1. The appellate order in this case was passed on 5-5-1984 wherein a sum of Rs. 18,906 claimed as deduction as interest paid on monies borrowed by the assessee, was rejected. Subsequent thereto, a miscellaneous application dated 18-7-1984 was filed by the assessee requiring the Tribunal to rectify its appellate order on the ground that the order suffered from a mistake apparent from the record.
2. The main ground in the miscellaneous application is that the learned Judicial Member had made certain observations during the course of the hearing from which it was assumed by the assessee's counsel that the matter was being decided in his client's favour and he did not advance his arguments in full. However, the Tribunal passed the order contrary to the impression given at the time of the hearing and this has caused great injustice to the assessee as his counsel did not have an opportunity for full hearing on this issue.
3. Both the learned members have in a way agreed that some such observations might have perhaps been made during the course of the hearing by the senior member who happens to be the learned Judicial Member in this case. All the same, the learned members are of the view that the fault, if any, would be essentially of the assessee's counsel.
When the observation is alleged to have been made, the Tribunal was hearing the counsel for the assessee. The assessee was the appellant.
The departmental representative was not heard. Therefore, any observation made, could only be tentative and, in any event, the counsel for the assessee was not prevented from arguing his case in full.
4. According to the learned Accountant Member, the counsel for the assessee was not prevented from arguing his case, full arguments had, in fact, been advanced and considered and there was no case for a mistake apparent from the record. The learned Judicial Member has, on the other hand, considered it desirable to give the assessee a further opportunity of arguing his case in the following words : This observation was probably misunderstood by the representative of the assessee who did not address any further arguments on this aspect of the matter. Now, this alternative claim of the assessee was ultimately rejected by the Bench on the ground that even before the Tribunal, the assessee's contention had been that the loans were admittedly used for the purpose of his profession and, consequently, no interest could be allowed as a deduction against dividend income.
I am slightly doubtful over the correctness of this part of the conclusion. The relevant discussion in the ITO's order reads as under : 'The assessee appeared but did not file any assessment (sic) it ought to be accounts as required and argued that even if such loans were utilised for purchasing shares-interest will not be inadmissible for deduction. Thus, it was not proved that such loan was used for profession.' This would seem to suggest that the assessee did seek to claim the interest as a deduction even if the loans were proved to have been utilised for purchasing shares at least alternatively. This part of the assessee's contention was not specifically rejected by the ITO though the claim was otherwise disallowed. The AAC has observed that the total credit balance of the loan amounts came to Rs. 1,06,500 whereas the investment in equity shares worked out to Rs. 78,820 and the capital balance was shown as at Rs. 16,324 only. Hence, according to him, the assessee's contention that loans were incurred for the purpose of meeting the expenses of the firm and not for the purpose of investment did not hold good. This could be taken to impliedly mean that part of the loans was utilised for the purpose of investment. The assessee's claim that interest to this extent against the dividend income was again not specifically considered by the AAC but his ground raised as a whole was rejected. Nearly the same is the conclusion of the Tribunal. Under these circumstances, it is quite possible that the assessee may have been misled in assuming that the claim for interest or part thereof would be allowed by the Tribunal against the dividend income and labouring under that misapprehension did not address any further argument on the matter. Though it was wrong on the part of the assessee to have presumed like that, but it could be an unintentional mistake. The result thereof has, however, been that part of the assessee's contention may not have been properly appreciated at the time of the disposal of the appeal. Consequently, the disposal of this matter in the manner in which it has been done by the Bench may leave scope for some grievance and it is desirable that the parties are fully satisfied at least to the extent that all their contentions have been fully appreciated, At any rate singe the misunderstanding is stated to have arisen because of certain expression of opinion on my part, I don't want to stand in the way of the assessee to have his contention considered afresh. I am, therefore, of the opinion that in the interest of justice, the assessee may now be given another opportunity to address further arguments on this aspect of the matter. To this extent, the miscellaneous petition should be allowed and the matter reconsidered.
It is for this reason that the following point of difference has been stated by the learned Members : Whether, the assessee's claim for inteiest or any part thereof against his dividend income ought to be considered afresh now, notwithstanding the fact that it has already been rejected by the order of the Tribunal in the main appeal The case having been assigned by the President to himself under Section 255(4) of the Income-tax Act, 1961 ('the Act'), the matter has come up before me as a Third Member.
5. Shri N.K. Poddar, the learned counsel for the assessee, has reiterated that the learned Judicial Member made certain observations while he was on his legs. The observations indicated that his client's claim was being accepted and he did not argue the case in full under that impression. The departmental representative has, on the other hand, submitted that if the counsel did not argue his client's case in full under some wrong impression it cannot be said that the order of the Tribunal suffered from an apparent mistake. Moreover, the departmental representative submits that all that could possibly be argued by the counsel for the assessee was argued. In any event, nothing has even now been stated as to what more arguments he would have advanced. According to him, the Tribunal does not have the power to review its order. The learned Judicial Member has decided to give another opportunity to the assessee's counsel as he was slightly doubtful about the conclusion. Otherwise, he has also categorically stated that the learned counsel was not prevented by the Tribunal from arguing his case.
6. I have considered the rival contentions carefully. The Tribunal, admittedly, does not have the power to review its order. Thus, the power to rectify its order under Section 254(2) of the Act can be assumed only where the orders suffer from glaring and obvious mistakes of facts or law or both. Both the learned Members are agreed that the observation made, if any, was only tentative and that the learned counsel was not prevented from arguing his case in full. Apart from the fact that there is difference between the Members as to the fact whether full arguments were advanced by the assessee's learned counsel, not arguing the case fully under some misapprehension, assuming it is correct, does not, to my mind, constitute apparent mistake on the face of the record so as to justify the recalling of the order for the purpose of hearing him again.
In the circumstances, I am inclined to agree with the learned Accountant Member that this is not a fit case for recalling the order.
7. The order will now go to the Bench for decision according to the majority view.