Income Tax, Rajkot Vs. Saurashtra Kutch Stock Exchange Ltd  INSC 1550 (15
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1171 OF 2004 ASSISTANT
COMMISSIONER, INCOME TAX, RAJKOT ... APPELLANT VERSUS SAURASHTRA KUTCH STOCK J
U D G M E N T C.K. THAKKER, J.
present appeal is directed against the judgment and order passed by the High
Court of Gujarat, Ahmedabad on March 31, 2003 in Special Civil Application No.
1247 of 2002 [Assistant Commissioner of Income-Tax v. Saurashtra Kutch Stock
Exchange Ltd., (2003) 262 ITR 146]. By the said judgment, the High Court
confirmed the order passed by the Income Tax Appellate Tribunal, Ahmadabad on
September 2 5, 2001 in Misc. Application NO. 31/Rjt/2000. By the said order,
the Tribunal held that there was a `mistake apparent from the record' within
the meaning of sub-section (2) of Section 254 of the Income Tax Act, 1961 and
accordingly, it recalled its earlier order passed on October 27, 2000 in ITA
stated the facts of the case are that Saurashtra Kutch Stock Exchange Ltd.-
respondent herein is an assessee under the Income Tax Act, 1961 (hereinafter
referred to as `the Act'). It is a Company registered under Section 25 of the
Companies Act, 1956. The assessee is a `Stock Exchange' duly recognized under
the Securities Contracts (Regulation) Act, 1956. As a `Stock Exchange', it is a
`charitable institution' entitled to exemption under Sections 11 and 12 of the
Act from payment of income-tax. The assessee, therefore, made an application on
February 10, 1992 for registration under Section 12A of the Act. The
Commissioner of Income Tax, Rajkot registered 3 it on July 8, 1996. The
assessee filed its return of income on October 29, 1996 for the assessment year
1996-97 declaring its total taxable income as `Nil', claiming exemption under
Section 11 of the Act although the assessee had not been registered under
Section 12A of the Act. The return was processed under sub-section (1)(a) of
Section 143 of the Act.
On November 7, 1997,
a notice was issued to the assessee by the Commissioner of Income Tax under
Section 154 of the Act to show cause why exemption granted under Section 11 of
the Act should not be withdrawn. The assessee replied to the said notice and
asserted that in accordance with Section 12A of the Act, the trust had made an
application for registration and, hence, it was entitled to exemption under
Section 11 of the Act. Meanwhile, the Commissioner of Income Tax on February
20, 1998 granted registration to the assessee on condition that the eligibility
regarding exemption under Section 11 of the Act would be 4 examined by the
Assessing Officer for each assessment year.
an order dated December 3, 1999, the Assessing Officer assessed the income of
the assessee under sub-section (3) of Section 143 of the Act and rejected the
claim of exemption under Section 11 of the Act.
aggrieved by the said order, the assessee preferred an appeal before the
Commissioner of Income Tax (Appeals), Rajkot.
vide his order dated February 28, 2000, rejected all the contentions of the assessee
and held that the assessee was not entitled to exemption.
assessee challenged the decision of the Commissioner of Income Tax by filing
further appeal before the Income Tax Appellate Tribunal, Rajkot. The Tribunal,
however, held that the authorities were right in not granting exemption and in
holding the assessee liable to pay tax. Accordingly, it dismissed the appeal on
October 27, 2000.
November 13, 2000, the assessee filed Miscellaneous Application under sub-
section (2) of Section 254 of the Act in the Tribunal to rectify the error
committed by the Tribunal in the decision rendered by it in appeal. The
Tribunal, by an order dated September 5, 2001, allowed the application and held
that there was a `mistake apparent from the record' which required
recalled its earlier order passed in appeal on October 27, 2000. For allowing
the application, the Tribunal relied upon a decision rendered by the High Court
of Gujarat in Hiralal Bhagwati v. Commissioner of Income Tax, (2000) 246 ITR
188 as also in Suhrid Geigy Limited v. Commissioner of Surtax, Gujarat, (1999)
237 ITR 834.
with the order passed by the Tribunal in Miscellaneous Application, rectifying
a `mistake apparent from record' and recalling its earlier order, the Revenue
filed a writ petition which, as stated above, was 6 dismissed by the High
Court. Hence, the present appeal.
