ORDER
S.L. Banerjee, Vice President
1. These two miscellaneous applications filed by the assessee are disposed of by this common order for the sake of convenience. In these two applications the assessee submitted that the order of the Tribunal dated 18-11-1996 is to be rectified.
2. The first objection raised by the assessee was in respect of observation made in the impugned order of the Tribunal at para 4 wherein it has been mentioned that the ld. CIT(A) while disposing of the appeal for the assessment years 1978-79 and 1990-91, though fixed the date of hearing and allowed the presence of the assessee’s counsel, did not hear the appeals. The learned counsel for the assessee, in prosecuting these miscellaneous applications, pointed out that the real facts are different. In fact, he submitted that the argument led by the counsel at the time of hearing was that though the appellate order for the assessment year 1986-87 was in favour of the assessee and that was filed before the ld. CIT(A) at the time of hearing it was not followed by him by bringing out some facts on the basis of certain facts and reasons for which no opportunity was given to the assessee’s counsel. He submitted that it was against the principle of natural justice or against the rule of audi alteram partem. The learned counsel, therefore, argued that the Tribunal has considered the issue in a wrong facet i.e., the department can go against the decision of earlier year if there are materials on record. He submitted
that though the res judicata is not applicable in the case of tax proceedings but if the department wants to differ from the opinion expressed in the earlier assessment year it is incumbent on them to give opportunity to the assessee to explain and satisfy the department and pursue them to follow the decisions of the earlier year which is in favour of the assessee. Another point he argued that the Tribunal has ignored some very important documents in the records of the Tribunal before giving its decision. He pointed out that there was a survey operation under section 133A in this case and in a report which is placed as page 23 of the paper book which shows that after the survey was conducted inspectors in the report stated that they had visited the farm and it was stated that the income derived by the assessee falls within the meaning of ‘agricultural income’. The learned counsel further adverted our attention to para 3 of the said report where the Assessing Officer has opined as follows :–
‘Even if the income is agricultural the assets acquired out of agricultural income are liable to Wealth-tax subject to admissible deductions under the Wealth-tax Rules.’
2.1 The learned counsel submitted that in unmistakable words the Assessing Officer had admitted that income derived by the assessee is nothing but agricultural.
2.2 The learned counsel further pointed out that on the directions of the Tribunal, two Senior Departmental Representatives Shri Manoj Mishra and Shri R.K. Chaudhary also visited the land to check up whether the plants which are being sold at Ahmedabad depot are actually grown on the land at Baroda. The learned counsel drawn our attention to Exhibit-C i.e., page 33 of the paper book filed with the miscellaneous application No. 67 a letter from counsel Shri J.P. Shah confirming such a visit.
2.3 He further pointed out that on the survey report under section 133A the inspectors have admitted that it was found that the income was derived from the agricultural process and therefore, it is within the meaning of “agricultural income”. On the basis of this report the Assessing Officer had reported to the IAC on 6th May, 1986. The Assessing Officer appears to have accepted the opinion of the inspectors but only stated that the assets acquired out of agricultural income are liable to Wealth-tax. This being the position, the learned counsel submitted that the Tribunal ignored this important piece of evidence and confirmed the order of the ld. CIT(A) on the basis of the materials which were based without giving proper opportunity to the assessee. He, therefore, pleaded that the order of the Tribunal should be rectified in favour of the assessee and in terms of the rectification petition.
3. The learned Departmental Representative submitted that any departure from the original view in the circumstances of the case will tantamount to review of an order which in unmistakable terms stated that the assessee’s income cannot be treated as agricultural income after consid-
ering the several decisions including the decisions of this High Court in this respect. He, therefore, urged that the order of the Tribunal should not be rectified.
4. We have considered the rival submissions, facts and materials on record. It cannot be denied that in the order of the Tribunal we have not considered the survey reports as well as opinion of the Assessing Officer in respect of the operations of the assessee and nature of its income. It is luculent that during the course of proceedings before the Tribunal the matter was confined to the percentage of income shown by the assessee to be treated as agricultural income, because, some of the activities of the assessee was trading activities, e.g., selling the pots or some of the items which are sold after purchase i.e., not rearing at the assessee’s own gardens. In our view, the impugned order of the Tribunal should be recalled to give proper justice to the arguments and evidence placed before the Tribunal. There are, of course, plethora of contradictory decisions in respect of the powers of the Tribunal for recalling its own order. On one hand the Hon’ble Orissa High Court in the case of CIT v. ITAT [1992] 196 ITR 640, and another case of same title in CIT v. ITAT [1992] 196 ITR 683 (Ori.) had held that the Tribunal has no power of recalling, as such, the order passed under section 254(1), on the other hand, the Hon’ble Allahabad High Court in the case of Laxmi Electronic Corpn. Ltd. v. CIT [1991] 188 ITR 398 had opined that in a case where Tribunal fails or omits to deal with an important contention affecting maintainability/merit of appeal, it must be deemed to be a mistake apparent from record, which empowers the Tribunal to reopen the appeal and rectify the same if it is so satisfied. The Hon’ble Madhya Pradesh High Court in the case of CIT v. Umeshchand K. Patel [1997] 225 ITR 1050 opined that when the Tribunal had recalled its earlier order because it found a factual mistake had been made in it and no adverse final order had been passed against the revenue inasmuch as the Tribunal had merely directed hearing of the appeal, no question of law arose from the order of the Tribunal. We find that the Supreme Court in a Special Leave Petition against the order of the Hon’bte Delhi High Court in the case of CWT v. Ila Dalmia impliedly approved the powers of the Tribunal to recall its own earlier order. The decision of the Supreme Court is reported in 191 ITR (Stat.) 76. The Hon’ble M.P. High Court in the case of CIT v. Mithalal Ashok Kumar [l986] 158 ITR 755 where it has been held that a direction for hearing of the appeal does not amount to a review in the strict sense of the term. In any case, even if there are differences in views in this matter we feel that the view in favour of the tax-payer should be adopted on the principle laid down by the Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. Needless to say here that in the impugned order of the Tribunal as pointed out earlier it totally ignored the material
which has been placed on the record obtained at the behest of the
Tribunal itself i.e., the inspection report which is the main plank of the
miscellaneous application of the assessee. It may be that in all cases the
Tribunal is not required to give opinion on all evidences or facts on record
and it can ignore certain facts or evidence which according to it is not
relevant for the purpose of giving decision but when the evidence has
been obtained at the behest of the Tribunal itself then according to us, that
should not be ignored while passing the order; otherwise it will be an
unceremonious disposal of an appeal. The Registry is directed to fix the
case within a month of this order as the matter is old and have got serious
repercussion for the other nurseries also. It may be noted that we are told
that on the basis of the order of the Tribunal no action is taken against any
nursery to draw them in the tax net.
