Dcit, Cc-1, Chandigarh vs Smt. Aarti Singal, Chandigarh on 18 March, 2021

[Cites 39, Cited by 1]

Income Tax Appellate Tribunal - Chandigarh

Dcit, Cc-1, Chandigarh vs Smt. Aarti Singal, Chandigarh on 18 March, 2021

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए" , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH "A", CHANDIGARH ी एन.के.सैनी, उपा य एवं ी आर.एल. नेगी, या#यक सद%य BEFORE: SHRI. N.K.SAINI, VP & SHRI , R.L. NEGI, JM Miscellaneous Application No. 31 /Chd/2020 (आयकर अपील सं./ ITA No. 706/Chd/2018 नधा रण वष / Assessment Year : 2008-09 The DCIT बनाम Shri Sanjay Singal Central Circle-1 3-Industrial Area, Phase-1 Chandigarh Chandigarh थायी लेखा सं./PAN NO: ANRPS7985C अपीलाथ /Appellant यथ /Respondent Miscellaneous Application No. 32 /Chd/2020 (आयकर अपील सं./ ITA No. 707/Chd/2018 नधा रण वष / Assessment Year : 2010-11 The DCIT बनाम Shri Sanjay Singal Central Circle-1 3-Industrial Area, Phase-1 Chandigarh Chandigarh थायी लेखा सं./PAN NO: ANRPS7985C अपीलाथ /Appellant यथ /Respondent Miscellaneous Application No. 33 /Chd/2020 (आयकर अपील सं./ ITA No. 709/Chd/2018 नधा रण वष / Assessment Year : 2012-13 The DCIT बनाम Shri Sanjay Singal Central Circle-1 3-Industrial Area, Phase-1 Chandigarh Chandigarh थायी लेखा सं./PAN NO: ANRPS7985C अपीलाथ /Appellant यथ /Respondent Miscellaneous Application No. 34 /Chd/2020 (आयकर अपील सं./ ITA No. 712/Chd/2018 नधा रण वष / Assessment Year : 2008-09 The DCIT बनाम Smt. Aarti Singal Central Circle-1 3-Industrial Area, Phase-1 Chandigarh Chandigarh थायी लेखा सं./PAN NO: AEFPS6299L अपीलाथ /Appellant यथ /Respondent Miscellaneous Application No. 35/Chd/2020 (आयकर अपील सं./ ITA No. 713/Chd/2018 2 नधा रण वष / Assessment Year : 2010-11 The DCIT बनाम Smt. Aarti Singal Central Circle-1 3-Industrial Area, Phase-1 Chandigarh Chandigarh थायी लेखा सं./PAN NO: AEFPS6299L अपीलाथ /Appellant यथ /Respondent Miscellaneous Application No. 36/Chd/2020 (आयकर अपील सं./ ITA No. 715/Chd/2018 नधा रण वष / Assessment Year : 2012-13 The DCIT बनाम Smt. Aarti Singal Central Circle-1 3-Industrial Area, Phase-1 Chandigarh Chandigarh थायी लेखा सं./PAN NO: AEFPS6299L अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri S.K. Tulsiyan, Advocate Shri Ashwani Kumar, CA राज व क! ओर से/ Revenue by : Shri G.C. Srivastava (Special Counsel for the Department) Shri Parichay Sonlanki, CA सन ु वाई क! तार&ख/Date of Hearing : 22/12/2020 उदघोषणा क! तार&ख/Date of Pronouncement : 18/03/2021 आदे श/Order PER N.K. SAINI, VICE PRESIDENT These Miscellaneous Applications filed by the Department are directed against the common order dt. 07/02/2020 by the ITAT Bench "A" Chandigarh in ITA No. 706 to 707 & 709/Chd/2018 and 712, 713 & 715/Chd/2018 for the A.Y. 2008-09, 2010-11 and 2012-13 in respect of the assessee namely Shri Sanjay Singal and Smt. Aarti Singal respectively.

