Income Tax Appellate Tribunal - Amritsar
The Income-Tax Officer,, Ferozepur vs Sh Hari Singh, Ex-Mla, Zira on 6 September, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND
SH.N.K.CHOUDHRY, JUDICIAL MEMBER
M. A. No. 13/Asr/2019
(arising out of M.A. No.76/Asr/2014)
Assessment Year: 2007-08
Income Tax Officer, Hari Singh, Ex.-MLA,
Ward 3(5), Zira, Makhu Road, Zira.
Ferozepur [PAN: AYOPS 9612C]
(Applicant) (Respondent)
Applicant by : Sh. Charan Das, Sr. DR
Respondent by : Sh. P. N. Arora, Adv.
Date of hearing : 14.06.2019
Date of pronouncement : 06.09.2019
ORDER
Per Sanjay Arora, AM
This is a Miscellaneous Petition by the Revenue arising out of an Order under section 254(2) of the Income Tax Act, 1961 ('the Act' hereinafter) by the Tribunal (in MA No. 76/Asr/2014, dated 05/11/2018). The said order was itself in disposal of the assesse's application u/s. 254(2) (in MA No. 09/Asr/2013, disposed vide order u/s. 254(2) dated u/s. 15/4/2014), made in pursuance of the order u/s. 254(1) dated 31/10/2013 (in ITA No. 394/Asr/2013).
The background facts
2. It would be relevant to enlist the background facts of the case as well as the events as transpired, leading to the Revenue's instant application. The assessee's 2 MA No.13/Asr/2019 (AY: 2007-08) (arising out of MA No.76/Asr/2014) ITO v. Hari Singh appeal was in respect of the assessment of the long-term capital gain (LTCG) of Rs. 291.50 lacs assessed by the Assessing Officer (AO) vide order u/s. 143(3) r/w s. 147 of the Act dated 30/12/2010. The same was upon allowing an exemption of Rs. 66 lacs u/s. 54F, claimed as invested in a residential house, i.e., from the said capital gain. The same was confirmed in appeal by the Commissioner (Appeals), Bhatinda ('CIT(A)' for short) vide his order u/s. 250(6) dated 07/3/2013. The LTCG, as assessed, was further enhanced by him to Rs. 357.50 lacs by withdrawing the said exemption u/s. 54F. The appellate order, carried in appeal, was confirmed by the tribunal per its' order u/s. 254(1), dated 31/10/2013. While agitating the assessment of capital gains vide Ground 1, the assessee also raised the issue of withdrawal of deduction u/s. 54F by the ld. CIT(A) before the tribunal vide Gds. 2 & 3 of his appeal (which finds reproduction at pages 2 & 3 of the tribunal's order dated 31/10/2013). Apart from on merits, considered by the ld. CIT(A), the issue of non-compliance of s. 251(2), i.e., without giving a notice of enhancement, so that no effective opportunity was allowed to the assessee, was also raised before the tribunal per the said grounds. The principal issue (Gd. 1) was found by the tribunal to be covered, i.e., on merits, by its earlier orders in Charanjit S. Atwal & Ors. and Satnam S. Kainth & Ors., by the Chandigarh and Amritsar Benches of the Tribunal respectively. It is these orders that find reproduction at pages 5-105 of the tribunal's order. The same was accordingly confirmed, holding, vide para 6 (at pgs. 105-106) of the order, as under:
'6. In view of the above discussion, we are of the view that the facts in the grounds taken in the present appeal, i.e., in ITA No. 394/Asr/2013, are identical to the facts in the case of Sh. Charanjit Singh Atwal v. ITO & Ors. (supra) and in the case of Satnam Singh Kainth v. ITO & Ors. (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts of the case in the case of Sh. Charanjit Singh Atwal v. ITO & Ors. (supra) and in the case of Satnam Singh Kainth v. ITO & Ors. (supra), therefore, our order in the case of Satnam Singh Kainth v. ITO & Ors. (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order 3 MA No.13/Asr/2019 (AY: 2007-08) (arising out of MA No.76/Asr/2014) ITO v. Hari Singh in the case of Sh. Satnam Singh Kainth v. ITO (supra). Therefore, in the facts and circumstances, all the grounds of the assessee are dismissed.' The issue of disallowance of exemption u/s. 54F was again considered by the tribunal on merits, finding itself in agreement with the view expressed by the ld. CIT(A), reproducing the same at paras 7 & 7.1 of its order dated 31/10/2013 (which stands reproduced at para 2 (pgs. 2,3) of the tribunals' order dated 05/11/2018, i.e., the impugned order, and in conjunction with which order this order is to be read).
