Income Tax Appellate Tribunal - Allahabad
Neeraj Agrawal,, Mirzapur vs Dcit, Mirzapur on 9 August, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
ALLAHABAD BENCH, ALLAHABAD
(THROUGH VIRTUAL / HYBRID MODE)
BEFORE SH.SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
AND
SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER
M.A. No.15 & 18/Alld/2023
A.Y.2012-13
(Arising out of ITA No.100 & 138 /Alld/2017)
Mr. NeerajAgarwal Dy. CIT
Prop. M/s Rajshree Jewellers vs. Circle 3
Basnahi Bazar Mirzapur
Mirzapur
PAN:ABNPA7884N
(Appellant) (Respondent)
Assessee by: Shri R. N. Yadav, Advocate and Shri R.
K. Kalyani, C.A.
Revenue by: Sh. A.K. Singh, Sr. DR
Date of hearing: 12.07.2024
Date of pronouncement: 09.08.2024
ORDER
PER SH.NIKHIL CHOUDHARY, ACCOUNTANT MEMBER:
These Misc. applications have been filed against the order of the ITAT, Allahabad Bench in ITA No. 100/Alld/2017 & ITA No.138/Alld/2017 for the Assessment Year 2012-13, passed on 14.03.2023. It was submitted that a survey under section 133A was conducted on 24.02.2012, both at the head office at Mirzapur and its branch at Varanasi. The survey team consisted of 1 M.A. No.15, 18/Alld/2023 A.Y.2012-13 (Arising out of ITA No. /Alld/2017) NeerajAgarwal Income Tax Authorities and a registered valuer at both the places. The valuation of stock during the survey was not made by the Department, but was done by the registered valuers who were present during the survey. The valuation report so prepared by the registered valuers was signed under protest, which had been noted by the Tribunal in its order. That the assessment order, the appellate order and the order of the Tribunal were all based and centered on the valuation report prepared by the registered valuer. It was submitted that no power had been provided to the Income Tax Authority acting under section 133A of the Act to requisition the services of a, 'registered valuer' to assist him as had been provided under section 132(2) of the Act. Citing the decision of the Hon'ble Supreme Court in the case of Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC), it was submitted that the provisions of the Income Tax Act from section 116 to 138 and the provisions of section 143/144 were all integrated and associated with each other. Thus, they were required to be followed by the Authorized officer under section 132 and the Income Tax Authority under section 133A, in the manner and process required under law. Section 133A (1) provided for an Income Tax Authority entering the premises for conducting survey in respect of the place and no such action could be taken without the approval of the Joint Director or Joint Commissioner, as the case may be. It was submitted that the Income Tax Authority meant a Joint Commissioner, a Director, a Joint Director and Assistant Director or Deputy Director, an Assessing Officer or a Tax Recovery Officer and for the purposes clause (i) of sub section (1) clause (i) of sub section (1) clause (i) of sub section (3) and clause (i) sub section (5) included an Inspector of Income Tax. In a nutshell, it was submitted that a registered 2 M.A. No.15, 18/Alld/2023 A.Y.2012-13 (Arising out of ITA No. /Alld/2017) NeerajAgarwal valuer was not an Income Tax Authority and could not be said to be a subordinate to the prescribed authorities who could have been given approval for the purposes of section 133A of the Income Tax Act. It was submitted that not even a Valuation Officer was an Income Tax Authority under section 116 r.w.s. 133A of the Act and in section 8 of the Wealth Tax Act, 1957 and even the Valuation Officer got jurisdiction under the Income Tax Act, 1961 for valuation of assets only when a specific reference was made to him by the Assessing Officer under section 55(A) and under section 142A of the Act. It was further submitted that while making an inventory under section 132 of the Act was mandatory, making of an inventory under section 133A was discretionary and they only related to things checked or verified during the survey. It was further pointed out that under section 132(9D) w.e.f. 1.04.2017, valuation of assets could be referred to the Valuation Officer under section 142A whereas under section 133A, no such power was vested with the Income Tax Authority. Only, during the course of assessment proceedings, could the Assessing Officer make such reference. It was submitted that the Income Tax Authority granting approval for the survey had to grant such authority in terms of the Act. In this context, the judgment of the Hon'ble Delhi High Court in the case of Sky View Consultants (P) Ltd. vs. Income Tax Officer 397 ITR 673 (Del) was quoted. It was further submitted that this decision of Hon'ble Delhi High Court had been challenged by the Revenue in SLP which was dismissed by the Hon'ble Supreme Court as reported in 257 taxman 250 and therefore, as per Article 141 of the Constitution, the law declared by the Hon'ble Supreme Court was binding on all Courts