Income Tax Appellate Tribunal - Cochin
Smt.Indu Sunilkumar, Thiruvalla vs The Dcit, Cochin on 12 March, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
BEFORE S/SHRI CHANDRA POOJARI, AM & GEORGE GEORGE K., JM
M.P. Nos. 53 & 54/Coch/2016
(Arsg. out of I.T.A. Nos. 54 & 55/Coch/2013)
Assessment Years : 2006-07 & 2008-09
Smt. Indu Sunil Kumar, Vs. The Deputy Commissioner of
Sravanam, Income-tax, Central Circle, Kochi.
Power House Road,
Thiruvalla.
[PAN: AGPPS 4558L]
(Assessee-Appellant) (Revenue-Respondent)
Assessee by Shri Ramesh John, CA
Revenue by Shri A. Dhanaraj, Sr. DR
Date of hearing 02/03/2018
Date of pronouncement 12/03/2018
ORDER
Per CHANDRA POOJARI, ACCOUNTANT MEMBER:
These two Miscellaneous Petitions filed by the assessee seek rectification/recall of the Tribunal order in ITA Nos. 54 & 55/Coch/2013 dated 08th August 2014.
M.P. Nos. 53 &54./C/2016
2. In these two cases, the assessee came in appeal before this Tribunal seeking quashing of the order of the Commissioner of Income-tax passed u/s. 263 of the I.T. Act. For the assessment years 2006-07, the original assessment was framed u/s. 143(3) of the I.T. Act. While perusing the records, the CIT noticed that an addition of Rs.6.5 lakhs was made by the Assessing Officer as unexplained investment u/s. 69 of the Act. The Assessing Officer though discussed relating to another unexplained investment of Rs.17,90,107/- was omitted to be assessed u/s. 69 of the I.T. Act. As such, the CIT gave direction to the Assessing Officer to make that addition for the assessment year 2006-07. Relating to the assessment year 2008-09, the CIT invoked the jurisdiction u/s. 263 of the Act to make further addition of Rs.28,05,000/- in respect of sale consideration of land and building at Edapally. The Tribunal confirmed the exercise of jurisdiction u/s. 263 of the Act by CIT for both the assessment years. However, according to the Ld. AR, regarding further addition suggested by CIT, it was remitted by the Tribunal to the file of the Assessing Officer for fresh consideration.
3. The Ld. AR submitted that even though the Tribunal order was dated 08/08/2014, the Assessing Officer posted the case for hearing on 08/02/2016. He submitted that before posting of the case and subsequent to the order of the Tribunal dated 08/08/2014, the High Court rendered the judgment dated 06/03/2015 in WP(C) No. 7182 of 2015 (W) in these cases. The Ld. AR submitted that as per para 3 of the judgment direction was given to the CIT(A) 2 M.P. Nos. 53 &54./C/2016 to consider the validity of the search and as to whether the Assessing Officer had jurisdiction to initiate proceedings u/s. 153A which resulted in framing of the original assessment order prior to deciding the issue on merits and direction was also given to allow cross examination of the panchas and the authorized officers. According to the Ld. AR, this was to be done prior to proceeding with appeal on merits.
3.1 It was submitted that the judgment of the High Court in WP(C) No. 7182 of 2015 (W) acts retrospectively. The Ld. AR submitted that the appeal before the CIT(A) was pending for disposal. According to the Ld. AR, in view of the said judgment, request was made before the Assessing Officer not to give effect to the order of this Tribunal since jurisdictional aspect has to be decided before going into the merits of the case in view of the High court judgment. The Ld. AR submitted that the Assessing Officer without considering the request, vide orders dated 30/03/2016 gave effect to the Tribunal order dated 08/08/2014 for assessment years 2006-07 and 2008-09.