December 19, 2003, notice was issued by this Court and in the meantime, further
proceedings before the Tribunal were stayed. Leave was granted on February 16,
2004 and stay was ordered to continue. On February 25, 2008, a Bench presided
over by Hon'ble the Chief Justice of India ordered the Registry to list the
appeal for final hearing during summer vacation. Accordingly, the matter has
been placed before us.
have heard learned counsel for the parties.
learned counsel for the Revenue submitted that the Tribunal committed an error
of law and of jurisdiction in exercising power under sub-section (2) of Section
254 of the Act and in recalling its earlier order passed in appeal. It was
submitted that the Tribunal is a statutory authority (though not an `income tax
authority' under Section 116) and is exercising 7 power conferred by the Act.
It has no `plenary' powers. It has no power to review its own decisions. Power
under Section 254(2) can be exercised in case of any `mistake apparent from the
record'. According to the counsel, even if the order passed by the Tribunal was
incorrect or wrong in law, it would not fall within the connotation `mistake
apparent on record'. If the assessee was aggrieved by the said order, it could
have challenged the order by taking appropriate proceedings known to law.
Application under Section 254(2) of the Act was not maintainable. Again, the
order passed under Section 254 by the Tribunal is final under sub-section (4)
of the said section. By invoking the jurisdiction under sub-section (2) of the
said section, the statutory `finality' cannot be destroyed or the provision
cannot be made nugatory. The Tribunal, therefore, could not have allowed the
application and recalled its earlier order as there was no error apparent on
the record. The 8 Revenue, therefore, challenged the said order.
however, the High Court committed the same error and dismissed the writ
petition. The order passed by the High Court also suffers from similar
infirmity. Both the orders, therefore, are required to be quashed and set
on merits, neither the Tribunal nor the High Court was right, submitted the
learned counsel for the Revenue. The counsel urged that the Tribunal exercised
the power under Section 254(2) of the Act relying on a decision of the High
Court of Gujarat in Hiralal Bhagwati, but a contrary view has been taken by
this Court in Delhi Stock Exchange Assn. Ltd. v. Commissioner of Income Tax,
(1997) 225 ITR 234 (SC). In view of the declaration of law by this Court, the
assessee is not entitled to exemption from payment of tax.
learned counsel submitted that this Court may consider the appeal of the 9
Revenue on merits and decide whether the order passed by the Tribunal in the
appeal was in consonance with law and settled legal position.
learned counsel for the assessee, on the other hand, supported the order passed
by the Tribunal in Miscellaneous Application and in recalling its earlier order
passed in appeal as also the order passed by the High Court. According to the
counsel, the Tribunal was functioning by exercising its powers in Gujarat. As
such, it is an inferior Tribunal subject to the supervisory jurisdiction of the
High Court of Gujarat under Article 227 of the Constitution. The High Court of
Gujarat is thus `Jurisdictional Court' over the Tribunal. The Tribunal is,
therefore, bound by a decision of the High Court of Gujarat.
question which fell for consideration before the Income Tax Authorities related
to exemption in favour of `trust'. The issue came up for consideration before
the High 1 Court of Gujarat in Hiralal Bhagwati whether a `trust' was entitled
to exemption from payment of tax under the Act. The High Court held that the
`trust' could claim such exemption. All authorities under the Act, including
the Tribunal, were bound by the said decision.
however, the attention of the Court was not invited to the said decision at the
time when the case of the assessee was considered and orders were passed under
the Act. Subsequently, however, the assessee came to know about the said
judgment and hence an application under Section 254 (2) was filed bringing it
to the notice of the Tribunal.