within the territory of India. It was further submitted that under article 265 of the Constitution, it was laid 3 M.A. No.15, 18/Alld/2023 A.Y.2012-13 (Arising out of ITA No. /Alld/2017) NeerajAgarwal down that no tax shall be levied except when authorized by law. With this background, it was submitted that since the registered valuer was not an Income Tax Authority, the valuation of jewelry made by him during the course of survey was illegal, without any authority and could not form the basis of addition made in the assessment order passed by the Assessing Officer. Attention was invited to the case of CED vs. R. Kanakasabai (1973) 89 ITR 251 (SC), wherein it was pointed out that it was impossible for the Court to read into a taxing provision any words which were not there or exclude words which were there. Attention was also invited to the case of CIT vs. Rayala Corporation Private Limited(1995) 215 ITR 883 (Madras), wherein it had been held that the primary task of the Tribunal was to see whether the lower authorities had erred on law or on fact. It was pointed out that in the case of Kitridev vs. CIT (IT) Ref No.156 of 1979 dated 10.12.1992 (Gujarat), it had been held that Tribunal had jurisdiction to allow a new question to be raised for the first time in appeal and in fairness it should allow such a question which can be decided on facts already on record and no new facts are being brought in. Reliance was also placed on CIT vs. Cochin Refinery Limited (1996)220 398 Kerela. Thereafter, Additional CIT vs. District Cooperative Bank Limited 119 ITR 142 (All) was quoted from, which stated that overlooking of a mandatory provision would amount to a commission of mistake apparent from the facts of the record and because the valuer was not an Income Tax Authority, who could have granted approval to enter a business premises of the assessee with the survey team and to make a valuation of assets found and that to without an approval of the Income Tax Authority, the report prepared and submitted by the registered valuer during 4 M.A. No.15, 18/Alld/2023 A.Y.2012-13 (Arising out of ITA No. /Alld/2017) NeerajAgarwal the survey was non-est in the eyes of law. Thus, the aforesaid mandatory provisions of the Act had been overlooked and the provisions of section 154/254(2) were applicable. Reliance was also placed on CIT vs. Himalaya Cold Storage & Iron Industries 147 taxman 90 (All), wherein it was pointed out that subsequent declaration of law by the Hon'ble Apex Court would constitute existence of a mistake apparent from record. The petitioner also placed reliance on ACIT v. Saurashtra Kutch Stock Exchange Ltd.(2008) 305 ITR 227 (SC), wherein it was held that non consideration of a decision of the jurisdictional Hon'ble High Court or Hon'ble Supreme Court can be said to be a mistake apparent from the record rectifiable under section 254(2) of the Act and Honda Siel Power Limited vs. CIT (2007) 295 466 (SC) wherein it was stated that rule of precedent is an important aspect of legal certainty in the rule of law and this principle was not obliterated by section 254(2). It was also submitted that the Hon'ble ITAT, Allahabad 'SMC' Bench had allowed Misc. Application No. 05/Alld/2021 arising out ITA No. 162/Alld/2019 in which the decision of the Coordinate Bench was based on the fact that the power of the Authorized Officer and that of the Assessing Officer hold different fields of action. Finally, the appeal of the appellant in ITA No. 162/Alld/2019 for the A.Y. 2012-13 was allowed on 13.05.2022 following the decision of Sky View Consultants P. Ltd. vs. Income Tax Officer (supra). It was also submitted that it had been pointed out in CIT vs. Rajeev Sharma 336 ITR 678, that when the statutes provides for a particular procedure, the authority had to follow the same and could not be permitted to act in contravention of the same. Furthermore, attention was invited to the decision of MST Jamuna Kunwar vs. Lal Bahadur AIR 1950 FC 131, where the Court had held that 5 M.A. No.15, 18/Alld/2023 A.Y.2012-13 (Arising out of ITA No. /Alld/2017) NeerajAgarwal whether the error occurred by a reason of counsel's mistake or crept in by reason of an oversight on the part of the Court was not a circumstance which could affect the exercise of jurisdiction of Court to review its decision if the error was apparent on the face of the record. Finally, the judgment of the Hon'ble Rajasthan High Court in the case of CIT vs. Ramesh Chand Modi (2001) 249 ITR 323 (Rajasthan) was cited which followed the principle of, 'ex debito justitiae' and held that justice may be tendered by the ITAT by correcting mistakes even in the absence of power. Thus, it was prayed that the order passed in ITA No.100/Alld/2017 dated 14.03.2023 may kindly be recalled in the interest of justice and a fresh order may be passed in accordance with law to quash the assessment order passed by the Assessing Officer under section 143(3) of the Act under appeal.