The assessee moved the tribunal u/s. 254(2) (vide MA No. 09/Asr/2013, dated 13/11/2013/copy on record) on 17/12/2013, claiming that the issue of non- compliance of s. 251(2), which reads as under, also raised per Gds. 2 & 3 before the tribunal, had not been addressed while deciding his appeal on the issue of (disallowance of) deduction u/s. 54F by it, which was only on merits:
Powers of the Commissioner (Appeals)
251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers-- ........
(2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction.
Explanation - In disposing of an appeal, the Commissioner (Appeals) may consider or decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.
And, therefore, to that extent Gds. 2 & 3 of the assessee's appeal remain undisposed. The assessee's miscellaneous application (MA) was disposed by the tribunal, after hearing the parties, vide para 4 of its order u/s. 254(2) dated 15/4/2014, as under (which stands reproduced at para 4 (pg. 2) of its' subsequent order u/s. 254(2) dated 05/11/2018, the impugned order - IO):
'4. We have heard the rival contentions and perused the facts of the case. The issue raised in the Misc. Application by the assessee, has already been dealt with in our order dated 4 MA No.13/Asr/2019 (AY: 2007-08) (arising out of MA No.76/Asr/2014) ITO v. Hari Singh 31.10.2013 and now the issue raised by the Ld. Counsel for the assessee tantamount to review of our order, which is not permissible under the law. Therefore, the Misc. Application filed by the assessee is dismissed.' The assessee moved a second application u/s. 254(2) on 19/5/2014 (MA No. 76/Asr/2014), claiming that while passing the order in MA No. 9/Asr/2013 on 15/4/2014, the tribunal did not consider the aspect of positive requirement of law per s. 251(2). The doctrine of merger of the order by the ld. CIT(A) in the tribunal's order (dated 31/10/2013), and the impermissibility of review, on which basis the tribunal had ousted the assessee's first application dated 13/11/2013, does not arise at all, i.e., as regards the issue of compliance of the condition of s. 251(2) by the ld. CIT(A) while withdrawing the deduction u/s. 54F.
The said MA was disposed by the tribunal vide the impugned order, accepting the assessee's application. The matter, for compliance of s. 251(2), was accordingly restored to the file of the ld. CIT(A); the relevant part of its order reading as:
'3. We have heard the parties, and perused the material on record.
3.1 Much less in the order by the first appellate authority, we do not find mention of any argument by the assessee even before the tribunal which should have, at any rate, required the assessee to state his case, meeting the principle of audi alteram partem, which is what the notice of enhancement by the first appellate authority seeks to satisfy. We are thus inclined to agree with the assessee that there has been, to that extent, a mistake by the tribunal in-as- much as which (it) has failed to address the grievance of the assessee per Gds. 2 & 3 of his appeal in-so-far as it relates to the non-grant of the opportunity by the first appellate authority before effecting the enhancement impugned per the said Gds. The adjudication on merits by the ld. CIT(A), which stands upheld by the tribunal, and which is what without doubt the matter in substance is, could follow only after hearing the parties, even as the assessee admittedly has not been allowed opportunity to do so at any stage.
