These two miscellaneous applications are filed by assessee. These miscellaneous applications are in nature of rectification petitions. These petitions are filed in context of common order of Tribunal dt. 25th Aug., 2006 passed in IT(SS)A No. 684/Mum/2002 and IT(SS)A No. 703/Mum/2002. In case of assessee petitioner, block assessment was completed under s. 158BC of IT Act, 1961. assessee company is engaged in business of acting as agent of foreign shipping companies and also handles ships of foreign principals in various docks in India. In course of search, it was found that assessee company has been paying certain amounts to various Government officials and public servants as "speed money". AO treated payment of speed money as part of undisclosed income. speed money amounted to Rs. 83,29,518. Particulars of certain foreign travels were also found out. foreign travel expenses of Rs. 4,71,779 were also treated by assessing authority as undisclosed income. total addition thus made was Rs. 88,01,297. block assessment was taken in first appeal. CIT(A) confirmed addition of speed money of Rs. 83,29,518. But he deleted addition of Rs. 4,71,779 relating to foreign travel expenses. assessee as well as Revenue, both were aggrieved by order of CIT(A). assessee objected to confirmation of addition of speed money amounting to Rs. 83,29,518. Revenue, on other hand, objected to deletion of foreign travel expenses of Rs. 4,71,779. assessee came in appeal in IT(SS)A No. 703/Mum/2002 and Revenue came in appeal in IT(SS)A No. 684/Mum/2002. above two cross-appeals were heard and disposed of by Tribunal through its common order dt. 25th Aug., 2006, as already stated above. In assessee s appeal, addition of speed money was confirmed by Tribunal. But relief was given to assessee in respect of levy of surcharge, which ground was also raised by assessee before Tribunal. appeal filed by Revenue was dismissed. It is in circumstances stated above that these miscellaneous petitions are filed before us stating that order of Tribunal with reference to appeal filed by assessee contains mistakes apparent from records, and therefore, need to be rectified. Therefore, virtually speaking, these miscellaneous applications are only with reference to order of Tribunal in case of appeal filed by assessee in IT(SS)A No. 703/Mum/2002. assessee has filed two miscellaneous applications as Misc. Appln. No. 42/Mum/2008 and Misc. Appln. No. 679-B/Mum/2007. learned counsel appearing for assessee petitioner has submitted at time of hearing that miscellaneous application in Misc. Appln. No. 679-B/Mum/2007 is withdrawn and Misc. Appln. No. 42/Mum/2008 alone is pursued before Tribunal. Accordingly, we proceed to consider miscellaneous application in Misc. Appln. No. 42/Mum/2008 as other Misc. Appln. 679-B/Mum/2007 is withdrawn. submissions of petitioner are as follows: "The assessee company acts as agents of foreign shipping companies. It handles ships of its principles in various docks in India. There was search on 2nd Dec., 1999. search has brought out details of expenditure incurred by assessee for customs clearance and movement of its ships in dock were inadmissible in terms of Explanation below s. 37(1). He treated same as unexplained income under s. 158BC. CIT(A) and Tribunal confirmed addition." With reference to decision of Tribunal, there are certain apparent mistakes in order dt. 25th Aug., 2006 passed by Tribunal that entire expenditure of Rs. 83,29,518 was treated by assessing authority as inadmissible expenditure in terms of Explanation below s. 37(1) relying solely on depositions given by Shri S. Srinivasan, recorded under s. 132(4) of Act. assessee prayed before CIT(A) that cross-examination may be allowed against Shri S. Srinivasan, but prayer was rejected by them. When this matter was raised by assessee before Tribunal as one of grounds, it was rejected by Tribunal with following observations: "Extract from paras 15 and 16 of order Without making any effort to exercise right of examination before assessing authority, assessee company has made it complementary ground before CIT(A) in first appeal. It is in that context, CIT(A) held that there was no need to give opportunity to cross-examine Shri S. Srinivasan, who was employee of assessee for 15 years. observation of CIT(A) may not be proper in law. But still that does not help case of assessee. Before Tribunal also, assessee company has raised complementary ground that assessee was not given opportunity of cross- examination. It is true in course of argument of case before Tribunal that learned counsel for assessee has raised it as first