2. Common contentions are raised in these Miscellaneous Applications which read as under:

REG: Miscellaneous application u/s 254(2) of the I.T. Act 1961 read with Rule 35A of the I.T. Rules, 1963 in the aforesaid cases, on mistakes apparent on record in order dated 07.02.2020 passed by the Hon'ble Tribunal The Hon'ble Bench has pronounced its order in the above matter on 07.02.2020. A copy of such order is enclosed for reference along with this application as Annexure 'A'.

It is submitted by the Revenue that on perusal of the order passed by the Hon'ble Bench, there are certain apparent mistakes of fact and law which deserve to be rectified u/s 254(2) of the Act. The Revenue would like to highlight these apparent mistakes as under:

I. Omission to consider the submissions of Revenue with regard to the applicability of the Coordinate Bench's decision in the case of Sh. Brij Bhushan Singal & others i. The Hon'ble Bench, in its order dt. 07.02.2020, passed in the cases of Shri. Sanjay Singal & Smt. Aarti Singal has extensively relied on the decision in the case of Sh. Brij Bhushan Singal & others in ITA 1412-1414/Del/2018.

ii. This appears from Para 49 of the impugned order, running from Pages 112-

127. The direction to delete the addition made is solely based on the aforesaid decision.

iii. Revenue had made detailed oral submissions distinguishing the case of Sh. Sanjay Singal with that of Sh. Brij Bhushan Singal and written submissions were also filed in this regard. A copy of these written submissions is enclosed as 'Annexure B'. The written submissions read as under:

"6. On the Question o f applicability o f the case o f Brij Bhushan Singal to the Present case a. Unlike the said case, in the present case there is a clear admission of the assessee that the LTCG was chargeable to tax u/s 68 and accordingly the income was offered u/s 132(4) of the Act.

Reference is invited to Para 132 of the said order which shows that had there been a voluntary surrender in the said case, it would have made difference to the decision there.

b. In the said case, there was no evidence to link the seized documents found in the premises of third party with any incriminating material found at the premises of assessee. (Para 121) In the present case, such a live nexus exists. There is a direct link of the material at the appellants place with that found at the premises of SCS. This has been 4 elaborately discussed by the AO in his order on Pages 43-58 o f the Assessment Order c. Unlike in the case relied upon, there is no retraction b y the people involved in the transaction in the present case. (Para 121 & 113) d. In the present case, each and every bit o f material available with the Department was made available to the assessee even before the voluntary surrender o f income was made.

e. The brokers or entry operators cannot be regarded as third parties. There is adequate material on record to show that they were people known to the appellant and they acted in concert in order to create and avail bogus LTCG.

f. The decision in the case o f NRA Iron and Steel (supra.) from the Hon'ble Supreme Court was rendered long after the decision given in the case and brings to the fore the issue of onus u/s 68 which was not pleaded and considered in the case of Sh. Brij Bhushan Singal.

g. The decisions of other High Courts on the scope of Section 153'A were not pressed into service and in any case the decision of jurisdictional High Court was binding.

h. The case of Andaman Timber has been distinguished by the Coordinate Bench in a similar case (Para 109) i. The reliance on Best Infrastructure is misplaced. In that case, the witness Tarun Goyal was not known to the assessee. In the present case, both SCS and RKK are very well known to the appellants. (Para 108) j. The jurisdictional High Court has held that it would depend on the facts and circumstances of each case to hold whether or not the lack of cross-examination is fatal to the findings arrived at. Reference is invited to the decision of Kusum Lata Thakral, reported in 327ITR 424 at Pages 211-216 of Revenue's CLC k. The basis on which the case of Anil Kumar was distinguished in the said case is clearly absent in the case of the appellant. (Para 103) l. The presumption u/s 132(4) in the cases of SCS and RKK based on material found and their statements is that they acted as entry operators and this presumption in the case of SCS and RKK defining the real nature of their business activities is by itself enough to justify the addition in the present case of the appellant. (Para 121)"