3.2 We, in view of the foregoing, only consider it proper that, admitting the mistake by the tribunal, i.e., as highlighted by the ld. counsel, the appeal is restored back to the file of the first appellate authority for providing an opportunity to the assessee to state his case qua each of the several objections to the deduction u/s. 54F as raised by the said authority, also considering evidence, if any, that may be led by the assessee in this regard, and decide in accordance with law per a speaking order. While ordinarily we would first restore the appeal for being decided by the tribunal, this may not be necessary in the instant case as our order is 5 MA No.13/Asr/2019 (AY: 2007-08) (arising out of MA No.76/Asr/2014) ITO v. Hari Singh itself based on the finding of the said Grounds, to the extent they raise the issue of non-issue of enhancement notice by the first appellate authority, i.e., qua the withdrawal of the said deduction, as valid. Where not valid, it may be appreciated, the restoration of appeal (in the relevant Grounds), even if undisposed, would be of no relevance or consequence. No useful purpose would therefore, i.e., given this finding, be served in restoring the appeal first before the tribunal, the rectification of which would necessarily entail, even as argued by the ld. counsel for the assessee, restoration back to the file of the first appellate authority for complying with the procedural law in the matter. The first appellate authority shall provide due opportunity to the assessee to state his case qua each of the several objections to the deduction u/s. 54F as raised by the said authority, also considering evidence, if any, that may be led by the assessee in this regard, and decide in accordance with law per a speaking order.
The remaining part of the order, i.e., para 3.3, discusses the various aspects of the matter, raised per legal arguments before it, being principally as to why the Revenues' contention of an application u/s. 254(2) being not maintainable in respect of an order u/s. 254(2), would not apply in the facts of the instant case, or otherwise arising for consideration in this regard.
3. The Revenue has now moved an application dated 28/2/2019, impugning the said order u/s. 254(2) dated 05/11/2018 on the following grounds:
a). that the impugned order is barred by time as it stands passed beyond the six month time limit of the order dated 15/4/2014, as prescribed u/s. 254(2) since, i.e., by Finance Act, 2016, w.e.f. 01/6/2016, so that the impugned order could not have been passed after 31/10/2014.
b). that the same tantamounts to a review, impermissible us/. 254(2), and that an application u/s. 254(2) could not have been entertained in respect of an order u/s.
254(2), much less on the same issue, i.e., denial of deduction u/s. 54F without following the requirement of s. 251(2).
The assessee, while relying on paras 3.2 and 3.3 of the IO, relied on the proposition that no application u/s. 254(2) lies against an order u/s. 254(2), so that the only recourse with the Revenue against the impugned order, was to move the Hon'ble High Court in appropriate proceedings, relying on the following decisions toward the same:
6 MA No.13/Asr/2019 (AY: 2007-08)(arising out of MA No.76/Asr/2014) ITO v. Hari Singh
- CIT v. Pearl Woollen Mills [2011] 330 ITR 164 (P&H)
- CIT v. Aiswarya Trading Co. [2011] 331 ITR 521 (Ker)
- CIT v. President, Income Tax Appellate Tribunal [1992] 196 ITR 838 (Ori)
- Padam Prakash (HUF) v. ITO [2011] 8 ITR (T) 135 (Del)(SB)
- ITO v. Iraisaa Hotels (P.) Ltd. (MA No. 29/Mum/2017, dated 10/9/2018)
4. We have heard the parties, and perused the material on record. 4.1 We shall consider the objections raised in seriatim. At the outset it may though be clarified that there is no contention by the Revenue toward there being in fact a compliance by the ld. CIT(A) of s. 251(2) of the Act, the principal issue raised by the assessee per Gds. 2 & 3 of his appeal before the tribunal, or of any finding in its respect by the tribunal, either per its order u/s. 254(1) dated 31/10/2013 or u/s. 254(2) dated 15/4/2014. In fact, the ld. Sr. DR, Sh. Charan Das, was specifically queried in this respect during hearing, to an answer in the negative. This is clarified at this stage as this forms the factual basis of the tribunal's order u/s. 254(2) dated 05/11/2018, the IO.