There was thus a
`mistake apparent from the record' and the Tribunal was bound to recall its
earlier order which has been done. No illegality can be said to have been
committed by the Tribunal in allowing the application and in recalling the
order and no grievance can be made against such action of the Tribunal.
prejudice had been caused to the 1 Revenue inasmuch as the Tribunal has not
allowed the appeal filed by the assessee nor quashed an order of assessment. It
merely recalled the earlier order in the light of a decision of the High Court
of Gujarat. The order of the Tribunal, therefore, was strictly in accordance
the Revenue approached the High Court, the High Court again considered the
legal position and held that in allowing the application and in exercising
power under Section 254(2) of the Act, the Tribunal had not acted illegally and
dismissed the writ petition. The orders passed by the Tribunal, as also by the
High Court, are in accordance with law and no interference is called for.
counsel also submitted that even on merits, the Tribunal was right in recalling
its earlier order. The assessee is entitled to exemption from payment of tax as
`trust' inasmuch as such exemption is legal, lawful and was validly granted in
favour of the assessee.
1 The view taken by
the High Court of Gujarat in Hiralal Bhagwati has been approved by this Court
recently in Assistant Commissioner of Income Tax, Surat v. Surat City
Gymjkhana, Civil Appeal Nos. 4305-06 of 2002; decided on March 04, 2008. It
was, therefore, submitted that there is no substance in the appeal and the
appeal deserves to be dismissed.
heard learned counsel for the parties, two questions have been raised by the
parties before us. Firstly, whether the Income Tax Appellate Tribunal, Gujarat
was right in exercising power under sub-section (2) of Section 254 of the Act
on the ground that there was a `mistake apparent from the record' committed by
the Tribunal while deciding the appeal and whether it could have recalled the
earlier order on that ground. Secondly, whether on merits, the assessee is
entitled to exemption as claimed.
the impugned order passed by the Tribunal and confirmed by the High Court, the
1 Income Tax Appellate Tribunal has merely recalled its earlier order passed in
appeal and directed the Registry to fix the case for re- hearing. The matter
will now be heard again on merits. The said order is challenged by the Revenue
in this Court. The assessee has no grievance against the impugned order. In our
opinion, therefore, it would not be appropriate for this Court to decide the
second question which has been raised by the parties; viz.
whether on merits,
the assessee is or is not entitled to exemption from payment of tax under
Section 11 of the Act. We, therefore, refrain from expressing any opinion on
the second question.
learned counsel for the parties drew our attention to the relevant provisions
of the Act. Section 252 of the Act provides for constitution of Income Tax
Appellate Tribunal by the Central Government consisting of as many judicial and
accountant members as it thinks fit to exercise the powers and 1 discharge the
functions conferred on such Tribunal under the Act. It also provides for
qualification of Members. It enacts that the Central Government shall
ordinarily appoint a judicial member of the Tribunal to be the President
thereof. Section 253 enables an assessee aggrieved by any of the orders
mentioned in the said section to appeal to Tribunal. Section 254 deals with
orders passed by the Tribunal and is material for the purpose of controversy
raised in the present appeal. The section as stood then read thus;
254. Orders of
Appellate Tribunal (1) The Appellate Tribunal may, after giving both the
parties to the appeal an opportunity of being heard, pass such orders thereon
as it thinks fit.
(2) The Appellate
Tribunal may, at any time, within four years from the date of the order, with a
view to rectifying any mistake apparent from the record, amend any order passed
by it under sub-section (1), and shall make such amendment if the mistake is
brought to its notice by the assessee or the Assessing Officer:
1 ... ... ... ...
(4) Save as provided
in Section 256, orders passed by the Appellate Tribunal on appeal shall be
255 of the Act lays down procedure to be followed by the Tribunal. Section 256
provides for reference to High Court at the instance of the assessee or Revenue.
Section 154 of the Act, likewise, empowers Income Tax Authorities to rectify
reading of sub-section (1) of Section 254 quoted hereinabove makes it more than
clear that the Tribunal will pass an order after affording opportunity of hearing
to both the parties to appeal. Sub-section (4) expressly declares that save as
otherwise provided in Section 256 (Reference), "orders passed by the
Appellate Tribunal on appeal 1 shall be final". Sub-section (2) enacts
that the Tribunal may at any time within four years from the date of the order
rectify any mistake apparent from the record suo motu. The Tribunal shall
rectify such mistake if it is brought to notice of the Tribunal by the assessee
or the Assessing Officer.