5. The miscellaneous applications are allowed.
Shri B.L. Chhibber, Accountant Member
1. Regretting my inability to persuade myself to the view taken in the order of my learned Brother (V.P.), I proceed to write a dissenting order.
2. The main plank of the miscellaneous applications of the assessee is that the Tribunal has totally ignored the material which has been placed on record obtained at the behest of the Tribunal itself i.e., the inspection report.
3. Two vital issues before this Tribunal were whether income from Nursery Business would belong to Shri Puran Singh M. Verma (HUF) and secondly whether exemption should be allowed in that case under section 10(1) of the Act (income from agriculture).
4. After hearing both the sides at length this Tribunal held that the income earned by the assessee is not agricultural income as defined in section 2(1A) of the Income-tax Act, 1961 and hence not exempt under section 10(1) of the Income-tax Act. In respect of the status whether HUF or AOP this Tribunal sent back the matter to the Assessing Officer to decide the issue afresh. Obviously on the issue of status the assessee has no grievance as there is no mention of such grievance in the miscellaneous applications.
5. This Tribunal after duly and thoroughly considering the lengthy arguments of both the sides and relying on the decision of the Hon’ble Supreme Court in the case of CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (in short Sahas Roy’s case); the judgment of the Hon’ble Allahabad High Court in the case of H.H. Maharaja Vibhuti Narain Singh v. State of Uttar Pradesh [ 1967] 65 ITR 364 held in clear terms that the income from Nursery Business was not in the nature of agricultural income. The learned counsel of the assessee Shri J.P. Shah had relied upon the decision of the Tribunal Jaipur Bench in the case of Balwant Singh v. ITO [1995] 55 ITR 363 (Jp.) and this case has also been discussed by the Tribunal in para 7 of its order. After discussing the above case the
Tribunal held that “it is a trite law that a decision of the High Court should be preferred to the decision of Tribunal”. After discussing the entire case law on the issue putforth before the Tribunal by both the sides this Tribunal gave a clear finding in para 7.1 as follows :–
“In the light of above discussion, we hold that the income earned by the assessee is not agricultural income as defined in section 2(1) and 2(1A) of the Income-tax Act, 1961 and hence not exempt under section 10(1) of the same Act. We accordingly allow the grounds raised on this cardinal issue by Revenue in ITA Nos. 2753 & 2754/Ahd./1990 and dismiss the grounds raised by the assessee in ITA Nos. 1888 & 1889/ Ahd./94.”
In para VI on page 8 of the application the learned counsel of the assessee has pointed out that on the direction of the Tribunal, two senior Departmental Representatives S/Shri Manoj Misra and R.K. Chaudhary also visited the land to check up whether the plants which are sold at Ahmedabad Depot are the ones which are actually grown on the lands at Baroda. I do not find any veracity in this statement. I have perused the order sheet and find that at no point of time any Bench of the Tribunal gave a direction to Shri Manoj Mishra and Shri R.K. Chaudhary. Finally when the case was heard by the Bench consisting of the then Judicial Member and now Hon’ble Vice President and myself, we never gave any such direction to any of the D.Rs. or any official of the Tribunal for inspecting the assessee’s lands. Accordingly in my opinion this Bench was not obliged to consider the so called report by two Sr. D.Rs. which is nothing but an extraneous piece of evidence now being brought to the notice of the Tribunal by way of two Miscellaneous Applications. Whether a particular income is agricultural income or business income is a question of law and this Tribunal after taking into consideration the various judicial pronouncements (referred to supra) and the definition of agriculture as given in Chambers 20th Century Dictionary New Edition (discussed at page 6 of the Tribunals order) held in very clear terms that the income derived by the assessee from nursery was not agricultural income and hence not exempt under section 10(1) of the Income-tax Act. Even if the said view were held to be erroneous, it could not be said to be a mistake apparent from the record, especially when the assessee has challenged the above view before the Hon’ble Gujarat High Court by way of Writ Petition registered as Special Civil Application No. 29 of 1997. It will be relevant to quote the following paragraphs from the said writ petition :–
“The observation of the Tribunal in paragraph 5 of its order that the Supreme Court ‘did not hold any income where there is a cultivation will be essentially an agricultural income’, is against the Supreme Court decision. The Supreme Court in most unambiguous terms held as follows at page 495 of its judgment. ‘Agricultural operations are thus defined by them to be operated where there was some measure of cultivation of the land, some expenditure of skill and labour upon it. If the conditions
are satisfied in regard to any particular land, then such land can be said to be used for agricultural purposes and income derived therefrom constitute agricultural income’. The Tribunal erred in not following the Supreme Court decision and also not following the Jaipur Bench decision and instead following wrongly an Allahabad High Court decision as against the assessee, which, on the contrary, was in favour of the assessee as the petitioner has stated above.
