In this petition filed under section 256(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act), the petitioner-assessee sought reference of the following questions to the High Court for its consideration :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the inclusion of the interest under section 214 as income for the assessment year 1983-84 ?
2. Whether, on the facts and in the circumstances of the case, the interest under section 214 which is treated as income, is assessable in entirety for the assessment year 1983-84 ?
3. Whether, on the facts and in the circumstances of the case, the omission to include the interest of Rs. 2,41,270 as income for the assessment year 1983-84 could be said to be a mistake apparent from record warranting rectification of assessment under section 154 of the Income Tax Act, 1961 ?”
2. The Tribunal following the decision of this court in CIT v. N.J. Dadabai (1978) 115 ITR 317 (AP) held that no reference would lie against the order of the Tribunal in a miscellaneous petition passed subsequent to the disposal of the main case and that reference can only be in respect of the main order in the appeal decided by the Tribunal. The Tribunal also rejected the contention of the petitioner that different or additional reasons having been given in the order of the Tribunal dated 11-11-1992 in the miscellaneous petition, the reference application is maintainable against the order passed in the miscellaneous petition. The petitioner has now filed the application under section 256(2) seeking reference of the above questions, said to be questions of law.
3. The appeal before the Tribunal arose out of a rectification order passed under section 154 of the Act on 22-3-1986 in respect of the assessment year 1983-84, as it was noticed that the interest under section 214 of the Act which was allowed under an order of assessment dated 30-3-1982 (served on 1-4-1982) for the assessment year 1975-76 was not taken into account by mistake while computing the assessable income for the year 1983-84. The first appeal having been rejected, the assessee preferred further appeal to the Tribunal. The Tribunal rejected the plea of the petitioner that the interest allowed in the assessment order dated 30-3-1982 should be related back to the assessment year 1975-76. The Tribunal held that the interest income was lawfully includible in the assessment for the year 1983-84 and that there was no debatable issue on this point. In other words, the Tribunal justified the invocation of section 154. Thereafter, the miscellaneous petition for rectification of the order of the Tribunal was filed under section 254(2) of the Act. As already noted, the said miscellaneous petition was rejected by the Tribunal by a considered order passed on 11-11-1992. The Tribunal took the view that there was no rectifiable error and that the decision of the Tribunal that the income was liable to be assessed for the year 1983-84 was unassailable. While disposing of the miscellaneous petition, the Tribunal gave certain additional reasons to meet the points which, according to the petitioner, were not duly considered by the Tribunal. Thereupon, the petitioner filed the reference application seeking reference of the above three questions which, according to the petitioner, arise out of the order of the Tribunal dated 11-11-1992. The Tribunal rejected the same holding that the reference application in relation to the order in miscellaneous petition is not maintainable.
4. In N.J. Dadabais case (supra), this court held as follows :
“. . . . the result of the order dated 26-2-1975 passed by the Appellate Tribunal dismissing the application under section 254 is that the original order of the Appellate Tribunal dated 9-10-1973 remains untouched. Hence, the question of law sought to be raised by the department about the entitlement of the assessee to claim obsolescence allowance did not arise from out of the order of the Appellate Tribunal dated 26-2-1975. Reference if any, can be only in respect of the main order dated 9-10-1975, which if filed may give rise to questions like limitation, etc. Hence, reference does not lie from the order of the Appellate Tribunal dated 26-2-1975, on the issue on which the department sought reference.” (p. 317)
5. The above observation cannot be understood to mean that under no circumstances, a reference application would lie against the order in a miscellaneous petition passed subsequent to the disposal of the main appeal. it is seen from section 256(2) that an order passed under section 254 could be the subject matter of reference under section 256(1) or 256(2), as the case may be. Section 256 does not make any distinction between the main order passed under section 254(1) or 254(2). However, in the guise of seeking reference in respect of an order passed under section 254(2), it is not open to the assessee or to the revenue to question the conclusion in the main order. The reference as against an order passed under section 254(2) could only be on the question whether the Tribunal was justified in exercising or not exercising the power under section 254(2). In other words, whether there was any mistake in the order of the Tribunal which is apparent from the record to which section 254(2) was attracted, is the only question that could be formulated and agicated in a reference. Viewed in this light, none of the questions on which the petitioner-assessee seeks reference is relatable to the order passed or arising out of the order passed under section 254(2). All the questions framed touch on the merits of the order passed in the main appeal. The present reference application is preferred against the order in miscellaneous application but not in the main appeal. Therefore, the question of calling for reference vis-a-vis the three questions extracted supra does not arise and the Tribunals order rejecting the reference application has to be upheld, though for different reasons. The reference application under section 256(2) is, therefore, rejected and the ITC is dismissed without costs. However, it does not preclude the petitioner from filing a reference application in respect of the order in the main appeal with a petition to condone the delay.