(2) thus covers two distinct situations;
(i) It enables the
Tribunal at any time within four years from the date of the order to amend any
order passed under sub-section (1) with a view to rectify any mistake apparent
from the record; and (ii) It requires the Tribunal to make such amendment if
the mistake is brought to its notice by the assessee or the Assessing Officer.
was submitted that so far as the first part is concerned, it is in the
discretion of the Tribunal to rectify the mistake which is clear from the use
of the expression `may' by the Legislature. The second part, however, enjoins
the Tribunal to exercise the power if such mistake is brought to the notice of
the Tribunal either by the assessee or by the Assessing Officer. The use of the
word `shall' directs the Tribunal to exercise such power.
is, however, no dispute by and between the parties that if there is a `mistake
apparent from the record' and the assessee brings it to the notice of the
Tribunal, it must exercise power under sub-section (2) of Section 254 of the
Act. Whereas the learned counsel for the Revenue submitted that in the guise of
exercise of power under sub-section (2) of Section 254 of the Act, really the
Tribunal has exercised power of `review' not 1 conferred on it by the Act, the
counsel for the assessee urged that the power exercised by the Tribunal was of
rectification of `mistake apparent from the record' which was strictly within
the four corners of the said provision and no exception can be taken against
learned counsel for the Revenue contended that the normal principle of law is
that once a judgment is pronounced or order is made, a Court, Tribunal or
Adjudicating Authority becomes functus officio [ceases to have control over the
matter]. Such judgment or order is `final' and cannot be altered, changed,
varied or modified. It was also submitted that Income Tax Tribunal is a
Tribunal constituted under the Act. It is not a `Court' having plenary powers,
but a statutory Tribunal functioning under the Act of 1961. It, therefore,
cannot act outside or de 1 hors the Act nor can exercise powers not expressly
and specifically conferred by law. It is well-settled that the power of review
is not an inherent power. Right to seek review of an order is neither natural
nor fundamental right of an aggrieved party. Such power must be conferred by
law. If there is no power of review, the order cannot be reviewed.
attention, in this connection, was invited by the learned counsel to a leading
decision of this Court in Patel Narshi Thakershi & Ors. V. Pradyumansinghji
Arjunsinghji, (1971) 3 SCC 844. Dealing with the provisions of the Saurashtra
Land Reforms Act, 1951 and referring to Order 47, Rule 1 of the Code of Civil
Procedure, 1908, this Court held that there is no inherent power of review with
the adjudicating authority if it is not conferred by law.
2 "It is well
settled that the power to review is not an inherent power. It must be conferred
by law either specifically or by necessary implication. No provision in the Act
was brought to our notice from which it could be gathered that the Government
had power to review its own order. If the Government had no power to review its
own order, it is obvious that its delegate could not have reviewed its order".
view in Patel Narshi Thakershi has been reiterated by this Court in several
cases. It is not necessary for us to refer to all those cases. The legal
proposition has not been disputed even by the learned counsel for the assessee.
view of settled legal position, if the submission of the learned counsel for
the Revenue is correct that the Tribunal has exercised power of review, the
order passed by the Tribunal must be set aside. But, if the Tribunal has merely
rectified a mistake 2 apparent from the record as submitted by the learned
counsel for the assessee, it was within the power of the Tribunal and no
grievance can be made against exercise of such power.
main question, therefore, is: What is a `mistake apparent from the record'?
Now, a similar expression `error apparent on the face of the record' came up
for consideration before courts while exercising certiorari jurisdiction under
Articles 32 and 226 of the Constitution. In T.S. Balaram v. Volkart Brothers,
Bombay, (1971) 2 SCC 526, this Court held that "any mistake apparent from
the record" is undoubtedly not more than that of the High Court to
entertain a writ petition on the basis of an "error apparent on the face
of the record". It was, however, conceded in all leading cases that it is
very difficult to define an "error apparent on the face of the
record" precisely, scientifically and with certainty.
