Income Tax Act, 1961

--Appeal (Tribunal)--Rectification under section 254(2) Review of earlier order--Revenue moved an application before the Income Tax Appellate Tribunal, under section 254(2), seeking recall of the earlier order by way of rectification, as the decision of the Tribunal dated 31-03-2008 had been based entirely on the decision of the Supreme Court in Virtual Soft Systems Ltd. 2007 TaxPub(DT) 980 (SC) : (2007) 289 ITR 83 (SC) and the earlier decision had been subsequently overruled by a larger Bench of the Supreme Court in Gold Coin 2008 TaxPub(DT) 2223 (SC) : (2008) 304 ITR 308 (SC), there was a mistake apparent from the face of the record and, therefore, the earlier order needed to be rectified. Assessee contended that as the decision of the Supreme Court in Gold Coin 2008 TaxPub(DT) 2223 (SC) : (2008) 304 ITR 308 (SC) rendered after the order passed by the Tribunal, the Tribunal's order could not be regarded as one which had a mistake apparent on the record and the Tribunal did not commit any mistake by following the said decision in Virtual Soft Systems Ltd. 2007 TaxPub(DT) 980 (SC) : (2007) 289 ITR 83 (SC), which was the law as declared by the Supreme Court on that date. It also submitted that on the date on which the decision of the Supreme Court was rendered in the case of Gold Coin 2008 TaxPub(DT) 2223 (SC) : (2008) 304 ITR 308 (SC), there was no proceeding pending before the Tribunal or any Court and, therefore, the order dated 31-3-2008 had attained finality and the same ought not to be disturbed. Held: Not rightly so, as the Supreme Court in its decision in Saurashtra Kutch Stock Exchange 2008 TaxPub(DT) 2300 (SC) : (2008) 305 ITR 227 (SC) held that a judicial decision acts retrospectively. Judges do not make law they only discover or find the law. Thus, where a decision of the Supreme Court overrules an earlier decision, the views expressed in the later decision would have to be regarded as having always been the law. The question of retrospective overruling would have to be considered in the light of the fact as to where a matter has or has not attained finality. Thus, once the fact was recognised that the Supreme Court decision in Gold Coin 2008 TaxPub(DT) 2223 (SC) : (2008) 304 ITR 308 (SC) (supra) operates retrospectively and therefore, it has to be regarded as the law as it existed when the order was passed by Tribunal, there was a clear mistake apparent from the record. That mistake could not be allowed to remain. The only limitation for correcting the mistake was that imposed by the provisions of section 254(2) itself and that was only with respect to time. The application for rectification having been made in time, the order of the Tribunal recalling its earlier order could not be faulted.