3.2 The Ld. AR submitted that on subsequent verification of assessment records for assessment year 2006-07, the Assessing Officer noticed that the cost of addition/improvements (own property at Paravur) made during the relevant previous year was Rs.17,90,107/- for assessment year 2006-07 and the source of fund for this investment was not explained and hence the said amount to be 3 M.P. Nos. 53 &54./C/2016 considered as unexplained investment u/s. 69 of the Act. According to the Ld. AR, this finding of the Assessing Officer was brought to the attention of CIT by the Assessing Officer and consequently, notice u/s. 263 was issued on 29/06/2012 calling for objections.
3.3 The Ld. AR submitted that for the assessment year 2008-09 also, similar steps were taken by the Assessing Officer on the ground that there was no capital gain returned on the sale of land at Edapally for Rs.2,80,55,000/- which was brought to the notice of the resulting in the notice u/s. 263 of the Act. Therefore, according to the Ld. AR, the initiation for both the years were not suo moto and the initiation was by the Assessing Officer by directing the CIT to issue notice u/s. 263 of the Act. It was submitted that based on the said facts stated by the Assessing Officer, the revision made by the CIT is not a suo moto as found by the Tribunal but only at the instance of the Assessing Officer. Hence, the initiation is by the Assessing Officer and not the CIT based on which CIT issued notice u/s. 263.
3.4 The Ld. AR submitted that at the time of disposal of the Tribunal order dated 08/08/2015, the information that section 263 was invoked at the initiation of the Assessing Officer was not available and it came out only pursuant to assessment orders dated 30/03/2016. Therefore, the Ld. AR submitted that the revision order passed by the CIT at the initiation of the Assessing Officer was 4 M.P. Nos. 53 &54./C/2016 without authority of law and the finding of the Tribunal without knowing the factual position at the time of disposal of the appeal resulted in a mistake in sustaining the order u/s. 263 of the Act.
4. On the other hand the Ld. DR relied on the order of the Tribunal.
5. We have heard the rival submissions and perused the material on record. The scope and ambit of application of section 254(2) is very limited. The same is restricted to rectification of mistakes apparent from the record. We shall first deal with the question of the power of the Tribunal to recall an order in its entirety. Recalling the entire order obviously would mean passing of a fresh order. That does not appear to be the legislative intent. The order passed by the Tribunal under s. 254(1) is the effective order so far as the appeal is concerned. Any order passed under s. 254(2) either allowing the amendment or refusing to amend gets merged with the original order passed. The order as amended or remaining un-amended is the effective order for all practical purposes. An order under s. 254(2) does not have existence de hors the order under s. 254(1). Recalling of the order is not permissible under s. 254(2). Recalling of an order automatically necessitates rehearing and re- adjudication of the entire subject- matter of appeal. The dispute no longer remains restricted to any mistake sought to be rectified. Power to recall an order is prescribed in terms of Rule 24 of the ITAT Rules, 1963, and that too only in case where the assessee shows that it 5 M.P. Nos. 53 &54./C/2016 had a reasonable cause for being absent at a time when the appeal was taken up and was decided ex-parte. Judged in the above background the order passed by the Tribunal is indefensible.
5.1 The words used in s. 254(2) are 'shall make such amendment, if the mistake is brought to its notice early, if there is a mistake, then an amendment is required to be carried out in the original order to correct that particular mistake. The provision does not indicate that the Tribunal can recall the entire order and pass a fresh decision. That would amount to a review of the entire order and that is not permissible under the IT Act. The power to rectify a mistake under s. 254(2) cannot be used for recalling the entire order. No power of review has been given to the Tribunal under the IT Act. Thus, what it could not do directly could not be allowed to be done indirectly.
5.2 In the case of CIT vs. Hindustan Coca Cola Beverages (P) Ltd. (2007) 207 CTR (Del) 119; (2007) 293 ITR 163 (Del), their Lordships while considering the powers of the Tribunal under s. 254(2) of the IT Act, 1961 observed as under:
"Under s. 254(2) of the IT Act, 1961, the Tribunal has the power to rectify mistakes in its order. However, it is plain that the power to rectify a mistake is not equivalent to a power to review or recall the order sought to be rectified. Rectification is a species of the larger concept of review. Although it is possible that the pre-requisite for exercise of either power may be similar (a mistake apparent from the record), by its very nature the power to rectify a mistake cannot result in the recall and review of the order sought to be rectified."
