ITAT Rectification Power U/s 254(2) Can’t Be Used To Re-Argue Merits: Allahabad HC

The Allahabad High Court has held that the Income Tax Appellate Tribunal’s power under Section 254(2) of the Income Tax Act, 1961 is confined to correcting only “mistakes apparent from the record” and cannot be invoked for reopening or re-arguing issues requiring elaborate examination of facts and law. The bench of Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary observed that while hearing appeals under Section 260A, interference is permissible only where a substantial question of law arises. Since the Tribunal's findings did not suffer from perversity and no substantial question of law emerged, the Court found no justification to interfere. The dispute originated after the assessee challenged orders passed by the Commissioner of Income Tax (Appeals) before the ITAT. However, the appeals had been filed with a delay of 867 days. The assessee sought condonation of the delay by stating that copies of the CIT(A) orders had been received by his driver, who allegedly kept them in a garage and failed to inform him about their receipt. The Tribunal had earlier rejected the delay condonation request and dismissed the appeals as time-barred, finding the explanation unsatisfactory and unsupported by independent evidence. Subsequently, the assessee filed miscellaneous applications under Section 254(2), contending that the Tribunal had failed to consider the affidavit submitted by the driver admitting fault and had not exercised powers available under Section 131 read with Section 255(6) for examination and verification of facts. The assessee argued that the Tribunal ought to have accepted the affidavit as genuine, especially since the driver had not been called for cross-examination. The Tribunal, however, rejected these miscellaneous applications and held that no mistake apparent on the face of the record existed. It noted that the earlier dismissal of appeals had followed a detailed consideration of the condonation applications and that the explanation regarding the delay had already been found implausible. Before the High Court, the assessee relied upon the Supreme Court ruling in Mehta Parikh & Co. v. Commissioner of Income Tax and argued that the Tribunal committed an error by not properly considering the affidavit evidence. The Revenue opposed the plea and argued that the challenge was directed only against the review order under Section 254(2), while no appeal had been filed against the original Tribunal order dismissing the appeals on limitation grounds. Therefore, according to the Department, the assessee could not indirectly challenge the merits of the original decision through rectification proceedings. The High Court agreed with the Revenue’s contention and observed that the scope of Section 254(2) is narrow and limited. The Court explained that not every error can be rectified under the provision. The mistake must be patent, obvious, and capable of being identified from the record itself without requiring extensive arguments or debate. The Court extensively discussed the meaning of the terms “mistake” and “apparent” and observed that an apparent mistake is one which is self-evident and does not depend upon detailed legal or factual examination. It relied on earlier judicial precedents, including Master Construction Co. (P) Ltd. v. State of Orissa and Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale, to reiterate that debatable issues fall outside the scope of rectification jurisdiction. The Bench further held that the question of whether the Tribunal should have exercised investigative powers under Section 131 and Section 255(6), or whether the driver’s affidavit should have been accepted, required factual evaluation and legal debate. Such issues could not be characterised as “mistakes apparent from the record.” The Court also noted that applicability of the Mehta Parikh judgment itself was dependent on factual circumstances and therefore could not form the basis of rectification proceedings. Accordingly, the Allahabad High Court dismissed the appeals and upheld the Tribunal's finding that Section 254(2) cannot be transformed into a mechanism for reviewing or re-arguing matters already adjudicated. Case Details Case Title: Abusaad Ahmad Versus The Assistant Commissioner Of Income Tax Central Circle – 1 Lko Citation: JURISHOUR-1292-HC-2026(ALL) Case No.: INCOME TAX APPEAL No. – 11 of 2026 Date: 06.05.2026 Counsel For Petitioner: Syed Aftab Ahmad Counsel For Respondent: Neerav Chitravanshi Click Here To Read Order Read More: S. 130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings

ITAT Rectification Power U/s 254(2) Can’t Be Used To Re-Argue Merits: Allahabad HC

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