and foremost ground of appeal. In facts and circumstances of case we have to state that assessee never required AO to provide opportunity to cross-examine Shri S. Srinivasan and assessee has not exercised its right to place its evidence through cross-examination before assessing authority. This right cannot be invoked before appellant authorities. Therefore, this objection raised by learned counsel is rejected. From above extract it is abundantly clear that Hon ble Tribunal rejected appellant s prayer to allow cross-examination of Sri Srinivasan on only ground that it failed to make such claim before learned AO. While rejecting assessee s prayer, Hon ble Tribunal apparently proceeded on assumption that learned AO allowed appellant opportunity to show-cause as to why deposition of Sri Srinivasan should not be used against it in framing assessment order. But this is contrary to facts available on records as discussed below. On going through assessment order dt. 28th Dec., 2001 passed by learned AO under s. 158BC of IT Act. it is noticed that at no stage he had intimated assessee that he was going to utilize deposition of Sri Srinivasan while making addition of speed money of Rs. 83,29,518. Although in last few lines of 4th page of assessment order, learned AO has observed that in view of above factual position, assessee was asked to furnish its explanation vide this office letter dt. 10th Oct., 2001 , but in said letter dt. 10th Oct., 2001 learned AO nowhere expressed his intention that he would be utilizing adverse statement of Sri Srinivasan while adding speed money referred to above. copy of this letter is enclosed. In above circumstances, assessee had no scope to exercise its right of cross- examination of Sri Srinivasan before learned AO. It was prevented by sufficient cause for not claiming cross-examination of Sri Srinivasan at assessment stage. learned AO was not justified in utilizing deposition of Sri Srinivasan against assessee without intimating his intention to use such material against it while framing assessment order. entire addition of Rs. 83,29,518 has been made by him solely relying on deposition of Sri Srinivasan which was recorded by him behind back of appellant and learned AO never intimated assessee that such deposition would be utilized against it. In this connection, kind attention of Hon ble Tribunal is invited to following observations of Hon ble Supreme Court in case of C. Vasantlal & Co. vs. CIT (1962) 45 ITR 206 (SC). ITO is not bound by any technical rules of law and evidence. It is open to him to collect materials to facilitate assessment even by private enquiry. But if he desires to use materials so collected, assessee must be informed of material and must be given adequate opportunity of explaining it. Hon ble Madhya Pradesh High Court in case of Universal Cables Ltd. vs. Union of India (1977) Tax LR 1825, 1833 has gone step further to hold t h t even when material used is within knowledge of person proceeded against, he must be told that it would be used against him, for, unless he is so informed he would have no opportunity of offering his explanation for meeting inference that authority seeks to draw from it. As already stated above, no such opportunity was given by learned AO n d also by learned CIT(A) by refusing to allow assessee to cross- examine Sri Srinivasan. Because of refusal of learned CIT(A) to allow cross-examination of Sri Srinivasan, there has been total denial of natural justice to appellant. effect of denial of natural justice to assessee has been explained by Hon ble Supreme Court in following words, in case of R.B. Shreeram Durga Prasad & Fatehchand Nursing Das vs. Settlement Commission & Anr. (1989) 75 CTR (SC) 187: (1989) 176 ITR 169 (SC): We are definitely of opinion that, on relevant date when order was passed, that is to say, 24th Aug., 1977, order was nullity because it was in violation of principles of natural justice. See in this connection, principles enunciated by this Court in State of Orissa vs. Dr. (Miss) Binapani Dei (1967) 2 SCR 625 as also observations in Administrative Law by H.W.R. Wade, 5th Edition, pp. 310-311, that act, in violation of principles of natural justice or quasi-judicial act in violation of principles of natural justice, is void or of no value. In Ridge vs. Baldwin (1964) AS 40 and Anisminic Ltd. vs. Foreign Compensation Commission (l969) 2 AS 147, House of Lords in England has made it clear that breach of natural justice nullifies order made in breach. If that is so, then order made in violation of principles of natural justice was of no value. On facts and in