1. This is a reference made by the Income-tax Appellate Tribunal to this court for answering the question :
' Whether the Income-tax Appellate Tribunal was justified in holding that there was no mistake apparent on record in the order passed by the Tribunal dismissing the appeal as withdrawn '
2. The facts as stated by the Appellate Tribunal are that the assessee is a firm and was granted registration in the assessment year 1969-70 but for the assessment year under appeal, i. e., 1971-72, the assessee filed a declaration in Form No. 12 seeking continuation of registration under Section 184(7) of the I.T. Act. This declaration was not filed within the prescribed time and an application explaining the reasons for the delay and seeking condonation was filed. The ITO refused to condone the delay and completed the assessment taking the status of the assessee as an unregistered firm. The assessee, in its appeal against the order of assessment, raised the ground of status as well. The AAC set aside the assessment order and remanded the case to the ITO directing him to deal with the question of continuation of registration in the assessment order itself.
3. After remand, when the matter went before the ITO he dealt with the question of registration under Section 184(7) separately and again refused to allow continuation of registration. Against this order of the ITO, the assessee filed an appeal to the AAC who dismissed the appeal holding that no appeal lay against the order refusing to condone the delay under Section 184(7) of the I.T. Act.
4. Against this order of the AAC, the assessee preferred an appeal before the Appellate Tribunal and simultaneously filed a revision petition under Section 264 of the I.T. Act before the Commissioner of Income-tax. The assessee later on sought withdrawal of the appeal and it was dismissed as withdrawn by the Appellate Tribunal. The Commissioner heard the revision petition and by his order dated July 28, 1976, dismissed it. The result was that the order refusing to condone the delay and not allowing continuation of registration passed by the ITO was confirmed. It appears that the ITO had passed a separate order Under Section 143(3) after the case was remanded by the AAC. The assessee appealed against that order before the AAC who directed the ITO to pass a fresh order stating reasons for adopting the status as an unregistered firm.
5. The Department preferred an appeal against the order of the AAC contending that the question of status has already become final after the order passed by the Commissioner, and the AAC was not competent to direct the ITO to examine the issue again., On this appeal by the Department, the Appellate Tribunal took the view that as the matter of registration has become final after the orders of the Commissioner for the same year the same question cannot be re-agitated in another forum and in this view of the matter, the Tribunal allowed the appeal of the Department and, it is after this judgment that the assessee submitted an application to the Appellate Tribunal for making a reference to this court and the Tribunal, therefore, has made a reference seeking an answer to the question.
6. In the same matter, the assessee submitted an application before the Tribunal Under Section 154 of the I.T. Act for rectification of the Tribunal's order dated July 28, 1976, seeking correction of the order of dismissal of the appeal as withdrawn. The Tribunal dismissed this application and, thereafter the assessee submitted an application for making a reference on that question also and the Tribunal has made this reference on that question.
7. It was contended by the learned counsel appearing for the assessee that there is no provision for withdrawal of appeal which was preferred before the Tribunal except Under Section 245M. It is conceded by the learned counsel that the prayer for withdrawal of the appeal was not a prayer Under Section 245M as, admittedly, it was not withdrawn for making an application to the Settlement Commissioner, but it was frankly conceded by the learned counsel that the appeal was withdrawn as the view of the law which prevailed then was that an appeal was not competent and, therefore, in order to get the relief in a revision petition, the assessee was advised to withdraw the appeal and, therefore, the appeal was withdrawn and the assessee pursued his remedy before the Commissioner by way of revision. But it was contended that the subsequent application for rectification Under Section 154 ought to have been accepted by the Tribunal; whereas it was contended by the learned counsel for the Department that when there is no specific provision for the withdrawal of the appeal except under Section 245M, the question of restoration of the appeal afresh did not arise, as according to the learned counsel, if it was a withdrawal under Section 245M, it is also provided in this section itself that the appeal could be restored back to the file but as it was not a withdrawal Under Section 245M but a withdrawal on the basis of the legal situation that the appeal was not competent and it was withdrawn and the appeal was dismissed as withdrawn. It clearly amounts to a dismissal of the appeal as not competent and it was contended that even if subsequently the view of law had changed still it will not entitle the assessee to file an application Under Section 154 as it could not be said that it was a mistake apparent on the face of the record as if this were permissible, whenever the legal position changes on account of subsequent decisions, it will always be open to the parties to approach the Tribunal to reopen the appeal which has been once decided and this could not be contemplated under Section 154 of the I.T. Act. It was, therefore, contended that may be that it is a harsh case for the assessee but it could not be contended that the Tribunal committed any error in rejecting the application Under Section 154 for rectification as, apparently, it could not be said to be a case of an error apparent on the face of the record.
8. Section 245M which provides for the withdrawal of the appeal and for its restoration afresh reads:
' 245M. (1) Notwithstanding anything contained in this Chapter, any assessee who has filed an appeal to the Appellate Tribunal under this Act which is pending before it shall, on withdrawing such appeal from the Appellate Tribunal, be entitled to make an application to the Settlement Commission to have his case settled under this Chapter ;
Provided that no such assessee shall be entitled to make an application in a case where the Income-tax Officer has preferred an appeal under Sub-section (2) of Section 253 against the order to which the assessee's appeal relates.