In the submission of the petitioner, the Tribunal’s decision is patently wrong on facts as also in law, and therefore, it is in the fitness of things that the Tribunal’s order must be set aside and this Hon’ble court be pleased to hold in no uncertain terms that doing horticultural activity on more than 30 acres of land is agricultural and that there is no room for any doubt left on this point after the Supreme Court decision, as held by Jaipur Bench of the Tribunal.
The Tribunal also went patently wrong when it said that an objection of not hearing by CIT(A) for assessment years 1989-90 and 1990-91 is an afterthought and there is nothing to indicate that in the grounds of appeal when there is enough in the grounds of appeal pointing that out plus the statement at the Bar of the same Advocate who also appeared before the CIT(A).”
Ultimately in para 20 of the writ petition the assessee has made the following prayers to the Hon’ble High Court:
“a. This Hon’ble Court be pleased to issue a writ certiorari or any other appropriate writ, order or direction, quashing the order of the Tribunal at Exhibit ‘K’.
b. This Hon’ble Court be pleased to issue a writ of mandamus or any other writ, order or direction, asking the Tribunal to hold that the impugned income of the petitioner is agricultural income,
c. This Hon’ble Court be pleased to quash the orders of respondent No. 1 at Exhibits ‘B’, ‘C1 and C2’ for the assessment years 1986-87, 1989-90 and 1990-91 and be pleased to ask him to hold that the impugned income is agricultural income and, therefore, not taxable in the hands of the petitioner.”
6. In the light of the above discussion it is evident that the issue is one which is highly debatable. In my considered opinion in the guise of rectification of a mistake apparent from the record the lengthy (9 paged) miscellaneous petition is in effect seeking for the review of the order of the Tribunal which is not permissible under the law.
In this connection, it would be relevant to refer to the A.P. High Court in the case of CIT v. ITAT [1994] 206 ITR 126. The Hon’ble High Court, while considering the power of Tribunal under section 254(2) held as under :
“We are of the opinion that the Appellate Tribunal, being a creature of the statute, has to confine itself in the exercise of its jurisdiction to the enabling or empowering terms of the statute. It has not inherent power. Even otherwise, in cases where a specific provision delineates the powers
of the court of Tribunal, it cannot draw upon its assumed inherent jurisdiction and pass orders as it pleases. The power of rectification which is specifically conferred on the Tribunal has to be exercised in terms of that provision. It cannot be enlarged on any assumption that the Tribunal has got an inherent power of rectification or review or revision.”
7. The Hon’ble Orissa High Court in CIT v. ITAT [1992] 196 ITR 590 has held that 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. A similar view was expressed by the Orissa High Court in the case of CIT v. ITAT [1994] 210 ITR 397.
8. To sum up, the assessee through these two miscellaneous applications requires the Tribunal to review ‘their well reasoned orders which is not permissible under the provisions of section 254(2) which gives only limited powers to the Tribunal in this regard. Accordingly the miscellaneous applications of the assessee are rejected.
9. In the result, the Miscellaneous Applications are dismissed.
STATEMENT UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961
A difference of opinion having arisen between us, the two Members who heard the miscellaneous application originally, we state the point of difference as under :–
“Whether, on the facts and in the circumstances of the case, the impugned order of the Tribunal should be recalled or not ?”
Submitted for further necessary action by the Hon’ble President of the Income-tax Appellate Tribunal.
THIRD MEMBER ORPER
Shri M.A. Bakshi, Judicial Member
1. The Ahmedabad Bench ‘B’ of the Tribunal had disposed of the appeals of the assessee in I.T.A. Nos. 1888 & 1889/Ahd./90, assessment years 1989-90 & 1990-91 and those of the revenue in I.T.A. Nos. 2753 & 2754/Ahd./90, for assessment year 1986-87, vide consolidated order dated 18th November, 1996. The assessee filed a Miscellaneous Application No. 67/Ahd./1997 on 11-4-1997 claiming certain mistakes in the order. Later on another application was filed on 21st July, 1997 as M.A. No. 127/Ahd./1997. These two applications were heard together by a Bench constituted of Vice President as Judicial Member and the Accountant Member. The Judicial Member/Vice President had proposed to recall the order of the Tribunal accepting the claim of the assessee that there were certain mistakes in the appellate order. However, the learned Accountant Member differed with learned Vice President by holding that there was no mistake in the appellate order justifying recalling of the order.
2. The President of the Tribunal, in exercise of the powers under section 255(4), has been pleased to nominate me as a Third Member in respect of the following point of difference :–
“Whether on the facts and in the circumstances of the case, the impugned order of the Tribunal should be recalled or not ?”
3. I have heard the rival contentions and perused the records. Before dealing with the Miscellaneous Applications, it may be relevant to give the brief facts of this case.
4. The assessee carried on business of running a nursery at Ahmedabad under the name of “Roses Garden” and at Baroda under the name of “Baroda Nursery”. Pursuant to a survey operation under section 133A, a notice under section 148 had been issued to the assessee in response to which Nil returns has been filed claiming exemption in respect of the entire income earned from nursery business on the ground that it was agricultural income within the meaning of section 2(1), read with section 10(1) of the Income-tax Act, 1961. The Assessing Officer while making assessment for assessment year 1986-87 held that the income of the assessee from running the nursery business is not agricultural income and accordingly he denied exemption claimed under section 10(1) read with section 2(1) of the Income-tax Act, 1961.