The Hon'ble Tribunal has altogether omitted to take note of the aforesaid submissions and these have somehow remained to be considered.

iv. In the absence of any finding by the Hon'ble Bench to the effect that the aforesaid points of distinction raised by the Revenue are not valid or these are not sufficient to make the case of Brij Bhushan Singal inapplicable, the order of the Hon'ble Bench suffers from the apparent mistake more so when the decision in the said case has become the core basis for deleting the additions made in this case.

v. The most vital point of distinction, as extracted herein above, is that in the case of Sh. Brij Bhushan Singal, there was no voluntary surrender of income u/s 132(4), but in the present case, Sh. Sanjay Singal has voluntarily surrendered an amount of Rs. 250 crores as undisclosed income from the sale of shares in companies managed by entry operators as bogus LTCG. The voluntary surrender was made by Sh. Sanjay Singal after having perused all the seized material and statements of the accomplices to the bogus LTCG claim. It is pertinent to mention again that Sh. Sanjay Singal has made a specific disclosure ofRs. 159.61 crores representing bogus LTCG from the shares in Parrneta Industries.

vi. The crucial nature of such a statement making voluntary surrender of income was recognised by the decision of Coordinate Bench(relied upon for deleting the addition) also in Para 132, where the Hon'ble Bench in that case, noted the absence of voluntary surrender of the person searched.

vii. Similarly, the decision in the case of Sh. Brij Bhushan Singal was on the primary consideration that there was no live nexus between material seized from third parties and the assessee. It was pointed out in the written submissions that such live nexus exists in the present case, as per Part B, Para 6.b of the written submissions. Besides, the written submissions and oral arguments clearly demonstrated the fact that SCS acted as an entry operator in respect of shares of Parrneta Industries and other companies, and this fact alone rendered the claim of LTCG as bogus and the credits in the accounts lacked both creditworthiness and genuineness of the transactions of the assessee with the entities controlled by SCS. The material seized from SCS and RKK and others has thus a live nexus with the claim of the assessee and transactions found recorded in the loose sheets found from the assessee. This made the decision in the case of Sh. Brij Bhushan Singal wholly inapplicable.

viii. It is submitted that had the Hon'ble Bench taken into consideration the submissions of Revenue, the decision in the case of Sh. Brij Bhushan Singal could not have formed the basis to delete addition in this case.

ix. In Para 49 of the order, the Hon'ble tribunal proceeds to rely on the decision in the case of the Coordinate Bench with a finding that the "facts of the present case are identical to the facts involved in the case of "Sh. Brij Bhushan Singal". This finding could not have been reached by the Hon'ble Bench if the distinguishing features pointed out by the Revenue in its oral and written submissions had been considered. The distinguishing features were elaborately detailed in sub-paras (a) to (T) of Para 6, Part B of final submissions of Revenue dt. 30th September 2019.

x. This apparent mistake of omission to consider the valuable submissions of Revenue and the failure to return any finding on such submissions constitutes a mistake apparent on the face and it is therefore prayed that the same may kindly be rectified.

II. No cognizance taken by the Hon'ble Tribunal to the live nexus existing between the Incriminating Material found during search actions at various places/premises 6 i. The Revenue vide detailed written submissions dt. 30th September 2019, in Part B, Para 2 has showcased the nature and degree of incriminating material seized during searches as follows:

"2. EXISTENCE OF INCRIMINATING MATERIAL • Pursuant to these searches, the Directorate of Investigation gathered a host of incriminating material relating to accommodation entries and the false claim of LTCG of the above searched persons in the following manner:

a. Shirish Chandra Shah (SCS) • BIPS folder, containins "Kedia-2" Sheet, which records all the transactions of purchase and sale of shares of Pranneta Industries and other companies. This sheet contains all the details of the transactions undertaken by SCS with RKK, the broker of the appellant.