the leading case of Hari Vishnu Kamath v. Syed Ahmad Ishaque, (1955) 1 SCR
1104, the Constitution Bench of this Court quoted the observations of Chagla,
C.J. in Batuk K. Vyas v. Surat Municipality, ILR 1953 Bom 191 : AIR 1953 Bom
133 that no error can be said to be apparent on the face of the record if it is
not manifest or self-evident and requires an examination or argument to
establish it. The Court admitted that though the said test might apply in
majority of cases satisfactorily, it proceeded to comment that there might be
cases in which it might not work inasmuch as an error of law might be
considered by one Judge as apparent, patent and self- evident, but might not be
so considered by another Judge. The Court, therefore, concluded that an error
apparent on the face of the record cannot be defined exhaustively there being
an element of indefiniteness inherent in its very nature and must be left to
be 2 determined judicially on the facts of each case.
therefore be taken as settled that a writ of certiorari could be issued to
correct an error of law. But it is essential that it should be something more
than a mere error; it must be one which must be manifest on the face of the
The real difficulty
with reference to this matter, however, is not so much in the statement of the
principle as in its application to the facts of a particular case. When does an
error cease to be mere error, and become an error apparent on the face of the
record? Learned Counsel on either side were unable to suggest any clear-cut
rule by which the boundary between the two classes of errors could be
demarcated". (emphasis supplied)
Satyanarayan Laxminarayan Hegde & Ors. v. Mallikarjun Bhavanappa Tirumale,
(1960) 1 SCR 890, this Court referring to Batuk K. Vyas and Hari Vishnu Kamath
stated as to what cannot be said to be an error apparent on the face of the
"An error which
has to be established by a long drawn process of reasoning on points where
there may conceivably be two opinions can hardly be said to be an error
apparent on the face of the record. As the above discussion of the rival
contentions show the alleged error in the present case is far from self evident
and if it can be established, it has to be established by lengthy and
complicated arguments. We do not think such an error can be cured by a writ of
certiorari according to the rule governing the powers of the superior court to
issue such a writ".
in Syed Yakoob v. K.S. Radhakrishnan & Ors., (1964) 5 SCR 64, speaking for
the Constitution Bench, Gajendragadkar, J. (as his Lordship then was) stated;
"A writ of
certiorari can be issued for correcting errors of jurisdiction committed by
inferior courts or Tribunals; these are cases where orders are passed by
inferior courts or tribunals without jurisdiction, or in excess of it, or as a
result of failure to exercise jurisdictions. A writ can similarly be issued
where in exercise of jurisdiction conferred on it, the Court or Tribunal acts
2 illegally or improperly, as for instance, it decides a question without
giving an opportunity to be heard to the party affected by the order, or where
the procedure adopted in dealing with the dispute is opposed to principles of
There is, however, no
doubt that the jurisdiction to issue a writ of certiorari is a supervisory
jurisdiction and the Court exercising it is not entitled to act as an appellate
Court. This limitation necessarily means that findings of fact reached by the
inferior Court or Tribunal as a result of the appreciation of evidence cannot
be reopened or questioned in writ proceedings. An error of law which is
apparent on the face of the record can be corrected by a writ, but not an error
of fact, however grave it may appear to be. In regard to a finding of fact
recorded by the Tribunal a writ of certiorari can be issued if it is shown that
in recording the said finding, the Tribunal had erroneously refused to admit
admissible and material evidence, or had erroneously admitted inadmissible
evidence which has influenced the impugned finding.
Similarly, if a
finding of fact is based on no evidence, that would be regarded as an error of
law which can be corrected by a writ of certiorari.
In dealing with this
category of cases, however, we must always bear in mind that a finding of fact
recorded by the Tribunal cannot be challenged in proceedings for a writ of
certiorari on the ground that the relevant and material evidence adduced before
the Tribunal was insufficient 2 or inadequate to sustain the impugned finding.
The adequacy or sufficiency of evidence led on a point and the inference of
fact to be drawn from the said finding are within the exclusive jurisdiction of
the Tribunal, and the said points cannot be agitated before a writ court. It is
within these limits that the jurisdiction conferred on the High Courts under
Art. 226 to issue a writ of certiorari can be legitimately exercised".