circumstances of case and in view of judicial observations discussed above, it appears that there is apparent mistake in orders of Hon ble Tribunal rejecting appellant s ground for allowing opportunity of cross-examination of Sri Srinivasan. In para 17 of its order, Hon ble Tribunal has observed as follows: It is to be held that assessee has not disclosed true character and nature of speed money payments. Therefore, speed money payments definitely fall under definition of undisclosed income provided in s. 158B(b). position is reiterated by amendment brought in statute by Finance Act, 2002 with retrospective effect from 1st July, 1995 whereby any expenses, deduction or allowance claimed under IT Act have been found to be false, those expenses, deduction or allowance even if disclosed in regular accounts would be held as part of undisclosed income. It is respectfully submitted that so far as appellant is concerned, there are two apparent mistakes in above observation of Hon ble Tribunal. Firstly, as expenditure relating to speed money was not false , it cannot be treated as undisclosed income in terms of s. 158B(b) and secondly, without prejudice to above, such expenditure incurred prior to 1st July, 1995 cannot also be considered as undisclosed income for purpose of block assessment under s. 158BC. While treating expenditure relating to speed money as undisclosed income as defined in s. 158B(b) of IT Act, it appears that Hon ble Tribunal has overlooked above issues as discussed below. provision of s. 158B(b) is reproduced below: undisclosed income includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for purpose of this Act (or any expense, deduction or allowance claimed under this Act which is found to be false) . last two lines as highlighted above were inserted by Finance Act, 2002 with retrospective effect from 1st July, 1995. background for inserting these two lines has been explained in CBDT Circular No. 8 of 2002 dt. 27th Aug., 2002 reported in (2002) 178 CTR (St) 9: (2002) 258 ITR 13 (St.) as reproduced below: existing provisions of cl. (b) of s. 158B define undisclosed income to include income or property which has not been or would not have been disclosed for purposes of Act, and which is represented by any money, bullion, jewellery or other valuable article or thing, or by any entry in books of account or other document or any other transaction. It has been noticed that in some cases appellate authorities have taken view that this definition covers only property or receipts which have not been disclosed and does not cover income represented by entries in respect of false claims of expenses or deductions. Such view is contrary to intention underlying provision of bringing to tax entire undisclosed income including income which has been suppressed by making false claims of expenses or deduction, which have been discovered as result of search or requisition. Finance Act, 2002, has amended definition of undisclosed income in s. 158B(b) to specifically include therein income based on entries in books of account or other documents which represent false claim of any expense, deduction, or allowance under IT Act. From last two lines inserted by Finance Act, 2002 as highlighted in para 3.1 above, it may also kindly be seen that expenditure, deduction or allowance could be treated as undisclosed income only when it is false . From CBDT circular as reproduced above, it may also kindly be seen that expenditure relating to speed money could be treated as undisclosed income only when it is false claim by assessee. In assessment order passed under s. 158BC of IT Act, learned AO added entire speed money as undisclosed income on ground that it is inadmissible in terms of Explanation below s. 37(1) of IT Act. In assessment order learned AO has nowhere disputed genuineness of payment of speed money. In other words, although expenditure relating to speed money has been treated as inadmissible in terms of Explanation below s. 37(1) of IT Act, at no stage learned AO has treated it as false . word false has not been defined in s. 158B(b) or elsewhere in IT Act. But it has been used in other sections of IT Act. In s. 273, heading is False estimate or failure to pay advance tax . Although word false has been used in heading, in s. 273(1)(a) or in s. 273(2)(a), word used is untrue . word false has also been used in ss. 277, 277A and 278 of IT Act. In these sections, word false' has been used in combination with words not true . On careful reading of these sections, it is clear that word false is synonymous with word untrue . If word false has been used in other sections