Delhi High Court

Smt. Baljeet Jolly vs Commissioner Of Income Tax on 2 August, 2000

Equivalent citations: 2001 113 TAXMAN 38 Delhi

Author: Pasayat

ORDER

Pasayat, C.J.

This is an application under section 256(2) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). In relation to a miscellaneous application filed under section 254(2) of the Act in IT Appeal No. 1439 (Del) of 1989 relating to the assessment year 1985-86, the Tribunal, Delhi Bench 'C', held that there was no mistake apparent on the face of the record in relation to the -addition of unexplained investments to the extent of Rs. 6 lakhs.

2. In the application filed under section 254(2), the assessee had taken the stand that the Tribunal's conclusions were not in accordance with the facts on record. It was stated that the total amount spent by the assessee on the construction of house was Rs. 6.92 lakhs of which she spent Rs. 2,85,600 in the assessment year 1984-85, and the balance Rs. 4,06,400 were spent in the previous year relevant to the assessment year 1985-86. In explaining the sources, the assessee had stated that Rs. 6 lakhs were received by her from Laxmi Chand Bagaji. The amount which was received in 1983 was shown in the balance sheet as a liability. The assessee's stand was that the Tribunal wrongly proceeded by treating the balance sheet as books of account, though the fact remained that the assessee did not maintain any books of account. The other mistake that was committed by the Tribunal, according to the assessee, was that the joint account in which deposit of Rs. 6 lakhs was made in 1983 was both of the assessee and her husband. It is normal for any husband and wife to maintain their joint account. In these circumstances, the assessee had stated that it was credited to her bank account in 1983. The submission that since the credit appeared in the books of the bank in 1983, and it was also established that the amount was received in 1983, merely for the reason that the amount was shown in the balance sheet relating to the assessment year in question, a different conclusion was not available to be taken and the Tribunal was in error in treating as if the credit appeared in the books in the year under question. Further, it was stated that the assessee had not been granted opportunity in regard to the manner of utilization of the amount in the construction. The Tribunal on consideration of the stand of the assessee and its finding recorded in the original order in appeal came to the conclusion that a case for rectification under section 254(2) was not made out.

3. The learned counsel for the petitioner submitted that the following nine questions which have been proposed clearly show that questions of law are involved and they arise out of the order of the Tribunal passed in respect of the miscellaneous application :

"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified and correct in law in refusing to rectify its order even when it was specifically pointed out by the assessee that the issue pertaining to source of construction of the property was never in dispute and the dispute before it was limited to the genuineness of the credits ?

2. Whether, on the facts and in the circumstances of the case, was the Appellate Tribunal justified and correct in law in not deleting an addition sustained by it of Rs. 6 lakhs received by the assessee as a loan from Laxmi Chand Bagaji, Bombay, on the ground there was no mistake apparent on record in its order, disregarding that the said credit appeared in the joint bank account of the assessee with her husband on 14-3-1983 and did not pertain to the assessment year 1985-86 ?

3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in refusing to rectify the order passed in appeal ?

4. Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in its conclusions by ignoring the relevant material and considerations brought out by the assessee in the application ?

5. Whether in view of the finding recorded by the Appellate Tribunal that the credits appeared in the bank account during the accounting period relevant to the assessment year 1984-85, the Appellate Tribunal was legally correct in refusing to rectify its order which pertained to the assessment year 1985-86 ?

6. Whether, on the facts and in the circumstances of the case, could it not be held that the order of the Tribunal is perverse and is thus unsustainable in law ?

7 Whether the order of the Tribunal is vitiated for non-consideration of the valid and legal material and upon consideration of invalid and extraneous material and consideration ?

8. Whether there is any presumption of law or of fact, to the effect, that if a bank account is held in the joint names the said account belongs to the persons, whose name appears first ?

9. If the answer to the aforesaid question is in the negative, whether the sum of Rs. 6 lakhs could then be treated as unexplained to be included in the income of the assessee for the instant assessment year ?"

According to him, the Tribunal proceeded on wrong premises and contrary to the stand taken by the assessee and the revenue at the time of hearing of the appeal before it. This, according to him, constitutes a mistake which is rectifiable in terms of section 254(2).

The learned counsel for the revenue, on the other hand, submitted that the issues now raised cannot by any stretch of imagination be treated as mistake apparent on the record warranting action under section 254(2).

4. Before we deal with rival stands, it is necessary to take note that an application under section 256(1) was filed before the Tribunal which was rejected. The questions that were posed for reference to this court are as follows :

"1. Whether, on the facts and circumstances of the case, the Tribunal is justified in including Rs. 6 lakhs as income from undisclosed sources ?