• The contents of this sheet completely corelate with the trading data of Pranneta Industries received from BSE and reproduced on Pases 32-34 o f Assessment Order and a detailed discussion on the contents and authenticity of this sheet can be found at Pases 17-34 o f Assessment Order • SCS admits that he is in the business of providing accommodation entries by controlling the affairs of 212 companies.

b.     R.K.Kedia (RKK)

•      A copy of ledger named "Deepu" and "Deepu Cheque" seized from the

premises of RKK, which records the details of cash and cheque payments by BPSL routed to SCS through Kedia and Pintu for the shares of Prraneta Industries. A detailed discussion of this ledger corelating with the contents of other searches appears in the Assessment Order on Pases 58-64.

• "Chopra/BPSL Account" found wherein the details of cash received by RKK from BPSL and cheque payments to and from BPSL for providing accommodation entries are recorded.

• "Purohit Ji/Radha Account" found which records the details of transactions undertaken by RKK with Sh. Jagdish Prasad Purohit (JPP). A detailed discussion on these accounts can be found in the Assessment Order on Pases 77-81 and 91-97 • Statement on oath by RKK that he was engaged in the business of providing accommodation entries for a commission and that he had undertaken transactions on behalf of Singals for the availing of bogus LTCG in transactions to the tune of Rs.500 crores.

c. BPSL, Sanjay Singal and others • A record of movement offunds by RTGS from BPSL to SCS controlled companies found and seized from the premises of BPSL. The same movement of funds have also been found in the documents found from SCS, RKK and Pintu. A 7 comparative analysis of the correlation of this data with other seized material appears in the Assessment Order on Pages 43-58. The primary counterparties who have bought the shares of Pranneta Industries from Singals are the companies controlled and managed by SCS. (Para 2.4 - Pase 1 0 - Assessment Order) • On being confronted with evidences and statements as gathered from the search operation at the premises of entry operators (SCS & associated entities), Sanjay Singal himself declared an additional income of Rs. 250 crores during the course of search u/s 132(4) and followed it by way of a disclosure letter.

d. Praveen Kumar Jain (Pintu) • Pintu was working in tandem with SCS and was responsible for receiving cash for SCS and remitting the same back to SCS controlled companies. He has admitted to this fact that he was in the business of providing accommodation entries and was a close affiliate of SCS.

• Evidence in the form of excel sheets were seized from Pintu which recorded the movement offunds through him to SCS. He prepared an account of SCS with him, an extract of which can be found in the Assessment Order on Pase 37 and the cross-checking exercise of these entries with Kedia 2 Sheet and books has been made in the Assessment Order on Pages 38-42.

e. Pranneta Industries • The managing director, Sh. Om Prakash Anandilal Khandelwal and the manager of the company, Sh. Radhe shyam Sharma have admitted in their statements that the company had no real business activities and that is was being used by SCS for providing accommodation entries in various forms. • Additionally, SCS has also admitted to the fact of controlling and managing the affairs of the said company in order to provide accommodation entries.

f. Praveen Kumar Agarwal (PKA) • As an entry operator, he admittedly handled the control and management of more than 200 companies by placing dummy directors to provide accommodation entries. Blue Circle Services has provided payouts to the tune of 170 crores to Singals, out of which 60 crores are through entities managed by PKA.

• Incriminating documents and books of accounts of these companies were seized, which corelated with the data found and seized from RKK. A detailed discussion appears in the Assessment Order on Pages 98-104.

g. Jagdish Prasad Purohit (JPP) • Similar to SCS as an entry operator, JPP was handling the control and management of paper entities for the purpose ofproviding accommodation entries in various forms.

