COMMISSIONER OF INCOME TAX Vs. BHATIA K L

JUDGEMENT

(1.) THIS order will dispose of a petition under S. 256(2) of the IT Act wherein it is prayed that the Tribunal should state the case and refer the following questions of law to this Court:

(2.) BRIEFLY stated, the facts of the case are that, in respect of the asst. year 1976 -77, the ITO framed the assessment. Against that, in respect of property No. E -73, Kalkaji, New Delhi, the assessee filed an appeal to the CIT(A), New Delhi. The contention of the respondent was that the said property belonged to his wife and not to him. The CIT accepted this contention. The ITO then filed a second appeal to the Tribunal. The Tribunal, by a speaking order dt. 27th June, 1985, came to the conclusion that the wife of the respondent was only a benamidar and that the property, in fact, belonged to the respondent. The petitioner then filed an application purported to be one under S. 254(2) of the IT Act, in which it was stated that a mistake had been committed by the Tribunal and that it should recall its earlier order dt. 27th June, 1985. In the said application, submissions were made on merits to show that some material facts were not correctly noted by the Tribunal in its earlier order and that some facts had not been taken into consideration. On 30th Jan., 1986, the Tribunal accepted this application. The Tribunal noted that this was an application under S. 254(2) of the Act and, after dealing with the merits of the application, it came to the conclusion that there was a mistake in the Tribunal's order and, as such, it required to be recalled.

(3.) AT the outset, a preliminary objection has been raised by Shri G.C. Sharma, learned counsel submits that the order dt. 30th Jan., 1986, of the Tribunal, from which the present reference is sought, is not an order passed under the provisions of the Act and, therefore, an application under s. 256 is not maintainable. The submission of learned counsel is that the said order is not passed under S. 254 and, therefore, a reference application was not maintainable. Learned counsel submits that, in exercise of its inherent powers, the Tribunal can, de hors the Act, recall its earlier order if there are sufficient grounds for doing so. In our opinion, there is no force in the contention of learned counsel for the respondent. Firstly, we find that the Tribunal has purported to exercise its jurisdiction under S. 254 of the Act. As has already been stated hereinabove, the respondent itself, in its application, stated that the said aplication was being filed under S. 254 of the Act. The Tribunal also, while dealing with the application, came to the conclusion that there was a mistake in its order and that, therefore, the order had to be recalled. In addition thereto, the Tribunal noted that the application which had been filed was under S. 254(2) of the Act. What is of greatest importance, however, is the fact that the application under S. 256(1) was dismissed by the Tribunal on merits. If the order dt. 30th June, 1986, had not been passed in the purported exercise of its powers under S. 254 of the Act, the Tribunal would not have entertained the application under S. 256(1). It is well -settled that a reference petition under S. 256 can be filed only against an order passed under S. 254 of the Act. It is also pertinent to note that the respondent did not raise such an objection before the Tribunal, when the Tribunal was dealing with the application of the petitioner under S. 256(1) of the Act. If such an objection had been raised, the Tribunal would itself have possibly clarified though, in our opinion, no clarification was required, stating that the order had been passed by it in exercise of its powers under S. 254 of the Act. Secondly, we are also of the opinion that the Tribunal can have no power to pass any order on merits, in exercise of its alleged inherent powers, if such orders are not contemplated to be passed under the provisions of the IT Act. The IT Act is a self -contained code. The Tribunal is a creation of the statute and its powers are circumscribed by the provisions of the Act. Appeals are filed before it under S. 253 of the Act. Sec. 254(1) contemplates disposal of the said appeal after giving an opportunity to both the parties of being heard. Sub -s. (2) of S. 254 enables the Tribunal to rectify any mistake apparent from the record. Sub -s. (4) of S. 254 specifies that save as provided in S. 256, the order passed by the Tribunal on appeal are final. A reading of S. 254 shows that the orders which are passed under S. 254 are final except under two circumstances : (1) if a rectification is called for, then such an order can be passed under S. 254 (2), and (2) a reference can be made on questions of law arising out of this order under the provisions of S. 256. As far as the Tribunal is concerned, S. 254(4) provides that the orders passed by it on appeal are final.