Case: Assistant Commissioner, Income Tax, Rajkot Vs. Saurashtra Kutch Stock Exchange Ltd

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 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Income Tax under Section 154 of the Act to show cause why exemption granted under Section 11 of the Act should not be withdrawn.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 examined by the Assessing Officer for each assessment year.3. By 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.4. Being aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Rajkot. The Commissioner, vide his order dated February 28, 2000, rejected all the contentions of the assessee and held that the assessee was not entitled to exemption.5. The 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, 2000.6. On 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 rectification. Accordingly, it 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 834.7. Dissatisfied 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 dismissed by the High Court. Hence, the present appeal.8. On 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 Honble 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.

Court's reasoning:
In 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 calledthe foregoing reasons, in our view, no case has been made out to interfere with the order passed by the Income Tax Appellate Tribunal, Ahmedabad and confirmed by the High Court of Gujarat.