5. In the return of income of the assessee had claimed Nil status. However, by a separate letter, during the course of assessment proceedings, it was claimed that the nursery business belongs to HUF of late Shri Puransingh M Verma which after his death in 1988 comprised of his wife and three sons, i.e., Shri Zaverilal P Verma, Shri Chimanlal P Verma, Shri Chandulal M Verma and their respective family members. The Assessing Officer did not accept the claim of the assessee in regard to the status as that of HUF. It was held that Shri Puransingh M Verma alongwith his three sons constituted an Association of Persons with indeterminate shares in the income from nursery business. He accordingly assessed the income in the name of Baroda Nursery and Roses Garden in the status of AOP at maximum marginal rate.
6. The Assessing Officer had also issued notice under section 148 to Shri Puransingh M Verma, Ahemdabad and the return of income was filed in the name of Baroda Nursery in response to the said notice. In the said return the assessee claimed the status of HUF and the total income of Rs. 4,99,760 was claimed as exempt under section 10(1) of the Income-tax Act, 1961. The Assessing Officer assessed the entire income in the status of HUF on protective basis.
7. The assessee appealed to the CIT(A) and the latter accepted the same by holding that the income from nursery business belonged to Shri Puransingh M Verma, HUF and the assessee was entitled to exemption under section 10(1) of the Income-tax Act, 1961. The revenue did not accept the decision of the C1T(A) and accordingly appealed to the Tribunal against the decision. Separate appeals were also filed in the case of Shri Puransingh M Verma, HUF.
8. In the meantime, the Assessing Officer made assessments for assessment years 1989-90 and 1990-91. The claim of the assessee that the income derived from nursery business was agricultural income was again rejected by the Assessing Officer on the ground that the CIT(A)’s decision for assessment year 1986-87 was not accepted by the revenue and the appeal was pending before the ITAT. The assessee appealed to the CIT(A) against the decision of the Assessing Officer. The CIT(A) took a contrary view for assessment years 1989-90 and 1990-91 than the view taken by his predecessor for assessment year 1986-87. The assessee appealed to the Tribunal against the decisions of the CIT(A) for assessment years 1989-90 and 1990-91. The Tribunal disposed of all the four appeals, two by the revenue for assessment year 1986-87 and one each by the assessee for assessment years 1989-90 and 1990-91 by a consolidated order. The decision of the CIT(A) regarding the nature of income of nursery business for assessment year 1986-87 was reversed and the decision for assessment years 1989-90 and 1990-91 approved. However, the issue regarding the status in which the assessment should be made was set aside to the file of the Assessing Officer. Thereafter, the Assessing Officer has vide order dated 17th March, 1997, accepted the claim of the assessee that the income should be taxed in the hands of Shri Puransingh M Verma, HUF on substantive basis. In other words, the claim regarding the status made by the assessee as of today stands accepted.
9. With these facts, I now proceed to consider the Miscelloneous Applications. Before I express my opinion about the disputed issues, it would be fruitful to refer to various decisions on the subject.
10. In the case of CIT v. ITAT [1997] 227 ITR 443 (All.), their Lordships of the Allahabad High Court held that the power exercisable by the Tribunal under section 254(2) of the Income-tax Act, 1961, is confined to rectifying any mistake apparent from the record.
11. In the case of CIT v. Income Tux Appellate Tribunal [1994] 206 ITR 126 (AP), their Lordships of the Andhra Pradesh High Court held that the power of rectification which is specifically conferred on the Tribunal has to be exercised in terms of that provision. It cannot be enlarged on any assumption that the Tribunal has got an inherent power of rectification or review or revision. Unless there is a mistake apparent from the record in the sense of patent, obvious and clear error or mistake, the Tribunal cannot recall its previous order. If the error or mistake is one which could be established only by long-drawn arguments or by way of process of investigation and research, it is not a mistake apparent from the record. If two views are possible on a point of law, and one of the alternatives is accepted in its previous order, it cannot be held that the mistake is apparent from the record. It further held that unless there are manifest errors which are obvious, clear and self-evident, the Tribunal cannot recall its previous order in an attempt to re-write the order.
12. In the case of CIT v. Ramesh Electric and Trading Company [1993] 203 ITR 497 (Bom.), their Lordships of the Bombay High Court held that the
power of rectification under section 254(2) can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. Failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. The Tribunal cannot, in the exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion. Their Lordships further held that the Tribunal cannot re-decide the matter and that it has no power to review its order.
13. In the case of CIT v. K.L. Bhatia [1990] 182 ITR 361, their Lordships of the Delhi High Court held that the Income-tax Appellate Tribunal is a creature of the Income-tax Act and that the Tribunal has no inherent power of reviewing its order on merits.
14. In the case of V.P. Minocha, ITO v. ITAT [1977] 106 ITR 691 their Lordships of the Gujarat High Court held that the Tribunal has no power to rectify a decision on debatable point of law as the same cannot be said to be a mistake apparent from the record. The mistake that can be rectified should be a mistake apparent from the record.
15. In the case of CIT v. Globe Transport Corporation [1992] 195 ITR 311, their Lordships of the Rajasthan High Court – Jaipur Bench held that the power of review is not inherent in a Court or Tribunal. It is a creature of the statute. A Court or Tribunal cannot review its own decision unless it is permitted to do so by statute. The Courts having general jurisdiction like Civil Courts have inherent power. But the Court or Tribunal of limited jurisdiction created under special statutes have no inherent power.
16. In the case of CIT v. Suresh Kumar [1990] 186 ITR 114 (Punj. & Har.), their Lordships of the Punjab and Haryana High Court held that even the High Court has no power to review in the matter of Income-tax references.
