JUDGMENT
Rajesh Balia, J.
1. These four appeals arise out of the order passed by the Tribunal on 12th Oct., 2001, in each case on an application moved by the appellant-assessee under Section 254(2) of the IT Act for rectifying its order dt. 22nd Feb., 2000 passed in appeals relating to asst. yrs. 1993-94, 1994-95, 1995-96, 1996-97 (four years).
2. The controversy for the present purpose pertains to the assessment of the income derived by the appellant-assessee by way of interest on debentures and securities for the aforesaid assessment years. The controversy has earlier’ been raised relating to the asst. yrs. (sic-1989-90), 1991-92 and 1992-93 which has been subject-matter of the decision of the Tribunal passed in ITA Nos. 5/Jp/1992 and 1060 and 1061/Jp/1994 decided by a common order dt. 29th Oct., 1998.
3. The-ground No. 1 dealt by the Tribunal in its order dt. 29th Oct., 1998 was against the sustenance of addition on account of interest on securities/ debentures on accrual basis. There was no dispute that the interest income was accounted for and taken into books of account by the appellant on accrual basis following the mercantile system. However, while computing income under the provision for IT’ Act for levy of tax, the assessee has shown lesser income as he had reduced its interest income shown in the books by the amount which was not declared and did not become receivable during the accounting year relevant to assessment year in question. The assessee claimed that Section 145, which is a machinery provision and is not charging section, has not really made any alteration in the method adopted by the assessee,
4. The AO has rejected the claim of the assessee and enhanced the income declared by the assessee by disallowing the claim of the assessee for reducing its income which was claimed to have not become due to be received during the relevant accounting period.
5. The Tribunal found in this connection that in the present case, the assessee has not acquired the right to receive income during the assessment years in question. On this reasoning, it was further held that the contention of the assessee deserves to succeed. The final conclusion reached by the Tribunal in its order dt. 29th Oct., 1998 relating to the aforesaid issues was recorded as under :
“The claim of the assessee is very plain as we have already said that the assessee has not acquired the right to receive the receipts which were receivable on a date which falls after the date of close of the accounting year. We have also noted that the assessee has himself shown those receipts in its P&L a/c in subsequent years. Therefore, also, we find that there is no loss of revenue at all and the method adopted by the assessee is a consistent method. Therefore, this ground of the assessee for all the three years is allowed.
In the result, the appeal of the assessee for asst. yr. 1989-90, i.e., ITA No. 5/Jp/1992 is. allowed and the appeals for asst. yrs. 1990-91 and 1992-93 are partly allowed.”
6. We are also informed that the order dt. 29th Oct., 1998 is subject-matter of appeals to this Court and appeals are pending for consideration. However, in the present appeals we are not concerned with the merit of the conclusion reached by the Tribunal in its order dt. 29th Oct., 1998 or the order dt. 22nd Feb., 2000 passed in the Appeal Nos. 82, 83, 223 and 420/Jp/1998 for the asst. yrs. 1993-94, 1994-95, 1995-96 and 1996-97.
7. The assessee had appealed before the Tribunal against the order of GIT(A) confirming the addition on account of (i) interest on securities/debentures, (ii) expenses incurred on repairs and depreciation of guest house, and (iii) claim of bad debts.
8. When the appeals were taken up for hearing, the Authorised Representative of the assessee submitted that all these three issues stand covered by the decision of the Tribunal in the case of appellant for asst. yrs. 1989-90, 1991-92 and 1992-93 vide its order dt. 29th Oct., 1998 in ITA Nos. 5/Jp/1992 and 1060 and 1061/Jp/1994.
9. Learned Departmental Representative on behalf of Revenue also agreed with the same.
10. On this common premise, the Tribunal decided that issue in the following terms by its order dt. 22nd Feb., 2000 :
“Keeping in view these facts and following our decision cited supra, the AO is directed to allow the claim of interest paid by the assessee on account of securities/debentures”.
11. Apparently, the order which was agreed to be passed in consonance with the order dt. 29th Oct., 1998 did not communicate in its essence by the aforesaid statement of conclusion inasmuch as no claim to deduction was made by the assessee on account of interest paid by it on debentures or securities. He claimed exclusion of such interest receivable by him, right to receive which has arisen after the close of relevant accounting year.
12. This led to making of an application under Section 254(2) by the assessee for rectification of above statement by bringing it in consonance with the direction contained in the order dt. 29th Oct., 1998. Other mistakes were also pointed out with which we are not concerned.
13. So far as the present controversy is concerned, the prayer made by the assessee was in the following terms :
“It is submitted that as per grounds of appeal, i.e., ground No. 1, the relief sought was that the interest on securities/debentures should be taxed on due basis and not on accrual basis as assessed by AO. And therefore, the addition made by the AO on this account was to be deleted. The Hon’ble Tribunal while deciding the issue decided this ground in favour of the appellant following its own order being ITA Nos. 5/Jp/1992, 1060 and 1061/Jp/1994 dt. 29th Oct., 1998. But while completing the sentence, instead of allowing the claim of the applicant, that interest on securities/debentures should be taxed on due basis, it has been mentioned `that the claim of interest paid by the assessee on account of securities/debentures’. It is, therefore, submitted that this being a mistake apparent from record may kindly be corrected so as to direct the AO to allow the claim of the applicant that interest on securities/debentures be taxed on due basis”.
