tribunal observed:
“It must be appreciated that section 201(1) speaks of non-deduction of the whole or any part of the tax or after deduction there is a failure to pay the tax as required under the Act and on any of these eventualities taking place the assessee is deemed to be an assessee in default in respect of such tax section 201(1A) then speaks of interest which is liable to be paid at a specified percentage on the amount of such tax from the date on which it was deductible and up to the date on which it is actually paid. With such provisions it is not at all a convincing argument on the part of the assessee that the payee has settled his tax liabilities and has obtained a refund from the Department. Reliance is placed on the judgment of the hon'ble Madhya Pradesh High Court in the case reported in CIT v. Manager, Madhya Pradesh State Co-operative Development Bank Ltd., [1982] 137 ITR 230 and the decision of the same court in the case reported in CIT v. Divisional Manager, New India Assurance Co. Ltd., [1983] 140 ITR 818. As rightly contended by the learned Departmental Representative section 192 pertains to payment of salary and an element of estimate crops in since salary includes various types of perquisites whose actual quantification requires interpretation of the relevant rules provisions, but in so far as section 194-I is concerned, the amount is determined and the element of estimate is absent. As already stated, TDS provisions are meant to ensure payment while earning the income and any postponement, delay or default stipulated by law would mean delay in a particular amount reaching Government coffers and that is why payment of interest has been provided under section 201(1A) and in so far as the shortfall is concerned, the assessee is treated to be in default vide section 201(1). The two decisions of the hon'ble Madhya Pradesh High Court, in our opinion, would not apply as these were situations where the assessments of the employees had already been completed and tax fully paid and no purpose would have been served in asking the employer to deposit the shortfall etc. for the TDS, since that would have only meant a further refund to the employees since TDS is always to be adjusted in the account of the earner of the income.”
(emphasis supplied)
8. Ultimately in paragraph 29 the Income-tax Appellate Tribunal held as under:
“The learned Departmental Representative has appropriately contended that what happens in the case of a recipient is not relevant since the duty to deduct tax is absolute unless the recipient filed the requisite declaration or certificate to show that its/his income is below the taxable limit. This is supported by the judgment of the hon'ble Madras High Court in the case of CIT v. Ramesh Enterprises, [2001] 250 ITR 464. This in fact was a judgment where the TDS pertained to payment of interest and which was a known and quantified amount. Another decision relied upon by the learned Departmental Representative was in the case of ITO v. Sreevatsa Trading Co., [2001] 252 ITR 133 (Mad), where their Lordships of the hon'ble Madras High Court took the view that two excuses put forward by the assessee for not complying with the TDS provisions could not be treated as an excuse in the eye of law to avoid the liability. These were:
(i) The firm had been incurring losses; and
(ii) The amount deducted had been refunded to the depositors.”
9. In the first place, we do not agree that there is no decision of the Income-tax Appellate Tribunal in respect of ground No. 7 raised in the memorandum of grounds of appeal. The extracted paragraphs of the first order clearly indicate that the Income-tax Appellate Tribunal did consider the plea of the assessee as contained in ground No. 7 and gave a decision thereon. In particular, the portions highlighted in paragraph 8 (page 166) above show that the point of the assessee not being liable to pay the differential TDS since the payee itself was not liable to pay tax was in fact considered. The conclusion reached by the subsequent Bench of the Income-tax Appellate Tribunal, different from the one that passed the first order, to the effect that the Tribunal had failed to deal with this aspect is, in our view, based on an incorrect reading of the first order. Certainly, this cannot be characterised as a mistake, much less a mistake apparent from the record justifying a “rectification” of the first order.