• He has admitted to being in the business of providing accommodation entries. (Para 2 - Page 70 - Assessment Order). Also, that he placed dummy directors in the companies controlled by him and was involved in artificially rigging the price of such companies in order to provide huge payouts to beneficiaries. (AO - Pages 71-75) h. The role of various share brokers in arranging bogus LTCG accommodation entries has been elaborated in Assessment Order on Pases 83-89."

ii. The order of the Hon'ble Bench does not even acknowledge the ample amount of incriminating material relating to the appellant found during the course of various search operations at various places. Such non consideration is despite the fact that such material found at premises of various co-conspirators have been proven beyond doubt to be corelating with each other and in turn, substantiating the existence of cash transactions involving undisclosed income to avail bogus LTCG.

iii. The name of the primary scrip through which a huge amount of bogus LTCG was availed by the Singals, Parrneta Industries, is nowhere whispered in the order. It is pertinent to mention that it is the name of the scrip, by which the transactions were recorded in the seized material, i.e. "Kedia-2" Sheet . "Deepu Cheque/Deepu", "Chopra/BPSL Account" and documents from Pintu. that links the unauthorised transactions between the co-conspirators including Singals. A vital point of such factual matrix is also that the transactions recorded in the seized material relating to the purchase and sale of shares of Parrneta Industries totally corelates with the trade data of Parrneta Industries received from BSE. However, the submissions in this regard seem to have been omitted from consideration. The order also does not acknowledge or consider the statements given by the directors of Parrneta Industries, that their company was being used by entry operators such as SCS to provide accommodation entries to their clients.

Iv Para 38.1 of the order puts forth a list of all the connected entities that were searched by the Investigation Wing while Para 38.2 reiterates the items of incriminating material, as per the earlier submissions of the Revenue. However, the order does not consider or return any finding on the detailed list of seized material considered as incriminating and how it totally corelates with seized material in other searches (as illustrated from the paper-books). A detailed list of the seized material considered as incriminating has been reproduced above at

(i).

v. Para 38.5 of the order considers the exercise of analysing and comparing the seized material undertaken by the AO along with the fact that Pintu maintained his books of account in coded language. It is worthwhile to mention that the result of the exercise by the AO, that all the seized material completely matches and corelates with each other is of utmost importance and has not been taken note of by the Hon'ble Bench in the order. Additionally, although Pintu maintained his books in coded language, the same was explained and decoded by him in his statements.

vi. The Hon'ble Bench, in its order, does not consider or return any finding on the letter filed by RKK, stating on oath that he was involved in the business of providing accommodation entries for a commission and that he had undertaken 9 transactions on behalf of Singals to the tune of Rs. 500 crores in the garb of availing bogus LTCG.

vii. To sum up, the submissions of the Revenue that the matching documents seized during searches from the premises of the various co-conspirators have to be viewed in conjunction with the sworn statements given by the respective persons and further this material has to be matched with the documents found from the premises of the assessee/BPSL.

viii. This submission has remained to be considered and the Hon'ble Tribunal has not returned any finding on this vital aspect of the matter leading to an apparent mistake on record.

III. Non-adjudication of the question as to what constitutes incriminating material.

i. In Para 39 of the order, the Hon'ble Bench has reproduced the detailed issues raised by the Revenue in its submission on the question as to what constitutes the incriminating material. This contention was not raised in the case of Sh. Brij Bhushan Singal relied upon by the Hon'ble Bench. In this regard, the Hon'ble Bench has omitted to take into consideration and to adjudicate the said issues raised by the Revenue, having strong implications on the outcome of the present case and on the interpretation of law in general.

ii. The Revenue strongly pressed the following contentions:

a. There is no requirement that the "incriminating material" cannot include what is found and seized during search at the premises of accomplices or coconspirators.

b. The expression "incriminating material" has to be understood in its normal contextual and common-sense connotations.

c. The material found from the premises of one may be relevant for making assessment in the case of the other and therefore, the expression "incriminating material" would include all relevant material.