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M.P. Nos. 53 &54./C/2016 5.3 Thus the scope and ambit of application u/s. 254(2) is as follows:
(a) Firstly, the scope and ambit of application of s. 254(2) of IT Act is restricted to rectification of the mistakes apparent from the record.
(b) Secondly, that no party appearing before the Tribunal should suffer on account of any mistake committed by the Tribunal and if the prejudice has resulted to the party, which prejudice is attributable to the Tribunal's mistake/error or omission, and which an error is a manifest error, then the Tribunal would be justified in rectifying its mistake. The "rule of precedent" is an important aspect of legal certainty in the rule of law and that principle is not obliterated by s. 254(2) of the Act and non-consideration of precedent by the Tribunal causes a prejudice to the assessee.
(c) Thirdly, power to rectify a mistake is not equivalent to a power to review or recall the order sought to be rectified.
(d) Fourthly, under s. 254(2) an oversight of a fact cannot constitute an apparent mistake rectifiable under the section.
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M.P. Nos. 53 &54./C/2016
e) Fifthly, failure on the part of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on record, although it may be an error of judgment.
(f) Sixthly, even if on the basis of a wrong conclusion the Tribunal has not allowed a claim of the party, it will not be a ground for moving an application under s. 254(2) of the Act.
(g) Lastly, in the garb of an application for rectification under s. 254(2), the assessee cannot be permitted to reopen and reargue the whole matter as the same is beyond the scope of s. 254(2) of the IT Act.
5.4 In the instant case, the Tribunal while deciding the appeals of the assessee vide order dated 8th August, 2014, considered the arguments advanced by both the parties and delivered the judgment. Now the assessee's contention raised in the instant applications is that there was a judgment of High Court dated 06/03/2015 in WP(C) No. 7182 of 2015 (W) wherein direction was given to CIT(A) to consider the validity of the search and as to whether the Assessing Officer had jurisdiction to initiate proceedings u/s. 153A which resulted in the original assessment order prior to deciding the issue on merits and direction was also given to allow cross examination of the panchas and the authorized officers. This was to be done prior to proceeding with appeal on merits. In view of the 8 M.P. Nos. 53 &54./C/2016 said judgment, a request was made before the Assessing Officer not to give effect to the order of this Tribunal since the jurisdictional aspect has to be decided before going into the merits of the case. However, the Assessing Officer without considering the request passed order on 30/03/2016 which gave effect to the order of the Tribunal. As seen from this, the grievance of the assessee is with regard to giving effect to the order of the Tribunal and not with reference to the Tribunal order cited supra. If there is grievance against the giving effect to the order of the Tribunal, then the assessee is having every right to file appeal against that order and the remedy lies with the assessee elsewhere and not by way of Miscellaneous Petitions. Hence in our opinion, the Miscellaneous Petitions filed by the assessee have no merits and deserve to be dismissed.
6. In the result, the Miscellaneous Petitions filed by the assessee are dismissed.
Pronounced in the open court on 12th March, 2018.
sd/- sd/-
(GEORGE GEORGE K.) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Place: Kochi
Dated: 12th March, 2018
GJ
Copy to:
1. Smt. Indu Sunil Kumar,Sravanam,Power House Road, Thiruvalla.
2. The Deputy Commissioner of Income-tax, Central Circle, Kochi. 9
M.P. Nos. 53 &54./C/2016
3. The Commissioner of Income-tax(Appeals)-IV, Kochi.
4. The Commissioner of Income-tax, Central, Kochi.
5. D.R., I.T.A.T., Cochin Bench, Cochin.
6. Guard File.
By Order (ASSISTANT REGISTRAR) I.T.A.T., Cochin 10