Section 254 of the Income Tax Act - power to rectify mistakes, errors

In Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227 / 173 Taxman 322, the Supreme Court, while dealing with a case arising under section 254 of the Act, considered the scope of the words and phrase "mistake apparent on the face of the record". The Supreme Court also considered the scope of section 254(2) of the Act. It was held therein that the power conferred under section 254(2) of the Act is not the power of review but is a power conferred, "to rectify any mistake apparent on record". It was also observed that, while doing so, the Tribunal may set aside the earlier order and rehear the matter, and that the phrase "to rectify any mistake apparent on record" is wider in its content than the expression "mistake or error apparent on the face of record" occurring in Order XLVII, rule 1 of the Code of Civil Procedure, 1908 (CPC).

 

 

(a) Under section 254(2) the Tribunal has merely the power to amend its order. While exercising the said power it cannot recall its order. The expression 'amendment' must be assigned its true meaning. While an order of amendment is passed, the order remains but when an order is recalled it stands obliterated. It is well-settled that what cannot be done directly cannot be done indirectly. The review of its own order by the Tribunal is forbidden in law; it cannot be permitted to achieve the same object by exercising its power under sub-section (2) of section 254 as has been held in Lachhman Das Bhatia v. ACIT, [2011] 196 Taxman 563 (Delhi) (FB).

 

(b)  Expression 'mistake apparent on the record', it is well-settled, means a mistake either clerical or grammatical or arithmetical or of like nature, which can be detected without there being any necessity to re-argue the matter or to re-appraise the facts as appearing from the records  as has been held by the Hon'ble Calcutta High Court in CIT v. Suman Tea & Plywood Industries (P.) Ltd., [1997] 226 ITR 34/94 Taxman 305 (Cal.).