By TIOL News Service

BENGALURU, APR 17, 2019: THE ISSUE BEFORE THE DIVISION BENCH IS - Whether the rectification order passed u/s 254(2) can be rectified or amended by invoking sub-section (2) of Section 254 once again. NO IS THE VERDICT.

Facts of the case:

During the A.Y under consideration, the assessee was subjected to search proceedings u/s 132, wherein she had made a statement that her husband knows about the bank accounts and immovable properties. The assessee was therefore issued with a show cause notice asking her to furnish confirmation from HSBC, Geneva to indicate that the bank account did not belong to her. Since the said account was in the joint name of assessee and her husband, the notice stated that on failure to substantiate the deposits, the same would be brought to tax. The AO taking the deposits in the said bank account as additional income for the A.Y 2007-08, brought it to tax. When the matter reached Tribunal, it was noted that the assessee was not agreeing to give consent for obtaining bank statement from HSBC, Geneva. Hence, adverse inference was drawn against the assessee.

Later on, the assessee filed Misc. Petition u/s 254(2) to rectify the mistake apparent on record. In that petition it was stated that addition of deposit in HSBC, Geneva amounting to Rs.5,98,40,617/- had been made to the assessee as well as her husband, which amounted to double addition. After considering this contention, the Tribunal noting that the substantive addition made to the assessee’s husband being upheld, was of the opinion that protective addition to the assessee had to go. The addition of Rs.5,98,40,607/- made to the assessee, stood deleted and hence, the order stood rectified. Although the Revenue challenged the said miscellaneous petition u/s 254(2), the same came to be dismissed as not maintainable u/s 254(2).

High Court held:

++ the provision of Section 254(1) contemplates hearing of the appeal by the Appellate Tribunal and passing of the order thereon. Sub-section (2) of Section 254 would empower the Tribunal to rectify any mistake apparent from the record, amend any order passed under sub-section (1), if the mistake is brought to its notice by the parties to the proceedings, within six months from the end of the month in which the order was passed. From a reading of sub-section (2) of Section 254, it would be clear that the Tribunal possesses the power to rectify any mistake apparent on the record in the order passed by it u/s 254(1). If the order under sub-section (2) of Section 254 is passed, the said order would not be available for rectification of mistake again u/s 254(2). Thus, the order passed u/s 254(2) cannot be rectified nor amended by invoking sub-section (2) of Section 254 once again. Repetitive applications u/s 254(2) are not permissible;

++ in the present case, the Tribunal in exercise of its power u/s 254(2) has rectified the mistake apparent on the record and deleted the double addition of income in respect of the assessee. Thereafter, the Revenue again files an application under sub-section (2) of Section 254 seeking rectification of the order passed u/s 254(2) which is not maintainable. The Tribunal has rightly dismissed the Misc. petition filed by the Revenue.

(See 2019-TIOL-841-HC-KAR-IT)