of Act with view to mean untrue , it would be reasonable to hold that word false in s. 158B(b) has also been used in same sense i.e., untrue. But in instant case, assessee has genuinely incurred expenses relating to speed money which have been duly recorded in its audited books of accounts and supported by vouchers prepared by its employees and as learned AO at no stage has held such expenses to be false or untrue, it cannot be treated as undisclosed income within meaning of s. 158B(b) of IT Act. disallowance of expenditure relating to speed money in terms of Explanation below s. 37(1) may be permissible in regular assessment of respective assessment year under s. 143(3)/144 of IT Act but as such disallowance cannot constitute undisclosed income as defined in s. 158B(b) of IT Act, it cannot be included in block assessment order passed under s. 158BC of IT Act. finding of Hon ble Tribunal in this regard being contrary to provision of IT Act as discussed above is mistake apparent from record which may kindly be rectified. second apparent mistake in observation of Hon ble Tribunal as reproduced in para 3 above is assessment of expenditure relating to speed money incurred prior to 1st July, 1995 as undisclosed income . From CBDT Circular No. 8/2002 dt. 27th Aug., 2002 referred to above, it may kindly be seen that prior to amendment of s. 158B(b) of IT Act by Finance Act, 2002, undisclosed income as defined in s. 158B(b) included only income or property which has not been or would not have been disclosed. But same definition did not cover income represented by entries in respect of expenditure, deduction or allowance. In order to plug this loophole, Finance Act, 2002 inserted last two lines in definition of undisclosed income under s. 158B(b) as reproduced and highlighted in para 3.1 above. This amendment was made with retrospective effect from 1st July, 1995. Consequently expenses, deduction or allowance incurred prior to 1st July, 1995 could not be treated as undisclosed income within meaning of s. 158B(b). In instant case, total speed money of Rs. 83,29,518 added by learned AO as undisclosed income in his assessment order passed under s. 158BC of IT Act consists of aggregate expenditures incurred by appellant during period from 1st April, 1989 to 2nd Dec., 1999 as per financial year- wise details given in assessment order. Since expenditure relating to speed money incurred by appellant prior to 1st July, 1995 could not be treated as undisclosed income as discussed above sum of Rs. 46,40,937 (approx) incurred by it during period from 1st April, 1989 to 30th June, 1995 should not have been assessed as its undisclosed income under s. 158BC of IT Act. learned AO, therefore, erred in treating entire speed money of Rs. 83,29,518 as appellant s undisclosed income in his order under s. 158BC of IT Act and Hon ble Tribunal was not justified in confirming such addition. This is second apparent mistake in observation of Hon ble Tribunal in para 17 of its order which may kindly be rectified." As seen from above detailed submissions made by assessee petitioner, we find that following are mistakes pointed out as apparent from records: "(i) That there is apparent mistake in order of Tribunal in rejecting assessee s ground for allowing opportunity of cross-examination of Shri Srinivasan. (ii) That there is apparent mistake in order of Tribunal in treating entire speed money of Rs. 83,29,518 as undisclosed income under s. 158BC." We heard Shri Sajjankumar Tulsiyan, learned counsel appearing for assessee petitioner along with Shri Shashi Tulsiyan. Shri A.D. Joshi, learned senior Departmental Representative appeared for Revenue and argued case. Out of above two mistakes pointed out by assessee petitioner, we would like to deal firstly with apparent mistake explained as treating speed money of Rs. 83,29,518 as undisclosed income of assessee. As already reflected in orders of lower authorities and explained by Tribunal in its order, it is fact that amount of Rs. 83,29,518 incurred by assessee company as speed money has already been reflected in regular books of account maintained by assessee. In para 17 of its order, Tribunal has categorically observed that speed money payments made by assessee company for all assessment years included in block period have been accounted in its books of account and formed part of income computation. Even though speed money payments have already been recorded in regular books of account even before search, Tribunal treated amount as part of undisclosed income on ground that "......the real nature and character of payments of speed money was