The Tribunal disposed of this application vide order dt. 12th Oct., 2001 in the following terms :
“The parties have been heard. To the controversy with respect to ground No. 1, it is directed to recall the decision in ground No. 1. The parties shall be heard in detail on 15th Nov., 2001. The ground No. 2 has not been pressed. The same is dismissed as not pressed. Announced in the open Court”.
14. Aggrieved with this order dt. 12th Oct., 2001 passed in Misc. Appln. No. 8/Jp/2000 relating to asst. yrs. 1993-94 to 1996-97, these four appeals have been preferred by the assessee.
15. A show-cause notice was issued by this Court on 25th March, 2003. In response to the same, learned counsel for the Revenue has appeared. Both the learned counsel have addressed fully about the order dt. 12th Oct., 2001 and no new facts are on record. We deem it just and proper to decide these questions at this stage itself.
16. The substantial question which arises for consideration is :
“Whether, in the facts and circumstances of the case, the application for rectifying the alleged mistakes apparent on the face of record by rectification order can result in the revival of the order by recalling the order in its entirety enabling to pass a fresh order de novo on the issue ?”
17. At the outset, we must notice that the impugned order quoted above is laconic and non-speaking order. It does not even record the satisfaction of the Tribunal that there exists a mistake apparent on the face of record which needs to be rectified.
18. The order only states that “to the controversy with respect to ground No. 1, it is directed to recall the decision on ground No. 1”.
19. Why and on what reason the decision is recalled which was in consonance with admitted grounds is not discernible. No finding is recorded whether there was any mistake apparent on the face of record and regarding finding on issue No. 1. If so, what was that mistake apparent from record which is required to be rectified. Whether rectification of such mistakes will result in recalling the order ? All these questions face monumental silence. If the Tribunal was of the opinion that if there was a mistake apparent on the face of record which required to be corrected, then the rectification should have been made in the order dt. 12th Oct., 2001, itself by bringing it in consonance with the order dt. 29th Oct., 1998, which was the only mistake that was pointed out by the applicant. If it was not satisfied with its earlier finding, following decision dt. 29th Oct., 1998 and wanted to come to a different conclusion or to elaborate its own finding recorded in the order dt..29th Oct., 1998, obviously that exercise would not fall within the domain of rectification of mistake apparent on the face of record from the order dt. 22nd Feb., 2000, which was made only in consonance with the order dt. 29th Oct., 1998 and no more.
20. We are, therefore, of the opinion that the order as such is not sustainable and deserves to be set aside.
21. The next question that arises for consideration from narration of facts and the order recorded by the Tribunal on. 22nd Feb., 2000, whether it contained the mistake apparent on the face of record.
22. There is no dispute about the contention of learned counsel for the parties, raised before the Tribunal during the course of hearing. Also, there is no dispute between the parties that for all intent and purposes, the order dt. 22nd Feb., 2000 purported to be the order in consonance with earlier order passed in the case of assessee on 29th Oct., 1998. There is also no dispute that the controversy was not about any deduction claimed by the assessee on account of any interest paid by him, but was about exclusion of such part of the interest, which became receivable by the assessee from others after the accounting period ending on 31st March of relevant accounting period relevant to respective assessment year in question. There is further no controversy on the issue that expression used by the Tribunal “allow the claim of the assessee in respect of interest paid by him as interest on securities/debentures” did not convey the order in terms of controversy between the parties’ about interest receivable by the assesses decided vide order dt. 29th Oct., 1998 referred to above. This was a mistake apparent on the face of record which needed to be corrected. Hence, the assessee had taken recourse to application under Section 254(2) of the IT Act to seek rectification of the said mistake rightly.
23. It is also apparent that the order dt. 22nd Feb., 2000 did not leave the question of allowability of claim of the assessee to the exclusion of interest receivable by him to be decided afresh nor had decided it afresh. Therefore, there was no room for the Tribunal to have recalled the order dt. 22nd Feb., 2000 on its conclusion about allowability of exclusion of interest income claimed by him from the computation of taxable income of the year for which it became receivable but was to be included in the income of account period during which according to the Tribunal it had become due to be received by the assessee. But the Tribunal vide its order dt. 12th Oct., 2001 had recalled the finding on ground No. 1 and directed it to be reheard on merit, as if it were to decide the issue on merit again afresh after hearing the parties. This order, in our opinion, was wholly beyond the scope of rectification proceedings on the facts of present case.
24. The Tribunal intended to pass the order on ground No. 1 in consonance with the order dt. 29th Oct., 1998 on agreement of the learned counsel for the respective parties stating that the same fully governs the case of the assessee, therefore, the Tribunal ought to have allowed the rectification application by substituting in the order dt. 22nd Feb., 2000 the expression allow the claim of the assessee in respect of interest paid by him as interest on securities/debentures’ in para 4 with the directions as were contained in the order dt. 29th Oct., 1998 and no more.