2. Sh. R.N. Yadav, Advocate and Sh. R.K. Kalyani, C.A., represented the assessee in the hearing of the case. Ongoing through the grounds of appeal raised by the assessee in ITA Nos. 100 & 138/Alld/2017, it was observed that none of the issues that had presently been raised by the assessee had been raised as a ground of appeal by the assessee at the time of filing of appeal memo in Form 36 or even at the time of hearing of the Income Tax Appeal. Thus, there was never any occasion for the ITAT to consider or pronounce judgment on any of the issues being raised by the assessee in the Misc. Application. Ld. Counsels were therefore, asked to explain as to how there was any mistake in the orders of the Hon'ble ITAT in ITA Nos. 100 & 138/Alld/2017, when the issues being presently raised by the assessee had never been placed before the Tribunal either as grounds of appeal or as arguments, and therefore there was never any occasion for the Tribunal to 6 M.A. No.15, 18/Alld/2023 A.Y.2012-13 (Arising out of ITA No. /Alld/2017) NeerajAgarwal pronounce judgment on them. In response, it was submitted that the Hon'ble ITAT had the power to rectify, 'any mistake apparent from the record' and the record as per decision of various Hon'ble Courts had been explained to mean not just the order of assessment but all the proceedings on which the assessment order was based and the ITO was entitled to look into all the evidences and the law applicable to ascertain whether there was an error, as per the judgment of the Hon Supreme Court in Maharana Mills Private Ltd. vs. ITO 1959 36 ITR 350 (SC). It was submitted that the error apparent on the face of the record cannot be said to be the record of one particular assessment, but the entire record of the assessee relating to all the assessment years - [Upasana Hospital & Nursing Home vs. CIT (2002) 253 ITR 507 (Kerela)]. Thereafter, taking us through factual matrix of the case, it was submitted ( in another petition) that in terms of the decision in Keshav Mills Coal Limited vs. CIT (1965) 56 ITR 365 (SC), one of the considerations that have to be borne in mind that whether some patent aspect of the questions remained unnoticed, or was the attention of the Court not drawn to any relevant and material statutory provisions and in this context, it was submitted that the statutory provisions contained in the proviso and the explanation below sub section (6) of section 133A had been overlooked by the Advocates appearing for the assessee, by the learned AO, by the learned CIT (A) and also by the Hon'ble ITAT and perusal of order of the ITAT shows that the clear factual matrix was fully in the knowledge of the ITAT. It was submitted that in the case of CIT vs. West Coast Paper Mills Ltd. (2009) 319 ITR 390 (Bombay), it was held that while the power of substantive review had to be conferred, procedural review was inherent in every Court or Tribunal. It 7 M.A. No.15, 18/Alld/2023 A.Y.2012-13 (Arising out of ITA No. /Alld/2017) NeerajAgarwal was also pointed out that this view had been reiterated in J.K. Synthetics vs. Collector of Central Excise (1996) 86 ELT 472 (SC) and in Chandrakant Butalal Shah vs. Union of India in WP No. 1505/2007 decided on 6th August, 2007. Attention was also invited to the case of Promain Ltd. vs. CIT (2016) 382 ITR 25 (Del) wherein it had been held that it was open to the Tribunal in an application under section 254(2) to examine whether the order sought to be rectified has an apparent error of law not limited to mistakes of fact on the face of the record. It was submitted that the order passed by the Hon'ble Tribunal had a clear error of law and our attention was again invited to the judgments of the various courts in the case of District Cooperative Ltd. (supra), Rayala Corporation Private Limited (supra) and Saurashtra Kutch Stock Exchange Ltd. (supra). Subsequent to this application, still another (3rd) submission was filed on 10.07.2024. Again drawing reference to the factual matrix of the case which had been noticed by the Tribunal and it was pointed out that the Tribunal had committed the following mistakes which were rectifiable under section 254(2) of the Act, 1961
(a) The Tribunal had missed the fact that the registered valuer was not an Income Tax Authority within the meaning of the proviso and the explanation under section 133A of the Act read with section 116 of the Act
(b) That the Income tax authorities were not required to make valuation of asset during the course of survey
(c) That the power to make valuation of asset is a jurisdiction of the Assessing Officer under section 143(3) which commences after the issue of notice under section 143(2) on receipt of research 8 M.A. No.15, 18/Alld/2023 A.Y.2012-13 (Arising out of ITA No. /Alld/2017) NeerajAgarwal
(d) That the Assessing Officer in his order passed under section 143(3) has accepted that the valuation has not been done by the Department but was made by the registered valuer
(e) That the assessment made by the Assessing Officer is based on irrelevant material and therefore, void ab initio invalid and vitiated in law.