brought to notice in course of search." Tribunal also observed in para 17 that assessee has not disclosed true character and nature of speed money payments, and therefore, speed money payments definitely fall under definition of undisclosed income provided in s. 158B(b) as reiterated by amendment brought in statute by Finance Act, 2002 with retrospective effect from 1st July, 1995 whereby any expenses, deduction or allowance claimed under IT Act have been found to be false, those expenses, deduction or allowance even if disclosed in regular accounts would be held as part of undisclosed income. It is on basis of above findings that amount of Rs. 83,29,518 has been treated by Tribunal as undisclosed income even though said expenditure was very much recorded in books of account in ordinary course of business. But after hearing learned counsel for assessee in detail and on considering law explained by him, we find that Tribunal has made mistake in applying amended law brought in statute by Finance Act, 2002. Sec. 158B(b) reads as below: " undisclosed income includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for purpose of this Act (or any expense, deduction or allowance claimed under this Act which is found to be false)." words "or any expense, deduction or allowance claimed under this Act which is found to be false" was inserted by Finance Act, 2002 with retrospective effect from 1st April, 1995. It is on basis of above amended law that Tribunal has held that speed money payment formed part of undisclosed income even though expenses were reflected in books of account. As per above amended law, any expense, deduction or allowance even if disclosed in books of account would be treated as undisclosed income only if expense or deduction or allowance is found to be false. word "false" has not been defined in s. 158B(b) or elsewhere in IT Act. meaning of word "false" is synonymous with word "untrue", which word has been used in text of law contained in s. 273(1)(a) or in s. 273(2)(g) where word "false" has been used in heading. word "false" has been used synonymously with word "untrue" or otherwise meaning of word "false" has been explained as "untrue" in s. 273 of IT Act, 1961. If analogy is drawn from meaning given above, it is to be seen that expense, deduction or allowance claimed under IT Act and otherwise reflected in regular books of account would be treated as part of undisclosed income if found to be "false" or "untrue". In present case, there is no dispute regarding fact that assessee had incurred amount of Rs. 83,29,518 by way of speed money expenditure. assessee has recorded this expenditure in its books of account in regular course. In course of search, vouchers were obtained and details of payments have been recorded on reverse side of vouchers. AO has no case that assessee had not incurred expenditure. AO has treated same as undisclosed income only for reason of Explanation below s. 37(1). said Explanation reads that "any expenditure incurred by assessee for any purpose which is offence or which is prohibited by law shall not be deemed to have been incurred for purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure." It is to be seen that Explanation below s. 37(1) deals only with unlawful expenditure whereas s. 158B(b) deals with expenditure found to be false. While endorsing view taken by assessing authority, Tribunal has overlooked crucial distinction between "unlawful expenses" and "false expenses". In present case, expenses having been actually incurred by assessee expenditures could not be treated as false or untrue. They were t h e real expenditures incurred by assessee in carrying on business. T h o s e expenditures might be opposed to public policy as provided in Explanation below s. 37(1). but that disqualification does not influence s. 158B(b). expenditure incurred by assessee cannot be treated as undisclosed income under s. 158B(b) only for reason that expenditure is hit by Explanation provided under s. 37(1). If AO has to disallow said expenditure, he should do it under s. 37(1) and not under s. 158B(b). In present case, as already repeated, speed money payments were actually incurred by assessee in course of carrying on of its business. Therefore, those expenditures cannot be treated as false expenditure or untrue expenditure. expenditures have been already reflected in books of account even before search. assessee has debited those expenditures while computing its P&L a/c and finally working out taxable income. All relevant account statements have been produced before assessing authority. Therefore, as far as said