(2) Any assessee referred to in Sub-section (1) may make an application to the Appellate Tribunal for permission to withdraw the appeal.
(3) On receipt of an application under Sub-section (2), the Appellate Tribunal shall grant permission to withdraw the appeal.
(4) Upon the withdrawal of the appeal, the proceeding in appeal immediately before such withdrawal shall, for the purposes of this Chapter, be deemed to be a proceeding pending before an income-tax authority.
(5) An application to the Settlement Commission under this section shall be made within a period of thirty days from the date on which the order of the Appellate Tribunal permitting the withdrawal of the appeal is communicated to the assessee.
(6) An application made to the Settlement Commission under this section shall be deemed to be an application made under Sub-section (1) of Section 245C and the provisions of this Chapter (except Sub-section (7) of Section 245D) shall apply accordingly.
(7) Where an application made to the Settlement Commission under this section is not entertained by the Settlement Commission, then, the assessee shall not be deemed to have withdrawn the appeal from the Appellate Tribunal and the provisions contained in Section 253, Section 254 and Section 255, shall, so far as may be, apply accordingly. '
9. A perusal of this provision will show that this was enacted for a special situation and it is plain that the application for withdrawal by the assessee in the instant case was not made under the circumstances which would warrant an application Under Section 245M and the learned counsel for the assessee frankly conceded that it was not under this provision. It is, therefore, clear that the withdrawal in the instant case could not be considered in the light of Section 245M at all.
10. It is not in dispute that there is no other provision providing for withdrawal of the appeal and it is also not in dispute that there are decisions which take the view that an appeal could not be withdrawn just to avoid a notice for enhancement as it is competent for the appellate authority to issue notice for the enhancement of the assessment. It is, therefore, clear that these cases about the right of the appellant to withdraw an appeal will be of no help so far as the present case is concerned because it is not a case where an appeal has been withdrawn on the ground that there has been any apprehension of notice of enhancement. In fact, it was not even an appeal against an order of assessment but it was merely an appeal against an order Under Section 184(7) refusing to condone the delay in filing the statement for continuation of the registration of the firm.
11. It is, therefore, plain that the withdrawal in this case, in substance, amounts to a statement made by the counsel for the appellant that the appeal was not competent and learned counsel for the parties agree that as the law prevailed then, the appeal was not competent and, therefore, if the appeal filed by the assessee was dismisssd as withdrawn, it could not be said that as there was no provision for withdrawal the Tribunal was not right in allowing the appeal to be withdrawn. It, therefore, could not be contended that that having been done, it is an error apparent on the face of the record. In substance, the order of the Tribunal dismissing the appeal as withdrawn clearly amounts to dismissal of the appeal as not competent, and it is, therefore, clear that the question of withdrawal of such an appeal under the circumstances stated above is not covered by any one of the cases which were referred to by the learned counsel for the parties.
12. It is, therefore, plain that the order dismissing the appeal as withdrawn, in substance, was an order of dismissal of the appeal and that being so, an application under Section 154 for rectification will not be competent. Section 154 reads:
'154. (1) With a view to rectifying any mistake apparent from the record--
(a) the Income-tax Officer may amend any order of assessment or of refund or any other order passed by him ;
(b) the Appellate Assistant Commissioner may amend any order passed by him under Section 250 or Section 271;
(bb) the Inspecting Assistant Commissioner may amend any 'order' passed by him in any proceeding under Sub-section (2) of Section 274 ;
(c) the Commissioner may amend any order passed by him in revision under Section 263 or Section 264.
(1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in Sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided.
(2) Subject to the other provisions of this section, the authority concerned--
(a) may make an amendment under Sub-section (1) of its own motion, and
(b) shall make such amendment for rectifying any such mistake which has been brought to its notice by the assessee, and where the authority concerned is the Appellate Assistant Commissioner, by the Income-tax Officer also......'
13. This clearly provides that a rectification can be done only if there is an error apparent on the face of the record. If the appeal was dismissed as withdrawn as it was clear that the appeal itself was not competent, merely because of subsequent decision that the view of the law has changed, it could not be said that there is an error apparent on the face of the record. Apparently, on the date on which the appeal was dismissed, the appeal was not competent and in substance, counsel for the assessee withdrawing the appeal submitted that the appeal was not competent and he chose to pursue the remedy of revision before the Commissioner. Having failed to get relief from the Commissioner, it is not open to the assessee now to say that his appeal should be heard. The only course open to the assessee was to challenge the order of the ITO, which was maintained by the Commissioner, by way of appropriate proceedings. That not having been done, it could not be contended that the Tribunal committed any error in rejecting the application Under Section 154.
14. In our opinion, therefore, the answer to the question is in the affirmative that the Tribunal was right in holding that there was no error apparent on the face of the record in the order passed by the Tribunal dismissing the appeal as withdrawn.
15. In the circumstances of the case, parties are directed to bear their own costs.