36. The Court concluded;
"It is, of
course, not easy to define or adequately describe what an error of law apparent
on the face of the record means. What can be corrected by a writ has to be an
error of law; but it must be such an error of law as can be regarded as one
which is apparent on the face of the record.
Where it is manifest
or clear that the conclusion of law recorded by an inferior Court or Tribunal
is based on an obvious mis-inter-pretation of the relevant statutory provision,
or sometimes in ignorance of it, or may be, even in disregard of it, or is
expressly founded on reasons which are wrong in law, the said conclusion can be
corrected by a writ of certiorari.
In all these cases,
the impugned conclusion should be so plainly inconsistent with the relevant
statutory provision that no difficulty is experienced by the High Court in 2
holding that the said error of law is apparent on the face of the record. It
may also be that in some cases, the impugned error of law may not be obvious or
patent on the face of the record as such and the Court may need an argument to
discover the said error; but there can be no doubt that what can be corrected
by a writ of certiorari is an error of law and the said error must, on the
whole, be of such a character as would satisfy the test that it is an error of
law apparent on the face of the record. If a statutory provision is reasonably
capable of two constructions and one construction has been adopted by the
inferior Court or Tribunal, its conclusion may not necessarily or always be
open to correction by a writ of certiorari. In our opinion, it is neither
possible nor desirable to attempt either to define or to describe adequately
all cases of errors which can be appropriately described as errors of law
apparent on the face of the record. Whether or not an impugned error is an
error of law and an error of law which is apparent on the face of the record,
must always depend upon the facts and circumstances of each case and upon the
nature and scope of the legal provision which is alleged to have been
misconstrued or contravened".
our judgment, therefore, a patent, manifest and self-evident error which does
not require elaborate discussion of evidence or argument to establish it, can
be said to be an error apparent on the face of the record and can be corrected
while exercising certiorari jurisdiction. An error cannot be said to be
apparent on the face of the record if one has to travel beyond the record to
see whether the judgment is correct or not. An error apparent on the face of
the record means an error which strikes on mere looking and does not need long-
drawn-out process of reasoning on points where there may conceivably be two
opinions. Such error should not require any extraneous matter to show its
incorrectness. To put it differently, it should be so manifest and clear that
no Court would permit it to remain on record. If the view accepted by the Court
in the original judgment is one of the possible views, the case cannot be said
to be covered by an error apparent on the face of the record.
the learned counsel for the assessee submitted that the phrase "to rectify
any mistake apparent from the record" used in Section 254(2) (as also in
Section 154) is wider in its content than the expression "mistake or error
apparent on the face of the record"
in Rule 1 of Order 47 of the Code of Civil Procedure, 1908 [vide Kil Kotagiri
Tea & Coffee Estates Co. Ltd. v. Income-Tax Appellate Tribunal & Ors.,
(1988) 174 ITR 579 (Ker)], it is not necessary for us to enter into the said
question in the present case.
stated earlier, the decision was rendered in appeal by the Income Tax Appellate
Tribunal, Rajkot. Miscellaneous Application came to be filed by the assessee
under sub- section (2) of Section 254 of the Act stating therein that a
decision of the `Jurisdictional Court', i.e. the High Court of Gujarat in
Hiralal Bhagwati was not brought to the notice 3 of the Tribunal and thus there
was a "mistake apparent from record" which required rectification.
core issue, therefore, is whether non-consideration of a decision of
Jurisdictional Court (in this case a decision of the High Court of Gujarat) or
of the Supreme Court can be said to be a "mistake apparent from the
record"? In our opinion, both - the Tribunal and the High Court - were
right in holding that such a mistake can be said to be a "mistake apparent
from the record" which could be rectified under Section 254(2).
similar question came up for consideration before the High Court of Gujarat in
Suhrid Geigy Limited v. Commissioner of Surtax, Gujarat, (1999) 237 ITR 834
(Guj). It was held by the Division Bench of the High Court that if the point is
covered by a decision of the Jurisdictional Court rendered 3 prior or even
subsequent to the order of rectification, it could be said to be "mistake
apparent from the record" under Section 254 (2) of the Act and could be
corrected by the Tribunal.
our judgment, it is also well- settled that a judicial decision acts
retrospectively. According to Blackstonian theory, it is not the function of
the Court to pronounce a `new rule' but to maintain and expound the `old one'.
