Commissioner Of Inco... v. Income-Tax Appellate...

A. Pasayat, J.:— The short 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 16-11-1989 passed in I.T.A No. 275.CTK of 1988 in purported exercise of powers under section 254(2) of the Income-tax Act, 1961 (in short ‘the Act’).

2. The background facts are that the aforesaid appeal filed by the Assessee before the Tribunal was dismissed by order dated 16-11-1989. The main point involved in the appeal was whether net profit rate adopted by the Income-tax Officer for making assessment was justified on the facts and circumstances of the case. The Tribunal referred to certain materials on which reliance was placed by the Assessing Officer as well as by the first appellate authority, and held that the net profit rate of 11.5% as adopted was reasonable. It also took note of decisions in some other cases, which were considered comparable to assessee's case. An application styled as one under section 254(2) of the Act was filed by the assessee, along with an affidavit asserting that there was another case which was comparable to that of the assessee, and in that case net profit rate of 2.8% was adopted. In the affidavit it was asserted that though a copy of the order was produced by the learned counsel for the assessee, the same was not taken into consideration by the Tribunal while disposing of the appeal. The application was numbered as M.A No. 15 (CTK) of 1990 and by order dated 20-12-1990 which is impugned in this writ application, the order was recalled.

3. The primary challenge of the Department in this writ application is that exercise of jurisdiction under section 254(2) of the Act was uncalled for because there was no mistake apparent from the record which necessitated any amendment, and in any event it was not open to the Tribunal to recall the order in its entirety. Mr. B. Panda, learned counsel for the assessee, however, submits that when relevant materials were placed for consideration by the Tribunal, and the same were not considered. It amounted to a mistake which could be rectified by the Tribunal.

4. In our view, even without entering into a detailed analysis of the legal position, the order impugned cannot be sustained. The Tribunal did not consider the applicability of section 254(2) of the Act, and by an unreasoned order has disposed of the matter. The affidavit filed by the assessee was termed as “sufficient proof”, without indicating as to of what it constituted sufficient proof, and also how the same had relevance to the question of applicability of section 254 (2) of the Act. The Tribunal merely queted the application, prayer and affidavit and abruptly came to a conclusion that it accepted the affidavit as sufficient proof. Power of amendment under section 254(2) of the Act is to be exercised only when there is a mistake apparent form the record. There is no indication in the order regarding any such mistake. No reason has been indicated for exercise of power under section 254 (2) of the Act. The order being non-reasoned is interdicted, and unsustainable.

5. Without being influenced by any observations made herein, the Tribunal shall re-hear the matter and consider whether a case for exercise of power under section 254(2) of the Act is made out. We quash the impugned order Annexure-1, and remit the matter back to the Tribunal with the aforesaid observations.

6. The writ application is accordingly disposed of. No costs.

S.K Mohanty, J.:— I agree.

Ordered accordingly.