N.N. Mathur, J. - (1.) THIS special appeal is directed against the judgment of the learned single judge dated May 7, 1986, whereby the learned single judge has set aside the order of the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as "the Tribunal"), dated October 15, 1985, granting the application of the assessee under Section 254(2) of the Income-tax Act, 1961, for rectification of mistake.
(2.) THE facts giving rise to the instant appeal are that a survey was conducted in the premises of the assessee, namely, Champalal, the karta of a Hindu undivided family, under Section 133A on August 18, 1979. THE Income-tax Officer after investigation assessed the income of the assessee and made an addition of Rs. 80,000 in the income for the assessment year 1978-79. THE appeal against the said order of assessment was dismissed by the Appellate Assistant Commissioner. On further appeal, the Tribunal dismissed the same by order dated July 26, 1984. The respondent, assessee filed an application under Section 254(2) of the Income-tax Act for rectification of mistake. It was, inter alia, pointed out in the rectification application that the appellant was assessed as a Hindu undivided family entirely a different entity distinct from Champalal, the assessee, in his individual capacity under the Act. Champalal, the Hindu undivided family, was not the owner of the diaries and other papers even at the time of search and, therefore, the additions which were made on account of alleged entries recorded in the said papers in the income of Champalal, the Hindu undivided family, were erroneous. Many other obvious mistakes were also detailed in the application. The Tribunal agreed with the assessee and admitted that there were certain mistakes of fact. The Tribunal was of the further view that as the judgment has proceeded on a wrong assumption of fact, it was expedient in the interest of justice to recall the order and post the appeal for rehearing. The said decision of the Tribunal was challenged before this court by way of petition under article 226 of the Constitution of India. The petition filed by the Revenue was resisted on a number of grounds. Preliminary objection was also raised to the effect that there being an alternate remedy available for the Revenue under Section 256(1) of the Act, the petition under article 226 of the Constitution of India was not maintainable. A number of authorities were also cited before the learned single judge for the proposition that the Tribunal is empowered to rectify the mistakes which are apparent on the face of the record and in a fit case the entire order may be recalled and rehearing of the appeal can be ordered. The learned single judge without discussing the case law cited, allowed the writ petition by simply saying that Sub-section (2) of Section 254 does not empower the Tribunal to review its own order and recall its earlier order. The discussion of the learned single judge on the point is extracted as follows : "A bare reading of Sub-section (2) of Section 254 of the Act it appears that under the garb of rectification, the Income-tax Appellate Tribunal cannot exercise the power of review and recall the order whole hog. There are conflicting judgments of the various High Courts on this subject. Without going into the various authorities which have been cited before me, I only need to say that a bare reading of Sub-section (2) of Section 254 does not empower the Tribunal to review its own order, and recall its earlier order." It is contended by Mr. Rajendra Mehta, learned counsel for the appellant-assessee, that the consistent view of all the High Courts is that the Tribunal while exercising the powers of rectification is also required to consider as to whether the facts and circumstances warrant recalling of the order on account of apparent mistake. On the other hand, it is submitted by learned counsel for the Revenue that it is beyond the scope of Sub-section (2) of Section 254 of the Act to recall the order whole hog in the name of rectification. In order to appreciate the controversy, it will be convenient to extract Sub-section (2) of Section 254 of the Act. "(2) 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-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer."
(3.) A reading of Sub-section (2) of Section 254 of the Act makes it clear that its scope and ambit is limited. It restricts to rectify the mistakes apparent from the record. Thus, in the normal course, the power of rectification cannot be extended for recalling the entire order, obviously it would mean passing of a fresh order. That does not appear to be the legislative intent. However, in a given case where the factual mistake is so apparent that it becomes necessary to correct the same, the Tribunal would be justified in not only correcting the said mistake by way of rectification but if the judgment has proceeded on the basis of that fact, it would be justified in recalling such order and posting for hearing. A Division Bench of the Madhya Pradesh High Court in CIT v. Mithalal Ashok Kumar [1986] 158 ITR 755, the Tribunal found apparent mistake from the record in its order while deciding the question as to whether the firm was genuine or not, accordingly the rectification was granted. On a challenge by the Revenue, the Division Bench held that while considering the application for rectification, the provisions of Order 47, Rule 1 of the Civil Procedure Code, can be strictly applied. The judgment of the Madhya Pradesh High Court is based on the decisions of the apex court in K.M. Shanmugam v. S. R. V. S. (P.) Ltd., AIR 1963 SC 1626 and Nagendra Nath Bora v. Commissioner of Hills Division, AIR 1958 SC 398. The Division Bench confirmed the order of the Tribunal granting rectification, there being manifest error on the face of the proceedings. In a recent decision the Allahabad High Court in CIT v. U. P. Shoe Industries [1999] 235 ITR 663 has taken the view that where there is apparent mistake from the record, the Tribunal has jurisdiction to rectify the mistake by recalling the entire order and posting for rehearing. In the instant case, the Tribunal granted rectification and posted the case for rehearing, having admitted that its order has proceeded on the assumption of wrong facts. In our view, in the facts of the case, the Tribunal was justified in correcting the manifest error. The learned single judge has committed an error in interfering with a well justified order, without looking into the real controversy involved. ;