2. Whether the conclusion that two drafts for Rs. 5 lakhs and Rs. 1 lakh in favour of Mrs. Baljeet Jolly have not been utilized in the construction of' the house at Sainik Farm and that the said two drafts aggregating to Rs. 6 lakhs were the property of Mr. Amarjeet Singh Jolly is based on evidences on record, is opposed to evidences on record and such conclusion is based on conjectures and surmises and, therefore, is vitiated in law ?"

The Tribunal was of the view that whether the assessee explained its source of investment or not is purely a finding of fact and no question of law can be said to arise out of the order of the Tribunal. In the impugned order, the Tribunal has recorded a finding that stand different from what was taken before the Tribunal at the time of hearing, was taken. It was specifically observed that perusal of its order in the appeal does not show that it was ever the case of the assessee that it did not maintain any books of account. In those circumstances, the balance sheet in which the credit appears was taken into account for appreciation of the factual position. So far as the claim that the money was deposited in the joint account of the assessee, it was pointed out that the conclusions were arrived at by referring to the first of the two named persons in the account and, therefore, holding that the first named person was the owner of the bank account. As aforesaid, Tribunal came to hold that there was no mistake apparent on record and the application was, therefore, dismissed.

5. A bare look at section 254(2) makes it clear that a 'mistake apparent from the record' is rectifiable. In order to attract the application of section 254(2), the mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. 'Mistake' means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error; a fault, a misunderstanding, a misconception. 'Apparent' means visible; capable of being seen; easily seen; obviously; plain. A mistake which can be rectified under section 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. The language used in section 254(2) makes it clear that only, amendment to the order passed under section 254(1) is permissible where it is brought to the notice of the Tribunal that there is any mistake apparent from the record. In our view amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order: What the assessee intends to do in the present case is precisely the substitution of the order, which according to us, is not permissible under the provisions of section 254(2) and, therefore, the Tribunal was justified in holding that there was no mistake apparent on the face of the record. Where an error is far from self-evident, it ceases to be an apparent error. It is no doubt true that a mistake capable of being rectified under section 254(2) is not confined to clerical or arithmetical mistakes. On the other hand, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by the Apex Court in Master Construction Co. (P) Ltd. v. State of Orissa (1966) 17 STC 360, an error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. Similar view was also expressed in Satyanarayan Laxminarayan Hegde v. Malikarjun Bhavanappa Tirumale AIR 1960 SC 137. It is to be noted that the language used in Order XLVII, rule 1, of the Code of Civil Procedure, 1908, is different from the language used in section 254(2). Power is given to various authorities to rectify any 'mistake 'apparent from record'. In the Code of Civil Procedure, the words are "an error apparent on the face of the record". The two provisions do not mean the same thing. The power of Tribunal in section 254(2) to rectify "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of "an error apparent on the face of the record" - TS. Balaram, ITO v. Volkart Bros. (1971) 82 ITR 50 (SC). Mistake is an ordinary, word, but in taxation laws, it has a special significance. It is not an arithmetical or clerical error alone that comes within its purview. It comprehends errors which, after a judicious probe into the record from which it is supposed to emanate, are discerned. The word 'mistake' is inherently indefinite in scope, as what may be a mistake for one may not be one for another. It is mostly subjective and the dividing line in border areas is thin and indiscernible. It is something which a duly and judiciously instructed mind can find out from the record. In order to attract the power to rectify under section 254(2) it is not sufficient if there is merely a mistake in the orders sought to be rectified. The mistake to be rectified must be one apparent from the record. A decision on a debatable point of law or disputed question of fact is not a mistake apparent from the record. The plain meaning of the word `apparent' is that it must be something which appears to be so ex facie and it is incapable of argument or debate. It, therefore, follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification.

6. The learned counsel for the assessee with reference to two decisions in Bishwanath Prasad & Sons v. CIT (1987) 163 ITR 715 (All) and CIT v. Ganesh Sizing Factory (1995) 211 ITR 355 (Raj.) submitted that the question whether there was an error apparent on the face of the record is a question of law. We find on a bare reading of the aforesaid two decisions that they related to the jurisdiction of the Tribunal in the manner of rectification of an order under section 254(2). On the facts of the present case, we find that there was no mistake apparent from the record which could be rectified under section 254(2). The so-called inaccuracies or wrong recording of facts as alleged are not patent mistakes which constitute sine qua non for exercise of power under section 254(2). The questions proposed deal with conclusions on facts giving rise to no question of law. The application being without merit is rejected.