4.2 The Revenues' claim of the IO being time barred is without any basis in law. Though the order is passed beyond four years of the assesse's application on 19/5/2014, and thus outside the time limit prescribed for the passing of an order u/s. 254(2), the Apex Court in Sree Ayyanar Spg. & Wvg. Mills Ltd. v. CIT [2008] 171 Taxman 498 (SC) clarified that the said time limit shall apply to the filing of the application u/s. 254(2) inasmuch as the applicant, having applied in time, cannot be prejudiced by the Tribunal by not passing the order within the stipulated time period. The application in the instant case was filed by the assessee on 19/5/2014, i.e., within five weeks of the order dated 15/4/2014, so that it is within the revised time limit of six months, even as the same, as admitted per para 3.1(i) of the Application, would apply only to orders passed on or after 01/6/2016. The 7 MA No.13/Asr/2019 (AY: 2007-08) (arising out of MA No.76/Asr/2014) ITO v. Hari Singh assessee's stating in reply that its' MA (No. 76/Asr/2014) did not arise out of the order u/s. 254(2) dated 15/4/2014, but of the order dated 31/10/2013, is without basis on facts as apparent from the record, including the said application itself as well as the order dated 05/11/2018, the IO, for which reference be also made to paras 2 & 3.3 of the said order; the latter being reproduced in this order. Rather, if not against the order dated 15/4/2014, referred to in the application, the assessee would need to show, which he has not, as to how the subject matter of his application dated 19/5/2014, i.e., non-consideration by the tribunal of the passing of the order by the ld. CIT(A) without complying with the provision of s. 251(2), is different from that raised per the first application filed on 17/12/2013. After all, it could not possibly, on the rejection of the first, file another application against the original order on the same issue. In fact, the second application is prima facie not maintainable on the same issue against the order disposing the first application, and which, as we shall presently see, is admitted only on the assessee showing, as a matter of fact, that his objection to the non-adjudication of his relevant Grounds, i.e., Gds. 2 & 3, obtain even after the passing of the order u/s. 254(2), on which specific issue there had been no finding by the tribunal. The assessee by claiming what he does, defeats his own cause as, in that case, the order u/s. 254(2) dated 05/11/2018, cannot be given any sanctity in law in view of the decision in Pearl Woollen Mills (supra).
4.3 The Revenue's objection qua the absence of the power of review stands in fact considered by the tribunal vide para 3.3 of the IO, as under:
'3.3 Before parting we may, however, meet an argument vehemently raised by the Revenue during hearing. That is, that there can be no miscellaneous application (MA) against a MA, so that the instant MA, being the second petition, is not maintainable at the threshold. We do not think that any such blanket proposition can in law be held out. A rectification order only seeks to eliminate a mistake, apparent from record, that is alleged to inform an order sought to be rectified. The same, i.e., a rectification order, as u/s. 254(2), has no locus standi of its own, and merges with the order u/s. 254(1), modifying the latter to the extent of 8 MA No.13/Asr/2019 (AY: 2007-08) (arising out of MA No.76/Asr/2014) ITO v. Hari Singh mistake as rectified. If, therefore, a mistake subsists despite an order u/s. 254(2), i.e., which had imbued the order u/s. 254(1), what in law, one may ask, prevents the applicant to seek rectification of the said mistake yet again by moving a fresh application u/s. 254(2)? In the instant case, the only 'mistake' that is stated to inflict the order u/s. 254(1) is that the assessee's grievance with regard to the requirement of the enhancement notice thereto by the first appellate authority u/s. 