expenditure is concerned, it was well disclosed to IT Department even before search. Those expenditures were also not false or untrue. Therefore, as rightly argued by learned counsel appearing for assessee petitioner, expenditure relating to speed money payments cannot be treated as undisclosed income under s. 158B(b). As explained above, Tribunal has committed error of law in treating amount of Rs. 83,29,518 as part of undisclosed income. As this contention of assessee is accepted by Tribunal and held that there is mistake apparent from record, we are not inclined to examine first point raised by assessee regarding issue of cross-examination. Once we find that Tribunal has committed mistake in its order, next step is to rectify mistake. rectification can be made in two ways. first method is to recall Tribunal order and post appeal for rehearing and decide matter afresh. second method is to incorporate rectification in same order of Tribunal passed for disposing of rectification petition. first method is used in such circumstances where rectification requires verification of facts and more elaborate arguments. second method is followed where no such detailed inquiry is necessary and no elaborate arguments are called for. present case falls under second category. mistake pointed out by assessee and accepted by Tribunal is speed money payments of Rs. 83,29,518 having treated as undisclosed income. Tribunal has found that it has committed mistake in branding said expenditure as part of undisclosed income. facts and circumstances leading to case have already been discussed by Tribunal in its order dt. 25th Aug., 2006, which is sought to be rectified by assessee through present petition. mistake committed by Tribunal is very much apparent from its order. Therefore, we find that it is not necessary to recall entire order passed by Tribunal on 25th Aug., 2006 so as to carry out rectification of mistake. In facts and circumstances of case, we carry out rectification proceedings in this very same order. Paras 17, 18, 19 and 20 of common order of Tribunal dt. 25th Aug., 2006 passed in IT(SS)A No. 684/Mum/2002 and IT(SS)A No. 703/Mum/2002 are set aside and made otiose. Instead of above, our discussion and finding made in impugned order disposing miscellaneous application is incorporated to be read along with. relevant portion of impugned order forms part of said common order of Tribunal dt. 25th Aug., 2006. Accordingly, we hold that lower authorities are not justified in treating, speed money of Rs. 83,29,518 as undisclosed income of assessee. said amount of Rs. 83,29,518 is hereby deleted in computing undisclosed income in hands of assessee. This issue is decided in favour of assessee. While disposing of this rectification petition. we have come across another point in our order dt. 25th Aug., 2006. One of grounds raised by assessee in its appeal was against levy of surcharge amounting to Rs. 5,28,078. levy of surcharge has been deleted by Tribunal in light of decision of Tribunal Hyderabad Special Bench in case of Merit Enterprises vs. Dy. CIT (2006) 102 TTJ 748 (SB): (2006) 101 ITD 1 (SB). Now Supreme Court in case of CIT vs. Suresh N. Gupta (2008) 214 CTR (SC) 274: (2008) 297 ITR 322 (SC) has held that proviso to s. 113 is clarifactory and t h e levy of surcharge is retrospective in nature. Thus, Supreme Court decision has unsettled Special Bench decision of Hyderabad Bench in case of Merit Enterprises vs. Dy. CIT (supra). Therefore, our decision against levy of surcharge has become mistake apparent from records. We are bound to correct said mistake even if no petition has been moved from either side. As Tribunal order dt. 25th Aug., 2006 is open before us, we have to rectify error, suo motu. Accordingly, we hold that levy of surcharge is justified, if any tax demand is there in modified order. While allowing Misc. Appln. No. 42/Mum/2008, we have interfered in our common order dt. 25th Aug., 2006 inasmuch it relates to appeal filed by t h e assessee in IT(SS)A No. 703/Mum/2002. We have rectified our earlier finding and held that speed money of Rs. 83,29,518 will not form part of undisclosed income. It is deleted. We have further upheld legality of levying surcharge. order of Tribunal in IT(SS)A No. 703/Mum/2002 is amended to above extent. impugned order in present Misc. Appln. No. 42/Mum/2008 shall form part of our common order dt. 25th Aug., 2006. In result, Misc. Appln. No. 42/Mum/2007 filed by assessee is allowed to above extent and Misc. Appln. No. 679-B/Mum/2007 is dismissed as withdrawn. *** GANGES LINES (INDIA) (P) LTD. v. DEPUTY COMMISSIONER OF INCOME TAX