(f) That at the time of passing the order under section 254(2), the Hon'ble Tribunal had observed that assessee did not produce any valuation report of approved registered valuer immediately after conclusion of survey as no such valuation by approved registered valuer was done at the behest of the assessee.
(g) The Hon'ble Tribunal had observed that the statement under section 133A(3)(iii) was recorded on oath of Sh. Neeraj Agarwal at Mirzapur while statement of Manager Sh. Shiv Bachan Yadav was recorded at Varanasi. It was submitted that it was well within the knowledge of the Tribunal that the registered valuer was not an Income Tax Authority and hence he could not have been approved for the survey and while writing its order the Hon'ble Tribunal overlooked this point.
(h) It was appropriate that the Hon'ble Tribunal should have required the respondent learned Sr. Departmental Representative to make available to Tribunal copy of authorization issued by Joint / Additional CIT for conducting survey to see who were Income Tax Authorities approved for survey.
(i) Copy of authorization was not provided to the appellant and had it been provided, objection could have been raised earlier.
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Thereafter, attention was invited to the following case laws:-
i. L. Hriday Narayan vs. CIT ii. Blue Star Engineering Co. (Bom) (P) Ltd. vs. CIT 73 ITR 283 both of which dealt with the powers to rectify the order and it pointed out that the Hon'ble High Court had considered the Income Tax Appellate Rules 11 and 29 in VMT Spinning Co. Ltd. vs. CIT, Ludhiana in its judgment dated 16.9.2016, by which Rule 11 of the Rules provide that the appellant, with the leave of the Tribunal can argue before it any ground not taken in the memorandum of appeal and the Tribunal while deciding the appeal is not restricted to any ground taken in the memorandum of appeal or taken leave of by the Tribunal in Rule 11. It was further submitted that Rule 29 permitted the Tribunal to admit additional evidence, for reasons to be recorded if it so desired. Finally, after the conclusion of the hearing on 12.07.2024, yet another petition was received on email where reference was invited to para 2E of the written submissions made on 10.07.2024 where reliance had been placed on decision of Dheeraj Lal Girdhari Lal vs. CIT 78 ITR 657 (SC), wherein it had been held that a decision made on irrelevant and extraneous materials was vitiated in law and since the decision of the Hon'ble Tribunal is also based on irrelevant and extraneous materials, it was erroneous in facts and law and the same was rectifiable under section 254(2) of the Act. It was also submitted that the facts were on record and by omitting to consider the facts, there was a mistake in the order of the Assessing Officer, CIT(A) and Tribunal which was rectifiable under section 254(2).
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4. On the other hand, Sh. A.K. Singh, ld. Sr. DR pointed out that the provisions of section 254(2) were only intended for rectification of any mistake that may have crept into the order of the ITAT and when an issue had never been raised before the ITAT and never been argued before the ITAT , there was no occasion for the ITAT to adjudicate on such an issue and it could not be said that, if the ITAT had not taken a decision on that matter, there was any mistake in the order of the ITAT on that count. Ld. Sr. DR further submitted that the proceedings under section 254(2) were not enacted to give an assessee a second chance to agitate an appeal on points which had not been taken in the main appeal. It was submitted that the ITAT did not have any powers to review its own orders and therefore, could not entertain the aforesaid Misc. Application, which did not emanate out of the orders of the ITAT. He, pointed out that these issues had never been raised by the assessee before the lower authorities also and it is for this reason they were not matters of consideration at any stage of the proceedings .He therefore, prayed that misc. application filed may be dismissed as section 254(2) did not relate to mistakes committed by lower authorities and authorized officers but only to mistakes committed by the ITAT and the only recourse for mistakes committed by lower authorities was an appeal to the ITAT, in which the assessee had not agitated any of the issues that he was seeking to raise in the misc. application.