251(2), before withdrawing deduction u/s. 54F, had not been met, denying it (him) thus an opportunity to state his case before him. If therefore the same survives the order u/s. 254(2), passed in pursuance to the assessee's application seeking redressal of the said mistake, the assessee can in no way be faulted for requiring tribunals' consideration of the said mistake and, where so, its' removal. It would surely be a different matter if the tribunal has, while passing an order u/s. 254(2), expressed a view that the stated mistake does not exist or rectifies the same to the extent it finds it to. As, for example, with reference to the facts of the instant case, if the first appellate authority had indeed met the requirement of law in giving due notice to the assessee of his intention to withdraw the deduction u/s. 54F. It would again be a different matter if the tribunal had expressed an opinion, either way, in the matter, i.e., found the assessee's grievance as valid or not so. It has not done so, restricting itself only to the merits of the adjudication by the first appellate authority. We have in fact gone ahead to say that the same being essentially a matter of providing an opportunity, we may yet have opined differently where such an opportunity had been provided to the assessee by the tribunal, particularly considering that it held the same opinion, i.e., on merits, as expressed by the first appellate authority. The tribunal, however, has not done so in the instant case. The said mistake is a matter of fact, apparent from record, i.e., the order by the first appellate authority and the tribunals' orders u/s. 254(1) and u/s. 254(2), the relevant part of which stand reproduced supra.
All that is meant when it is said that there could be no rectification application in respect of a rectification order is that there could be no review of such an order, a proposition with which there could be no quarrel. What thus we have in substance held is that though there could be indubitably no review of an order u/s. 254(2), or an order u/s. 254(1) for that matter, a mistake continuing the inform the order u/s. 254(1) could be sought to be rectified through a rectification application despite there being an order u/s. 254(2), where the same is, as in the instant case, silent in the matter. There could in fact also be a case where the order u/s. 254(2) itself is imbued with a mistake, for which therefore the only recourse left open for the applicant is to make a fresh application u/s. 254(2), stating the mistake as well as the reason/s for the said application, i.e., why and how the said mistake is considered to subsist, or a fresh mistake had occurred while passing the rectification order u/s. 254(2). We are thus unable to uphold an absolute proposition to the effect that no rectification application is maintainable pursuant to a rectification order. The instant application by the assessee is maintainable.
The absence of the power of review, as would be apparent, is well accepted, nay, admitted by the tribunal per the IO. It clarifies that where there indeed had been a finding by the tribunal of the assessee having been allowed opportunity by the ld.9 MA No.13/Asr/2019 (AY: 2007-08)
(arising out of MA No.76/Asr/2014) ITO v. Hari Singh CIT(A) while deciding the issue of deduction u/s. 54F, there is no question of the same being examined under rectification proceedings, which are limited only to 'mistakes' which could be of law or of fact, apparent from the record. The tribunal's entire order (dated 05/11/2018) is based on a finding, on a perusal of the record, of the absence of any finding by the tribunal, at any stage, qua the assessee plea, raised per Gds. 2 & 3 of his appeal before it, of having not been allowed any opportunity by the ld. CIT(A) while proceeding to withdraw the deduction u/s. 54F allowed in assessment, enhancing thus his income thereby, and which he was bound to provide u/s. 251(2).