17. The Madhya Pradesh High Court in the case of CWT v. R.S. Seth Ghisalal Modi Family Trust (1988) 169 ITR 530 held that the High Court does not have inherent power merely on the ground of wrong application of a decision in arriving at its earlier order.
18. In the case of Jose T Mooken v. CIT [1979] 117 ITR 921 (Ker.), their Lordships of the Kerala High Court held as under :–
“Though it is well settled that the High Court as a ‘court’ has inherent jurisdiction to act ex debito justitiae, if the circumstances of a case so demand and such inherent jurisdiction or power is inherent in the High Court because it is a court and is unrelated lo and independent of
the nature of its jurisdiction, in regard to the power of review, unless it is expressly conferred, the power cannot be exercised. The power of review is not conferred on the High Court in the matter of a reference under the IT Act and in the absence of specific conferment of power, the High Court cannot exercise that power.”
19. In the case of T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC), their Lordships of the Supreme Court had the occasion to consider the meaning of a ‘mistake apparent on the record’. Their Lordships held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record.
20. In the case of Mithalal Ashok Kumar (supra), their Lordships of the Madhya Pradesh High Court held as under :–
“Though the Appellate Tribunal has no power to review its own order, yet it can certainly correct its mistakes by rectifying the same in case it is brought to its notice that the material which was already on record before deciding the appeal on merits was not considered by it. Therefore, what would be the effect of rectifying a mistake and thereby amending its original order would always depend on the facts of each case. The mistakes have not to be strictly considered according to the provisions of Order 47, rule 1, Civil Procedure Code, 1908, but have got to be taken into consideration depending on the facts of each case which may vary as also the points involved.”
21. In the case of ITO v. ITAT [1965] 58 ITR 634 (All.), it was held by the Allahabad High Court that wherein a judgment or order of the Tribunal an error has crept in, not as a result of any fault of the assessee, but attributable entirely to the Tribunal in having lost sight of a material fact at the time of writing its order or judgment, which fact was duly brought to its notice by the assessee, there would be an error apparent from the record which could be rectified.
22. The meaning of words “mistake apparent from record” – As per Chambers Concise Dictionary ‘mistake’ means to think or understand wrongly, to take for another thing or person, to be wrong about. It also means omission made not by design but by mischance. The word ‘apparent’ refers to something which is obvious, conspicuous and self-evident. Thus ‘mistake apparent from records’ would mean mistakes or errors which are glaring and obvious and not such errors which can be determined by arguments or debate.
23. On the analysis of the aforementioned decisions, following principles emerge :–
(1) That the power of the Tribunal under section 254(2) is confined to rectifying any mistake apparent from the record.
(2) That the Tribunal does not have inherent power of rectification or review or revision. Unless there is a mistake apparent from the record in the sense of patent, obvious, clear error or mistake, the Tribunal cannot recall its previous order.
(3) If the error or mistake is one which could be established only by long-drawn arguments or by way of process of investigation and research, it is not a mistake apparent from the record.
(4) Unless there are manifest errors which arc obvious, clear and self-evident, the Tribunal cannot recall its previous order in an attempt to re-write the same.
(5) Failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment.
(6) The Tribunal cannot in exercise of its power of rectification look into some other circumstances which would support or not support its conclusion. The Tribunal cannot re-decide the matter and it has no power to review its order.
(7) That the Tribunal has no power to rectify a decision on debatable point of law.
(8) Whereas the Courts having general jurisdiction like Civil Courts have inherent power, the Tribunal docs not have the power to review its own decision except what is authorised under section 254(2).
(9) Whereas the High Court has inherent power of review, in the matter of Income-tax references even the High Court cannot exercise that power.
(10) A decision on debatable point of law is not a mistake apparent from the record.
(11) Where the Tribunal has over-looked the relevant material on record, there would be an error apparent from record which can be rectified by setting aside the order for fresh consideration.
(12) That where a material fact brought to the notice of the Tribunal has been lost sight of, the Tribunal has the power to rectify the mistake so committed provided the material fact has an important bearing on the ultimate decision.
24. I now proceed to consider the Miscellaneous Applications of the assessee in the light of the aforementioned principles of law.
25. The first point brought out by the applicant in the miscellaneous application is “that for assessment year 1986-87 the CIT(A) had decided the issue in favour of the assessee. In assessment years 1989-90 and 1990-91 the Assessing Officer had followed his earlier order by stating that the decision of the CIT(A) has not been accepted. The assessee had taken
specific grounds before the Tribunal that the CIT(A) did not allow proper opportunity of being heard. The Tribunal has dealt with this issue in the appellate order and rejected the claim of the assessee by holding that accusation of not giving a fair hearing to the assessee has not been brought out cither in the statement of facts or in the grounds of appeal filed before the Tribunal.” This is claimed, to be a mistake in the order.
26. In my view, there is no mistake in the order of the Tribunal in this regard. The issue has been decided by the Tribunal against the assessee on the ground that there was no such accusation. In the grounds of appeal for the assessment years 1989-90 and 1990-91, I find that the assessee had raised a ground before the Tribunal that the CIT(A) was not justified in not following the decision of his predecessor for assessment year 1986-87 without confronting the assessee with specific reasons for not following the earlier order. The Tribunal had decided this issue against the assessee. The question in the present proceedings is not whether the decision taken by the Tribunal in regard to this ground of appeal is a decision on which there could possibly be two opinions. In proceedings under section 254(2), the limited scope is to consider as to whether there is a mistake apparent from record which can be rectified. In my view, there is no such mistake in regard to this issue, falling within the ambit of section 254(2).