d. The incriminating material would also include the material which may on the face of it may or may not be incriminating but when examined along with other material found at one place or the other assumes the nature of being incriminating if these corelate.

e. It is the relevance of the material to the determination of income which is necessary and not the situs or the person from whom the material is seized.

f. Revenue also made reference to the decisions of Goyal Industries [(2014) 49 taxmann.com 203], Ganpati Fincap Services [(2017) 82 taxmann.com 408 (Delhi)] and Rajesh Sunderdas Vaswani [(2016) 76 taxmann.com 311 (Gujarat)] in this regard.

g. The statements u/s 132(4) recorded within the mandate of law and having wide scope as per the language employed in the provision has to be regarded as incriminating material if it incriminates the assessee.

h. No decision of the Hon'ble ITAT or the higher Court records any finding to the effect that even if incriminating material is found in connected searches, the Assessing Officer cannot treat these as incriminating material merely because such material has not been recovered from the premises of the assessee.

iii. The Hon'ble Tribunal reproduces these detailed submissions of the Revenue in Para 39 of the order but disregards these submissions in the final consideration without returning a finding that these contentions of Revenue do not have merit.

iv. It is submitted that the arguments relating to the width and scope of the material and the issue as what constitutes incriminating material was not pressed into service in the case of Sh. Brij Bhushan Singal and hence these submissions of the Revenue did not deserve to be brushed aside without these being rejected on their merits.

v. The omission of the Hon'ble Bench to return a finding on the sustainability or otherwise of the arguments of the Revenue constitutes a mistake apparent from record.

IV. The Hon'ble Bench has omitted to take into consideration the reliance of the Revenue on the binding decision of the jurisdictional High Court in the case of Kusum Lata Thakral (327ITR 424), where it is observed that whether or not the denial of opportunity of cross examination results in a violation of principles of natural justice depends on facts of each case. Revenue also relied on the decision of Nova Promoters and Finlease Pvt. Ltd. (342 ITR 169) where the Hon'ble High Court of Delhi held that when the Assessing Officer had provided copies of statements to the assessee, the rules of natural justice stand complied with.

Revenue also referred to the case of V3S Infratech in 104 taxmann.com 403 where the Hon'ble Coordinate Bench observed that where the entire statements of the witness was provided to the assessee and there was sufficient corroborative material apart from the statement, the proceedings cannot be vitiated merely on the ground that the opportunity to cross examination was not provided.

These submissions were neither raised before nor considered by the Coordinate Bench in the case of Sh. Brij Bhushan Singal. Therefore, the Hon'ble Bench deciding the case of Sh. Sanjay Singal ought to have considered these submissions of the Revenue and returned a finding accepting or rejecting these submissions before deleting the addition by relying in the decision of the Coordinate Bench.

V. Revenue submits that the omission to consider and return a finding one way or the other with regard to these vital submissions of Revenue constitutes a mistake apparent from record. The reliance by the Hon'ble Bench on the decision of the Coordinate Bench is of no avail since these vital submissions relate to facts which either did not exist before the said Bench or these represent arguments which were not pressed into service by the representative of the Revenue before the Coordinate Bench. Thus, the aforesaid submissions begged a finding, whether in favour of Revenue or against it, from the Hon'ble Bench.

VI. Attention of the Hon'ble Bench is drawn to the observations of the Hon'ble Supreme Court in the case of Shukla & Brothers reported in (2010) 3 taxmann.com 622 (SC) on this aspect of the matter.

i. In Para 18, the Hon'ble Apex court quotes with approval the words of Justice Atkinson:

"The first matter to consider is the purpose of the judgment. To my mind there are four purposes for any judgment that is written:

(1)             to clarify your own thoughts;
(2)             to explain your decision to the parties;
(3)             to communicate the reasons for the decision to the public; and
(4)             to provide reasons for an appeal Court to consider."



ii,    In Para 21, the Hon'ble Supreme Court states as under:

