Padam Prakash (HUF) vs. ITO (ITAT Delhi Special Bench)

DATE: (Date of pronouncement)
DATE: March 1, 2011 (Date of publication)

Click here to download the judgement (padam_prakash_MA_rectification.pdf)

Mistake in s. 254(2) order cannot be rectified

The Special Bench passed an order u/s 254(1) holding that the enhanced compensation received by the assessee for acquisition of its land was to be assessed on receipt basis. The assessee filed a MA claiming that there were certain mistakes in the order which was dismissed on the ground that as the P&H High Court had held that the order of the Special Bench was not sustainable, the order of the Tribunal had merged with the order of the High Court and there was no question of rectification of any mistake (see 117 ITD 129). Against this MA order, the department filed a MA pointing out that as the assessee was based in Uttar Pradesh, the P&H High Court had no jurisdiction over the assessee. The department’s MA was allowed and it was held that the P&H High Court’s order was not good law and the observations made while disposing of the assessee’s MA were not sustainable in law and constituted an apparent mistake. Against the said MA order, the assessee filed a MA contending that the Tribunal could not rectify a mistake in a MA order. HELD dismissing the MA:

(i) S. 254 (2) can be invoked only if there is a mistake in the order passed by the Tribunal u/s 254(1). As the MA filed by the assessee is against an order passed u/s 254(2) it has to be rejected CIT vs. ITAT 196 ITR 838 (Ori) followed;

(ii) Though the s. 254(2) order against which the rectification was filed was also passed in respect of an earlier s. 254(2), the only course permissible to the assessee is to file an appeal against that order and not to approach the Tribunal to contend that the said order should be recalled on the ground that it was an invalid order.

Note: See also Lachman Hingwala vs. ACIT (Delhi High Court – Full Bench) for the scope of s. 254(2)

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