27. The second issue raised by the assessee is that the Tribunal had relied upon the decision of the Bombay High Court in the case of Burmah Shell Refineries Ltd v. ITO [1966] 61 ITR 493 to hold that the ITO can reopen the question previously decided only if fresh facts come to light, which, on investigation would entitle the officer to come to a conclusion different from the conclusion previously reached or if the earlier decision had been rendered without taking into consideration material evidence. It has been pointed out in the petition that the Assessing Officer had not found any fresh facts. In fact he relied upon his own order for assessment year 1986-87 in deciding the issue against the assessee. He had also referred to the decision of the CIT(A) in favour of the assessee but had refused to accept the same for the reason that the department had not accepted the decision and second appeal was filed before the Tribunal. This is claimed to be a mistake.
28. In my view, the claim made by the assessee is to some extent misconceived insofar as the Tribunal has referred to the contention on behalf of the assessee that the CIT(A) in assessment years 1989-90 and 1990-91 had not taken into consideration the order of his predecessor for the assessment year 1986-87 on the same issue. It is in the context of this contention that the Tribunal relied upon the decision of the Bombay High Court in the case of Burmah Shell Re fineries Ltd. (supra) and held that the CIT(A) had considered material in the assessment years 1989-90 and 1990-91 which had not been considered in assessment year 1986-87 by his predecessor. The issue before the Tribunal argued, was whether the CIT(A) was justified in not following his predecessor’s order for the assessment year 1986-87 and not as to whether there were fresh materials
before the Assessing Officer in the assessment years 1989-90 and 1990-91 for taking a different view. The Assessing Officer has in assessment years 1989-90 and 1990-91 in fact followed his own order for assessment year 1986-87. The Tribunal, in its wisdom, had justified the action of the CIT(A) in not following his predecessor’s order for assessment year 1986-87. It is in this context that the decision of the Bombay High Court in the case of Burmah Shell Refineries Ltd. (supra) has been followed.
29. It may be pertinent to mention that under the Income-tax Act, each year of assessment is an independent unit of assessment. The Assessing Officer takes a decision which is appealable before the CIT(A). If the CIT(A) decides the appeal in favour of the assessee, the Department has the right of appeal to the Tribunal. Once the Tribunal also decides the matter in favour of the assessee, the Department has the right of seeking a reference to the High Court and ultimately to the Supreme Court. In the subsequent assessment year the Assessing Officer is not bound to follow the decision of the CIT(A) as in that case he will be acting prejudicial to the interests of the revenue. When the Department has not accepted the decision of the first appellate authority, one cannot expect the Assessing Officer to decide the issue in favour of the assessee in the subsequent year pending litigation.
30. In this case, the Assessing Officer had decided the issue against the assessee for assessment year 1986-87. However, on appeal the CIT(A) decided the appeal in favour of the assessee. This decision of the CIT(A) was not accepted by the revenue and accordingly an appeal was filed before the Tribunal. For assessment years 1989-90 and 1990-91, the matter had again come up before the CIT(A), who on consideration of the material on record, took a different view than his predecessor. Whereas the revenue utilised its right of appeal against the decision of the CIT(A) for assessment year 1986-87, the assessee also exercised its right of challenging the decision of the CIT(A) for assessment years 1989-90 and 1990-91 by way of appeal to the Tribunal. Alt the three appeals had come up before the Tribunal simultaneously and the issue was wide open for both the parties. The point of view of the Assessing Officer, that of the CIT(A) for assessment year 1986-87 and for assessment years 1989-90 and 1990-91, was available to the Tribunal as well as to the parties. The assessee as well as the revenue had full opportunity to represent the respective point of view. There has been no violation of principles of natural justice. The Tribunal, after consideration of the facts and circumstances of the case, the rival contentions and material on record, reversed the order of the CIT(A) for assessment year 1986-87 and confirmed the orders of the CIT(A) for assessment years 1989-90 and 1990-91. There was, thus, no mistake in the order of the Tribunal apparent from record in regard to this issue.
31. The next issue raised in the application is that the Tribunal has referred to the decision of the Jaipur Bench of the Tribunal in the case of Balwant Singh’s (supra) and held that while relying upon the decision of the
Supreme Court in the case of Raja Benoy Kumar Sahas Roy (supra) the observations have been quoted as under :–
“The observations of the Supreme Court leave no room for doubt that income from nursery would be considered as agricultural income.”
32. It has been stated in the application that the Tribunal had wrongly mentioned in the appellate order that the decision of the Supreme Court in the case of Raja Benoy Kumar Sahas Roy (supra) has not adjudicated the issue at all and that there was a mere discussion on the point which was either raised or argued. It has been claimed that the Ahmedabad Bench of the Tribunal has committed a grave error in taking the above stand.
33. In my view, it is a question of opinion. The Tribunal has taken a view which the assessee’s counsel or the assessee may consider to be wrong or even erroneous. However, that does not bring it within the ambit of section 254(2), being a mistake apparent from record. The Tribunal has discussed the issue and expressed its opinion and, therefore, there is no mistake in regard to this issue in the appellate order.
34. The next issue raised in the miscellaneous application is the non-consideration of the report of income-tax officials on their surprise spot visit to the agricultural land of the petitioner, i.e., the survey report under section 133A. It has been pointed out that the Tribunal has missed to refer to the report in the appellate order resulting into grave injustice to the applicant.
