MR.JUSTICE AKIL KURESHI J- The facts being common, we may note facts from Special Civil Application No.12439/2017. This petition is filed by the incometax department in the following background.
2. The incometax department had filed appeal bearing ITA No.35/2013 before the Income Tax Appellate Tribunal. The Tribunal disposed of the said appeal by an order dated 8.11.2013 where the contentious issue was with respect to addition made by the Assessing Officer under section 40(a) (ia) of the Income Tax Act(“the Act” for short). The department perceiving that while passing the said order, error apparent on face of the record had been committed, filed a Misc. Application No. 101/2014. This application was dismissed by the Tribunal by an order dated 13.5.2015 observing as under :
“We find that the revenue has filed an appeal before the Hon'ble Gujarat High Court against the order dated 8112013 passed in IT(SS) A Nos 35 & 36?Ahd.2013.The instant miscellaneous applications are arising out of the very same order of the Tribunal. We further find that the Hon'ble High Court has already passed an order on 3 March 2015 in tax appeals numbers 126 and 127 of 2015 in respect of the appeals so filed by the revenue. Thus the order of the Tribunal has already merged with the order of the Hon'ble High Court. As on date operative order is of the Hon'ble High Court and not of the Tribunal, therefore the Miscellaneous Applications have become infructuous and accordingly the same are dismissed. In the result, both the Misc. Applications filed by the Revenue are dismissed.”
3. The department has thereupon filed a fresh Misc. Application No.78/2015 before the Tribunal and contended that in the order dated 13.5.2015, an obvious error has crept in when the Tribunal recorded that the High Court has passed order on appeals filed by the Revenue from which the Misc. Application arise. In view of this the order of the Tribunal has merged with that of the High Court and therefore, the rectification application had become infructuous. This application of the department came to be dismissed by the Tribunal by an order dated 13.10.2016 in which the Tribunal held that the application for rectification to correct an order passed by the Tribunal in the rectification application would not be maintainable. The department has thereupon filed this petition in which challenge is both to the first order dated 13.5.2015 passed by the Tribunal in in the first rectification application as well as later order dated 13.10.2016 passed in subsequent rectification application of the department.
4. Having heard learned advocates for the parties what emerges as an undisputable position is that in the order dated 13.5.2015 dismissing the department's rectification applications, the department had made an erroneous reference to the order of the High Court in Revenue's tax appeals concerning the subject matter at hand. It appears that though the department had filed appeals before the High Court, these appeals did not concern the issue which the Tribunal had decided in the department's appeals in case of respondent assessee. The Tribunal therefore, erroneously concluded that the order of the Tribunal having merged with that of the High Court, Misc. Applications for rectification were rendered infructuous. We have proceeded on such basis.
5. In context of such facts, we may examine the department's challenge. Learned counsel Shri Himani for the assessee contended that powers of rectification of the Tribunal flowing from subsection( 2) of section 254 of the Act, can be exercised only for rectification of an order passed under subsection( 1) of section 254. In other words, according to the counsel only on the original order in appeal passed by the Tribunal, can the power of rectification be exercised in terms of subsection( 2) of section 254. He relied on plain language used in the said subsection.
6. We do not intend to give final answer to this question in the present petition though prima facie it may appear that even without any specific powers under the statute, for example, as referred to in subsection( 2) of section 254 for rectification, it would appear that any judicial or quasijudicial authority would have inherent powers to correct an error which is plainly that of clerical, typographical, arithmetical or factual. If the Tribunal had proceeded on factual basis which was wholly and concededly erroneous, the Tribunal perhaps even in absence of specific provision of subsection( 2) of section 254, had the power to recall the order. However it is not necessary to elaborate this issue any further since the department has challenged not only the subsequent order of the Tribunal dated 13.10.2016 but also the original order dated 13.5.2015 which in any case is subject to examination in exercise of writ jurisdiction by this Court and is challenged before us. When we find that the Tribunal's order dated 13.5.2015 was passed on clearly incorrect factual premise and such factual premise being the very foundation of the order, such order must be set aside and is accordingly set aside.
7. Facts being identical in both the petitions, both the petitions are allowed. The Tribunal's order dated 13.5.2015 is quashed. Department's rectification applications being Misc. Applications No. 101/2014 and 102/2014 are revived and shall be decided by the Tribunal afresh after hearing both the sides. Consequently, the order dated 13.10.2016 is rendered infructuous. Petitions are disposed of.
8. Before closing we may record that we have not examined the contention of Shri Himani that in any case, the tax effect in the appeals being below the minimum threshold level, the same cannot be persuaded by the department on merits. We leave it open for the Tribunal to examine such a contention, if so raised in the revived rectification applications.