22.1 RECOMMENDATION FOR AMENDMENT TO SECTION 254(2) TO PROVIDE A SHORTER TIME FOR RECTIFICATION OF MISTAKE BY THE TRIBUNAL
The existing provisions of Section 254(2) provide for a time-limit of four years from the date of the order of the Appellate Tribunal for rectification of mistakes apparent from the record. In practice this long time-limit has given rise to difficulties arising on account of non-availability of the Members who passed the order due to transfer or retirement or otherwise. Moreover any mistake in the order should not be allowed to remain for such a long period. Section 245D(6B) relating to rectification of mistake by the Settlement Commission also prescribed the period of six months for the rectification. Section 35C(2) of the Central Excise Act, 1944 which gives similar power to the CESTAT to rectify its orders was amended by the Finance Act, 2002 with effect from 11-5-2002 to reduce the time-limit for rectification from four years to six months. This is in tune with the time-limit of one hundred and eighty days provided in Section 35G of the Central Excise Act for filing an appeal to the High Court from the order of the CESTAT. Section 260A(2)(a) of the Income Tax Act, 1961 however provides for a time-limit of one hundred and twenty days for filing an appeal to the High Court from the order of the Appellate Tribunal on a substantial question of law. The Committee recommends that the time-limit for rectification of the order of the Appellate Tribunal under Section 254(2) of the Income Tax Act, 1961 should be reduced similarly to 120 days from the date of the order sought to be rectified.
22.2 Accordingly, the Committee recommends that the first part of the existing Section 254(2) of the Income Tax Act, 1961 be amended to read as under:
“The Appellate Tribunal may, at any time within one hundred and twenty days 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:”
No change is being recommended to the Proviso to the sub-section.