In other words, Judges do not make law, they only discover or find the correct
law. The law has always been the same.
If a subsequent
decision alters the earlier one, it (the later decision) does not make new law.
It only discovers the correct principle of law which has to be applied
To put it
differently, even where an earlier decision of the Court operated for quite
some time, the decision rendered later on would have retrospective effect
clarifying the legal 3 position which was earlier not correctly understood.
in his well-known work states;
"(T)he theory of
case law is that a judge does not make law; he merely declares it; and the
overruling of a previous decision is a declaration that the supposed rule never
intermediate transactions made on the strength of the supposed rule are
governed by the law established in the overruling decision. The overruling is
retrospective, except as regards matters that are res judicatae or accounts
that have been settled in the meantime". (emphasis supplied)
is no doubt true that after a historic decision in Golak Nath v. Union of
India, (1967) 2 SCR 762, this Court has accepted the doctrine of `prospective
overruling'. It is based on the philosophy:
"The past cannot
always be erased by a new judicial declaration". It may, however, be
stated that this is an exception to the general rule of the doctrine of
of an order stems from the fundamental principle that justice is above all. It
is exercised to remove the error and to disturb the finality.
S. Nagaraj & Ors. v. State of Karnataka, 1993 Supp (4) SCC, Sahai, J.
"Justice is a
virtue which transcends all barriers. Neither the rules of procedure nor
technicalities of law can stand in its way. The order of the Court should not
be prejudicial to anyone. Rule of stare decisis is adhered for consistency but
it is not as inflexible in Administrative Law as in Public Law. Even the law
bends before justice. Entire concept of writ jurisdiction exercised by the
higher courts is founded on equity and fairness. If the Court finds that the
order was passed under a mistake and it would not have exercised the
jurisdiction but for the erroneous assumption which in fact did not exist and
its perpetration shall result in miscarriage of justice then it cannot on any
principle be precluded from rectifying the error. Mistake is accepted as valid
reason to recall an order. Difference lies in the nature of mistake and scope
of rectification, depending on if it is of fact or law.
But the root from
which the power flows is the anxiety to avoid 3 injustice. It is either
statutory or inherent. The latter is available where the mistake is of the
Court. In Administrative Law, the scope is still wider. Technicalities apart if
the Court is satisfied of the injustice then it is its constitutional and legal
obligation to set it right by recalling its order".
the present case, according to the assessee, the Tribunal decided the matter on
October 27, 2000. Hiralal Bhagwati was decided few months prior to that
decision, but it was not brought to the attention of the Tribunal.
In our opinion, in
the circumstances, the Tribunal has not committed any error of law or of
jurisdiction in exercising power under sub- section (2) of Section 254 of the
Act and in rectifying "mistake apparent from the record".
Since no error was
committed by the Tribunal in rectifying the mistake, the High Court was not
wrong in confirming the said order. Both the orders, therefore, in our opinion,
are strictly in consonance with law and no interference is called for.
the foregoing reasons, in our view, no case has been made out to interfere with
the order passed by the Income Tax Appellate Tribunal, Ahmadabad and confirmed
by the High Court of Gujarat. The appeal deserves to be dismissed and is
On the facts and in
the circumstances of the case, however, the parties are ordered to bear their
parting, we may state that we have not stated anything on the merits of the
matter. As indicated earlier, the assessee has not approached this Court. Only
the Revenue has challenged the order passed under Section 254 (2) of the Act.
The Tribunal, in view of the order of rectification, has directed the Registry
to fix the matter for re-hearing and as such the appeal will be heard on
clarify that we may not be understood to have expressed any opinion one way or
the other so far as exemption from 3 payment of tax claimed by the assessee is
concerned. As and when the Tribunal will hear the matter, it will decide on its
own merit without being influenced by any observations made by it in the
impugned order or in the order of the High Court or in this judgment.
(LOKESHWAR SINGH PANTA)