35. The claim of the assessee that the Tribunal has not referred to the survey report in the appellate order is correct. The learned Vice President in his order has admitted that the survey report under section 133 A which had been filed before the Tribunal on its directions had not been considered while disposing of the appeal. The Hon’ble Accountant Member had not commented upon this finding of the Vice President. The question that arises for consideration is as to whether the non-consideration of the survey report constitute a mistake apparent from record and if so whether the order of the Tribunal requires to be recalled. The copy of the report is available on record. In this report it has been brought to the notice of the IAC, Ahmedabad, that the assessee has not filed any returns on the ground that the income derived was believed to be agricultural income. It had also been brought to the notice of the IAC that Inspectors had given an opinion in their report that the income derived by the assessee was agricultural income. The statements of the three brothers had also been recorded and the same had been forwarded to the IAC. It had also been reported to the IAC that the assessee had accumulated the assets of the value of more than Rs. 25.00 lakhs. In the report it had also been pointed out that even if the income is agricultural, the assets arc liable to Wealth-lax. The report had been forwarded alongwith the Inspectors’ Report. This report is dated 6th May, 1986. When this report is read in conjunction with the decision of the CIT(A) for assessment years
1986-97 and 1989-90, it becomes abundantly clear that the IAC and the concerned Income-tax Officer had not accepted the opinion of the Inspectors that the income derived by the assessee was agricultural income. That is the reason why the proceedings against the assessee had been initiated by issue of notice under section 148.
36. At this stage it may be relevant to point out that for assessment year 1986-87 the CIT(A) has relied upon the survey report of the Inspectors dated 24-4-1986. From para 18 of his order the relevant portion may be quoted hereunder:–
“It will be seen that the family of Shri Puransingh M Verma was entirely engaged in all the basic operations on the land itself for the purpose of growing plants saplings in different manners adopting modern scientific techniques. All the operations carried on by the family for producing the plant saplings involved basic as well as subsequent operations done in conjunction with the basic operations and there is no dispute about the fact. I find from the report of the Inspectors dated 24-4-1986, who carried out the survey action under section 133A at the nursery site, that they have reported that the nursery is spread over about 25 acres of land approx and employing 40 employees and there are two tube-wells and irrigation is done with submersible pumps with the help of which the land was being irrigated. They have also reported that the income is derived from agricultural process. In view of these factual aspects and the decision of the Supreme Court as to what constitutes an agricultural operation, I have no hesitation to hold that the family of Shri Puransingh M Verma is engaged in agricultural operations on the land and the income from nursery arising from sale of the agricultural produce i.e., plants of various species is income from agricultural exempt under section 10(1) of the Income-tax Act, 1961.”
37. For assessment years 1989-90 and 1990-91 also the CIT(A) has considered the survey report. It will be relevant to quote from the order of the CIT(A) for assessment year 1989-90 as under :–
“In this case, there was a survey on 24-4-1986 in the premises of M/s. Baroda Nursery, 15, Vithalbhai Patel Colony, Stadium Road, Ahmedabad. At the time of survey, it was found that this plot of land had been purchased for a sum of Rs. 3,07,850 and construction has also been carried out on this plot. This place serves as Head Office of Baroda Nursery. At the time of survey thousands of plants lying in pots and plastic bags were seen in this premises. The statement of Shri Zaverilal Puransingh Varma was recorded wherein he has stated that the activities of M/s. Baroda Nursery are carried on by three brothers namely Shri Zaverilal Puransingh Varma, Shri Chimanlal Puransingh Varma and Shri Chandulal Puransingh Varma. He has stated that the income was being earned from the following nurseries :–
(1) Baroda Nursery, Ahmedabad
(2) Baroda Nursery, Raicka, Baroda
(3) Roses Garden, Baroda
(4) Sandhya Nursery, Baroda
(5) Garden Centre, Baroda
On the basis of survey carried out and on the information, Income-tax proceedings were initiated. The appellant claimed that the income from the nursery is exempted under section 10(1). The Assessing Officer has not accepted the claim of the appellant in view of Allahabad High Court decision reported in 651TR p. 364.”
38. A perusal of the survey report, which is on record and the decisions of the C1T(A) for assessment years 1986-87 and 1989-90, does not leave one in doubt that this report had been considered in arriving at the conclusion. When the matter was brought to the Tribunal by way of appeals challenging the orders of the CIT(A) the latter disposed of the appeals against the impugned orders. There is no doubt that the material available in the survey report had been considered by the CIT(A). The Tribunal while deciding the appeals did consider the decisions of the C1T(A) for the respective assessment years where the relevant materials stood considered and discussed. It is not suggested by any one that the decisions of the CIT(A) for the respective assessment years were not considered by the Tribunal while deciding the appeals. Firstly, the material contained in the report having been considered by the Tribunal, the non-consideration of the same as such separately had not affected the consequences of the appeals. Secondly, a perusal of the report furnished by the Assessing Officers alongwith the Inspectors’ report reveals two things in favour of the assessee. One is the cultivation of land and the other is the opinion of the Inspectors that the income of the assessee is the agricultural income. As far as the opinion of the Inspectors is concerned, the same was not binding upon the Assessing Officer or any other superior authority. Therefore, its non-consideration is of no consequence. The second aspect of the report is the cultivation of the land. In this regard it may be pertinent to mention that the CIT(A) for the assessment year 1986-87 reached to the conclusion that the income derived by the assessee was agricultural income. For assessment year 1989-90, another C1T(A) held that the income derived by the assessee from nursery business was not agricultural income of the assessee. Whereas for assessment year 1986-87 the CIT (A), took into account that there was cultivation of land for assessment year 1989-90 the CIT(A) was of the view that the main activity of the assessee was that of business and not of agricultural operations. When the matter came up before the Tribunal by way of appeals, the Tribunal proceeded to hold that the income of the assessee can not be held to be agricultural income even if therchas been cultivation. At page 5 of the order of the Tribunal it has been observed as under :–
“The Hon’ble Supreme Court in Roy’s case at page 510 of the report has observed as under :–
“If the term ‘agricultural’ is thus understood as comprising within its scope the basis as well as subsequent operations in the process of
agricultural and the raising on the land of products which have some utility either for consumption or for trade and commerce, it will be seen that the term ‘agricultural’ receives a wider interpretation both in regard to its operations as well as the results of the same. Nevertheless there is present all throughout the basic idea that there must be at the bottom of its cultivation of land in the sense of tilling of the land, sowing of the seeds, planting, and similar work done on the land itself. This basic conception is the essential sine qua non of any operation performed on the land constituting agricultural operation. If the basic operations are there, the rest of the operations found themselves upon the same. But if these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations.”