5. In response, the ld. counsels for the assessee pointed out that a legal issue could be raised at any stage of the proceeding and that since they went to the very root of the matter, they required consideration because failure to consider those matters would be a mistake apparent from the record and 11 M.A. No.15, 18/Alld/2023 A.Y.2012-13 (Arising out of ITA No. /Alld/2017) NeerajAgarwal since the ITAT had not considered those matters in the earlier appeal orders, even though there was material on record that pointed to these mistakes committed by the lower authorities.
6. We have duly considered the Miscellaneous applications and all the subsequent submissions filed by the assessee. At the very outset it is important to consider the fact that the issues that have been raised by the assesee's counsels in the Miscellaneous Applications and the subsequent submissions that have been filed in support of such miscellaneous applications have never been raised by the assessee either before the Assessing Officer or the CIT(A) or the Tribunal. Thus there was never any occasion for any of them to decide the so called questions of law now raised by the assessee. The assessee has quoted from judgments that hold that a legal ground can be raised at any time, that the Tribunal is not precluded from allowing the assessee to argue on issues not raised in the grounds of appeal and in deciding the appeal on still other grounds. We have no dispute with this position except for the fact that this is not an appeal but a Miscellaneous Application under section 254(2) and the scope of section 254(2) is restricted to rectifying mistakes in the orders passed by the Tribunal under section 254(1). There is no scope in the provisions of section 254(2) to allow the counsels for the assessee to raise new grounds which they had omitted to raise in the original appeal. It is not a provision of law that provides for a second innings to reagitate an appeal on fresh grounds. The Tribunal does not have power to review its orders on consideration of fresh question of law or fresh evidence not argued or presented before it at the time of appeal.
Furthermore, the so called 'mistake' raised by the assessee in the Misc.
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NeerajAgarwal
Application is not an 'apparent error' but a debatable question of law in which there could conceivably be two opinions. Therefore the judgments quoted by them have no application to the facts of the assessee's case.
7. The counsels for the assessee would have us believe that the failure of the Tribunal to suo-moto notice that the valuation was vitiated because a registered valuer was not an income tax authority and therefore could not enter the premises of the assessee, even when they had not raised any such ground before any authority, let alone in the appeal before the ITAT, is a mistake apparent from record that merited recall of the order. We disagree. Any order is a decision on the grounds of appeal and issues that are raised before it. If, while delivering such order, the Tribunal fails to take note of any relevant fact or point of law which has been brought to its notice and which renders its decision on the subject to be erroneous, only then can it be said that there is á mistake in the order that justifies its recall. If a ground is never raised before it and never argued before it, since the Tribunal had no occasion to decide the issue, it cannot be said that any mistake has been committed by the Tribunal in deciding the issues or grounds raised before it. Nor can it be alleged that the Tribunal had decided the issue on irrelevant considerations. In the instant case, as the grounds raised in the miscellaneous application have never been raised in any form at any stage prior to the Miscellaneous application, there is no mistake in the decision of the Tribunal in not travelling beyond the issues raised before it and not noticing arguments that were never placed before it. Any argument that the Tribunal ought to have suo-moto drawn cue from the fact that the registered valuer had valued the stock in trade during the survey, to declare the valuation illegal even though no such 13 M.A. No.15, 18/Alld/2023 A.Y.2012-13 (Arising out of ITA No. /Alld/2017) NeerajAgarwal issue had been raised or argued before it or lower authorities, is farfetched, misplaced and unworthy of serious consideration. Therefore, there is no merit in the Miscellaneous Application filed by the assessee, notwithstanding his attempt to obfuscate the issue, by quoting from a plethora of case laws. The Applications are accordingly not maintainable in view of the scope of section 254(2) and are therefore dismissed.
6. In the result, Misc. Applications are dismissed.
Order pronounced on 09.08.2024.
Sd/- Sd/-
[SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY]
JUDICIAL MEMBER ACCOUNTANT MEMBER
DATED:09 /08/2024
sh
Copy forwarded to:
1. Appellant -
2. Respondent -
3. CITDR , ITAT,
4. CIT,
5. The CIT(A)
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