In other words, the only finding by the tribunal is that the assessee's Gds. 2 & 3 remain undisposed. That being the case, there is no question of any merger. Again, the question of review, in the absence of any finding as to adjudication by the tribunal, does not arise. True, the tribunal per its earlier order u/s. 254(2) dated 15/4/2014, does state, vide para 4 thereof, that the issue raised by the assessee per its MA has been dealt with vide order dated 31/10/2013. It is however apparent from the reading of the said order, as well as the order dated 31/10/2013, the relevant parts of both of which are reproduced in the IO, that the 'issue' referred to is the deduction u/s. 54F on merits. There is no reference either in the order dated 07/3/2013 by the ld. CIT(A), or the order u/s. 254(1) dated 31/10/2013, both of which concern the issue of the said deduction on merits, to either s. 251(2) or, alternatively, to the grant of opportunity to the assessee by the first appellate authority before deciding the issue of deduction u/s. 54F. In fact, there is no reference, again, either to s. 251(2) or to the grant of opportunity by the ld. CIT(A), in the tribunal's order u/s. 254(2) dated 15/4/2014, indicating of it being cognizant of the matter being raised. How could, then, it be said aspect was considered or adjudicated by the Tribunal. Or, that Gds. 2 & 3 of the assessee's appeal before the tribunal stand disposed by it? It is in fact this that led to the filing of the 10 MA No.13/Asr/2019 (AY: 2007-08) (arising out of MA No.76/Asr/2014) ITO v. Hari Singh second application by the assessee, which, otherwise, as afore-stated, is not maintainable. It is based on this finding that the assessee's this limited prayer, i.e., the non-grant of opportunity by the ld. CIT(A) and, thus, non-compliance, in fact, of the provision of s. 251(2) by him, stands accepted by the tribunal per the IO. There has been no examination, much less review, of the issue on merits. It would be, even as clarified per the IO, a different matter if the tribunal, per its order dated 15/4/2014 had held that there is no non-compliance of s. 251(2), in which case this finding would preclude entertaining another MA in the matter. There has been thus no transgression of the decision in Pearl Woollen Mills (supra). In the facts of that case, the tribunal, per its order dated 31/7/1979, reviewed the matter afresh. It is this re-adjudication by the tribunal that was disapproved by the Hon'ble jurisdictional High Court. There is, at the cost of repetition, absence of any adjudication by the tribunal qua the assessee's grievance with reference to s. 251(2), which is a mistake, held vide the IO, to inform its order dated 31/10/2013 and, further, survive its' order u/s. 254(2) dated 15/4/2014 inasmuch as there is again no reference thereto in the latter order. The only limited issue, thus, that stands decided by the tribunal was whether indeed there was in fact any adjudication by the tribunal of its grievance qua non-compliance of s. 251(2) by the ld. CIT(A) and, if so, whether the same constitutes a mistake apparent from record. The said decision, in our humble opinion, would not apply in the facts of the case.
Continuing further, however, having issued a finding per the IO, on a perusal of the material on record, that there had indeed been a denial of opportunity to the assessee, as warranted u/s. 251(2), and which aspect of the matter, raised per Gd. 2 & 3 of the assessee's appeal before the tribunal, remain un-adressed by it despite having been raised in miscellaneous petition, visiting this finding again would amount to a review, impermissible in law, and which is the purport of the several 11 MA No.13/Asr/2019 (AY: 2007-08) (arising out of MA No.76/Asr/2014) ITO v. Hari Singh decisions cited by the assessee before us, reliance on which is therefore apposite. The law, without doubt, cannot operate differently depending upon who stands to succeed, the assesse or the Revenue. As has been sought to be emphasized at length in the earlier part of this order, there has been no review by the tribunal while passing the IO inasmuch as there was no finding by the tribunal qua the aspect of non-compliance of s. 251(2) of the Act by the tribunal per its' earlier orders.
4.4 In view of the foregoing, there has been no excess of jurisdiction per the impugned order, so as to recall or otherwise warrant any interference with the said order. We decide accordingly.
5. In the result, the instant application by the Revenue is dismissed.
Order pronounced in the open Court on September 06, 2019 Sd/- Sd/-
(N.K.Choudhry) (Sanjay Arora)
Judicial Member Accountant Member
Dated: 06/09/2019
Copy of the order forwarded to:
(1) Income Tax Officer, Ward 3(5), Zira, Ferozepur
(2) Sh. Hari Singh, Ex.-MLA, Makhu Road, Zira
(3) The CIT concerned
(4) The CIT (Appeals), Bathinda
(5) The SR DR, I.T.A.T.
True copy
By Order