It is true that in Roy’s case the Hon’ble Supreme Court held that for an agricultural income basic operation on the land is sine qua non; but it did not hold any income where there is a cultivation will be essentially an agricultural income. A hypothetical example may be given. If a court holds for a motor-car its ability to transport people or goods from one place to another is sine qua non; then, this cannot be said to have held any vehicle, which is capable of transporting people or goods from one place to another will be a motor car. It may be a train or even a ship.”
39. The Tribunal has further proceeded to consider the meaning of words ‘agriculture’, liorticulture’ and ‘nursery’. At page 6 of the order of the Tribunal it has been observed as under :–
“In the parlance of the above observations if we consider the decision cited by the ld. counsel placed at page 119 of the compilation the case of Shri Ranchhodbhai Kalabhai v. Puransingh Manoharlal in the court of Bombay Revenue Tribunal, it can be noticed that Bombay Tenancy Act in definition of agricultural has included horticultures in its ambit. Had the agricultural, horticultural and nursery are the same, then the legislature in the Tenancy Act would not have included the horticulture and the nursery specifically in the definition clause. To interpret the words – agriculture, horticulture and nursery, the help of Chambers 20th Century Dictionary, New Edition, is taken and it defined them as follows :–
‘……………………………………………………………’
40. It has been held that the income derived by the asscssee from running the nursery does not fall within the definition of agricultural income and, therefore, the assessee is not entitled to exemption under section 10 of the Income-tax Act, 1961.
41. It is in the light of these facts I hold that the material contained in the survey report under section 133A has been considered in arriving at the decision. No prejudice has been caused to the assessee by not looking at the copy of the report filed during the hearing when it is established that the contents of the report have been duly considered. On consideration of the facts and circumstances of the case the Tribunal has discussed the
legal aspects of the case. In my view, recalling of the order on the ground that the survey report under section 133A has been over-looked is not warranted. The claim of the assessee on this count is also rejected.
42. The last issue raised by the assessee in the Miscellaneous Application is the non-consideration of the report of the two Departmental Representatives, viz. Shri Manoj Misra and Shri R.K. Chaudhary. It is claimed that these two DRs had been directed to visit the spot and furnish a report to the Tribunal as to whether the plants which are being sold that Ahmedabad arc the ones which are actually grown on the land at Baroda. It has been claimed that a list of plants had been prepared by the two officers and the same had been furnished to the Tribunal. The counsel for the assessee had also filed a letter dated 17th September, 1996 stating that Shri Manoj Misra and Shri R.K. Chaudhary had been asked by the Tribunal to visit Baroda and to find out whether the plants which are sold at Ahmedabad, as enumerated in the report dated 5-2-1986 are actually grown on the assessee’s land there. It was stated in the certificate that they visited the spot and found that the plants which are sold at Ahmedabad are being grown on assessee’s land at Baroda.
43. The learned Accountant Member in his order had specifically pointed out that there was no direction issued by the Tribunal at any stage to any departmental representative to visit any place nor was any report submitted to the Tribunal. I have gone through the records and find no evidence of the Tribunal having ever directed the Departmental Representatives to visit the site and furnish a report. Thus the issue raised is about a disputed fact :
“As to whether any direction was issued by the Tribunal and whether any report had been furnished during the course of the hearing of the appeals. A disputed issue cannot fall within the ambit of mistake apparent from record. There is another aspect of the matter. What are the contents of the report of DRs and what could be the consequences had this report been considered.”
44. It is claimed by the learned counsel for the assessee that the two senior DRs who had been directed by the Tribunal to visit the spot had specifically mentioned that the activities of the assessee, M/s. Baroda Nursery, are largely agricultural. He had also expressed the view that the profit from selling the plants is non-agricultural income and, therefore, some portion of the total income would be non-agricultural income. Assuming that the Tribunal had directed the two senior DRs to visit the spot and give a report to it, the issue that remains is as to whether the opinion given by the two DRs would be binding upon the Tribunal.
45. In my view, the opinion of the two DRs was not binding upon the Tribunal and therefore, even if they had been directed by the Tribunal to submit a report, the non-consideration of their opinion has not affected the results of the appeals. Therefore on that ground also the application fails.
46. I am therefore of the considered view that, there is no mistake apparent from record in the order of the Tribunal which can be rectified under section 254(2). As already pointed out, the Tribunal does not have the power to review its earlier order. The Bench of the Tribunal has considered the contentions and the materialhad arrived at a decision. The correctness of that decision cannot be questioned in the proceedings under section 254(2). It is only the mistakes if any which are apparent from record which can be rectified. If the mistakes are such which will affect the result of the order, then the order can be recalled. However, since I am in agreement with the view expressed by the learned Accountant Member that there is no mistake apparent from record. Miscellaneous Applications of the assessee are liable to be rejected.
47. In my view, on the facts and in the circumstances of this case, recalling of the order of the Tribunal is not warranted.