10. We may notice that in the present case the assessee filed an appeal against the order dated July 12, 2002, of the Income-tax Appellate Tribunal and the appeal was dismissed by this court on May 21, 2004. The order dated July 12, 2002, of the Income-tax Appellate Tribunal thus became final. Mr. Vohra candidly stated that the point based on ground No. 7 was not taken up in the appeal in this court. The reason for this, according to him, was that this court would not have permitted the assessee to urge such ground in the absence of decision thereon by the Income-tax Appellate Tribunal. We do not agree with this understanding by the assessee of the scope of an appeal under section 260A. Where it is shown to this court in appeal that a ground that has been specifically raised in the memo of appeal before the Income-tax Appellate Tribunal has not been considered by it, that can persuade this court, if the circumstances so justify, to remand the case to the Income-tax Appellate Tribunal for consideration of that ground. What clearly appears to have happened here is that having failed to urge this ground in the appeal before this court, the assessee took a chance by filing a rectification application on that very ground before the Income-tax Appellate Tribunal after the dismissal of the appeal by this court and nearly two years after the Income-tax Appellate Tribunal's first order. This; to our mind, was an attempt at doing indirectly what could not be done directly, i.e, seeking a review of an order of the Income-tax Appellate Tribunal that had already attained finality. Since on the facts of the present case we are of the view that there was no mistake apparent from the record in respect of its earlier order dated July 12, 2002, warranting the exercise by the Income-tax Appellate Tribunal of its power of rectification under section 254(2) of the Act, we do not consider it necessary to discuss in detail the cases cited by the counsel for the assessee. We may nevertheless refer to the decision rendered by us today in CIT v. Honda Siel Power Products Ltd., [2007] 293 ITR 132 (Delhi) (judgment dated October 11, 2006 in I.T.A No. 735/2004) where we have given detailed reasons explaining the narrow scope of the power of rectification under section 254(2). There we have discussed the decisions handed down by this court in K.L Bhatia, [1990] 182 ITR 361, Deeksha Suri v. ITAT, [1998] 232 ITR 395 (Commissioner Of Income-Tax v. Vichtra Construction (P.) Ltd., [2004] 269 ITR 371 (Delhi), J.N Sahni v. ITAT, [2002] 257 ITR 16 (Delhi) and CIT v. ITAT, [2007] 293 ITR 118 (Delhi) and taken the view that (page 137):
“It is plain that the power to rectify a mistake is not equivalent to a power to review or recall the order sought to be rectified. Rectification is a species of the larger concept of review. Although it is possible that the prerequisite for exercise of either power may be similar (a mistake apparent from the record), by its very nature the power to rectify a mistake cannot result in the recall and review of the order sought to be rectified. Otherwise, what cannot be done directly by seeking a review of an order can be achieved indirectly, by seeking a rectification of that order. This is even more significant in the light of the fact that under the Act there is no express power given to the Tribunal to review its own orders.”
11. We have also held in Honda Siel Power Products that [2007] 293 ITR 132 (page 143):
“… it makes no difference whether the entire order is sought to be recalled or the order passed by the Tribunal on individual grounds is sought to be recalled in entirety. In other words, if the Tribunal has given its decision on say grounds Nos. 3 and 4 in a particular way in its first order while dealing with ten separate grounds and pursuant to a rectification application, it recalls its decision on grounds Nos. 3 and 4 and gives a completely different decision on the said grounds, then it would certainly amount to recall and review of its entire order in respect of those grounds.”
12. In conclusion we have observed (page 145):
“It must be remembered that this is not a power of review but is restricted to rectifying mistakes ‘apparent from the record.’ A liberal approach might constitute an invitation to parties to allow the period for filing an appeal to expire, anticipate a change of coram of the Bench that heard the appeal in the first instance, and then at their own sweet will ‘take a chance’ by filing a rectification application on any fancy imagined ‘mistake apparent from the record’ at any time before the expiry of four years.”
13. The present case is an apt illustration of the above situation, which we reiterate must not be permitted to ensue in the garb of “rectification”.
14. For these reasons, we are of the view that the impugned order of the Tribunal dated September 13, 2004, cannot be sustained in law and it is accordingly set aside. The appeal is allowed with no order as to costs.