25. However, instead of doing that the Tribunal opted for the approach as if it was deciding the question afresh after hearing the parties ignoring that the parties had made their submissions earlier and so far as the Tribunal is concerned, it has accepted the submission to pass order about ground No. 1 in terms of its earlier order dt. 29th Oct., 1998.
26. The Revenue being aggrieved with the order dt. 29th Oct., 1998 had filed appeal and hence, could have preferred appeals against the order dt. 22nd Feb., 2000 also which was passed in consonance with the order dt. 29th Oct., 1998. There was no ground existed to pass a fresh order. This course was not open to the Tribunal while deciding the application for rectification which was to correct such mistake as are found apparent on the face of record.
27. The scope of rectification is not of revision or review. The jurisdiction under Section 154 or for that matter Section 254(2) does not extend to rehear and permit re-arguments on issues already decided, and it is not found to suffer from any foundational error on the face of record so as to permit rectification by recalling the order altogether.
28. A Division Bench of this Court in CIT v. United Mercantile Co. (P) Ltd (1986) 158 ITR 41 (Raj) said that Section 154 did not contemplate revision or review of earlier order.
Another Bench decision of this Court in Jainaiain Jeevraj v. CIT (1980) 121 ITR 358 (Raj), opined that rearguing a point decided is not within the Scope of rectification.
Considering Section 35 of the Indian IT Act, 1922, corresponding to Section 154 of the Act of 1961, Madras High Court in CIT v. O. RM. M. SM. SV. Sevugan (1948) 16 ITR 59 (Mad) had held that Section 35 has limited application…… clearly the section does
not enable an order to be reversed by revision or review, but permits only some error which is apparent on the face of record to be corrected’.
29. It is also true that power to rectify is not confined to correct only clerical or arithmetical mistake, as is the case under Section 152 of the CPC and is wider to include correction of any mistake of fact or law which is apparent from record, but it does not extend to revise or review the finding recorded in any order by recourse to fresh arguments, without there being any apparent error found in reading such finding of law and fact.
30. In this connection, it will be apposite to recall that in T.S. Balram, ITO v. Volkart Bros. & Ors. (1971) 82 TTR 50 (SC), the Supreme Court opined that it is not permissible for an officer in rectification proceedings to reconsider and go into true scope of a provision of law. Nor can it reappreciate the evidence and reach a new finding.
Likewise, considering similar provision under Orissa Sales-tax Act, Supreme Court in Master Construction Co. (P) Ltd. v. State of Orissa (1966) 17 STC 360 (SC) said that an error which is apparent on the face of record should be one which is not an error which depends for its discovery on elaborate arguments or, question of fact or law.
31. Keeping in view the above principles, we find that before Tribunal on claim of the assessee to exclude such interest on stock and debentures which has accrued for the period relevant to assessment year in question but became receivable in subsequent year, as it depended on other facts, the controversy was covered by the earlier decision of the Tribunal in the assessee’s own case for earlier year. On this aspect, the representations of assessee as well as Department were ad idem. The Tribunal accepting that, made an order following its own decision. However, in giving effect to this conclusion instead of referring to claim of the assessee to exclusion of such interest receivable by him subsequent to the close of previous year, referred to it as ‘a claim to deduction of interest paid by the assessee’, which did not convey the order to be in conformity of earlier decision governed by the Tribunal’s decision.
32. The assessee had pointed out this mistake in his application. No other apparent mistake in this regard was either pointed out by any party nor found by the Tribunal. Thus, jurisdiction of AO extended only to correct such error by making the order in consonance with the conclusion reached by it and recourse
could not nave been taken to require fresh arguments on me subject for reaching any finding de novo.
33. In the circumstances, the order under appeal dt. 12th Oct., 2001 cannot be sustained. The direction to rehear the appeal on ground No. 1 and passing a fresh order, after rectification application is allowed, cannot be sustained.
34. There was mistake apparent on the face of record that the Tribunal intended to pass order on ground No. 1 only in terms of the order dt. 29th Oct., 1998. However, a different conclusion has been communicated that needed to be corrected. That being so, the rectification application ought to have been allowed by the Tribunal by substituting para 4 of its order dt. 22nd Feb., 2000 with appropriate direction to bring it in conformity with order dt. 29th Oct., 1998, as per its conclusion in the order sought to be rectified.
35. Accordingly, the appeals are allowed. The order passed by the Tribunal dt. 12th Oct., 2001 in each appeal is quashed. The rectification application filed by the assessee succeeds as there was a mistake apparent on the face of record as noticed by us above in the order dt. 22nd Feb., 2000 and that ought to be corrected by substituting para 4 of the order dt. 22nd Feb., 2000 with appropriate directions contained in the order dt. 29th Oct., 1998 which has. been quoted by us above. The Tribunal shall correct its order accordingly by including the directions as contained in its earlier order dt. 29th Oct., 1998 in this regard, in place of the incorrect portion noticed above without prejudice to the rights of respondents to challenge the order so rectified by way of appeal in accordance with law.
36. No order as to costs.