"There is hardly any statutory provision under the Income Tax Act or under the Constitution itself requiring recording of reasons in the judgments but it is no more res Integra and stands unequivocally settled by different judgments of this Court holding that, the courts and tribunals are required to pass reasoned judgments/orders. In fact, Order XIV Rule 2 read with Order XX Rule 1 of the Code of Civil Procedure requires that, the Court should record findings on each issue and such findings which obviously should be reasoned would form part of the judgment, which in turn would be the basis for writing a decree of the Court. "

iii. In Para 12 of the said judgement, the Hon'ble Supreme Court states as under: "At the cost of repetition, we may notice, that this Court has consistently taken the view that recording of reasons is an essential feature of dispensation ofjustice. A litigant who approaches the Court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. These principles are not only applicable to administrative or executive actions, but they apply with equal force and, in fact, with a greater degree of precision to judicial pronouncements. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the Court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher Court in the event of challenge to that judgment. Now, we may refer to certain judgments of this Court as well as of the High Courts which have taken this view. "

VII. In the light of the above, it is respectfully submitted that the order of the Hon'ble Bench suffers from an apparent mistake of law in not adhering to the principles set out by the Hon'ble Supreme Court.

VIII. In view of the above, it is prayed that the Hon'ble Bench may kindly consider the above mistakes which are apparent from record and pass an appropriate order rectifying such mistake. Revenue prays that the aforesaid submissions may 12 kindly be considered and even if these are not acceptable, these may be rejected on merits by explicit findings.

3. Ld. Special Counsel for the Department reiterated the contents of the aforesaid Misc. Application and further submitted that the facts of the present case were different from the facts involved in the case of Shri Brij Bhushan Singal which has been followed by the ITAT, in the said case there was no voluntarily surrender therefore, the mistake was apparent from the record. It was further submitted that the statements of the assessees under section 132(4) of the Act were recorded after considering the incriminating material, this fact has not been considered by the ITAT, particularly the submission that the statement is also an incriminating material. It was stated that non consideration of the argument is a mistake of law and the error of judgment can be rectified. Accordingly it was submitted that since there is a mistake apparent from the record therefore the order passed by the ITAT dt. 07/02/2020 may be recalled. Reliance was placed on the decision of the Hon'ble Apex Court in the case of Shukla & Brothers reported at (2010) 3 taxmann.com 622.

4. In his rival submissions the Ld. Counsel for the Assessee submitted that there is no mistake apparent from the record in the well reasoned order dt. 07/02/2020 passed by the ITAT wherein discussion has been made in para 39 to 47 therefore there is no mistake in the order passed by the ITAT and that the ITAT followed the earlier order of the co-ordinate Bench at Delhi in the case of Shri Brij Bhushan Singla and others in ITA No. 1412 - 1414/Del/2018 which was having the identical facts vis a vis of the present assessees. It was further stated that the Department wants to get the aforesaid order dated 07/02/2020, reviewed which is not permissible.

4.1 It was stated that the assertion of the Department in the MA that certain submissions made by the Ld. Standing Counsel for the Revenue were not considered is factually incorrect and fallacious, the MA is apparently motivated by the Department's illicit intention to procure a total review of the original order under the grab of rectification of mistake apparent from the record. It was submitted that the ITAT has passed a well reasoned order after duly considering all the submissions made on behalf 13 of the Revenue and the Assessee and it is trite that the correctness of the decision recorded by the ITAT on merits cannot be challenged by the Revenue in the garb of a rectification petition under section 254(2) of the Act which is confined rectification of mistakes apparent from the record which is patent, self-evident, glaring, obvious, whose discovery is not dependent on argument or elaboration and does not require complicated process of investigation, argument or proof and that the decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification. The reliance was placed on the following case laws :

• T.S. Balaram, ITO Vs. Volkart Brothers & Ors. (1971) 82 ITR 50 (SC) • Karan & Co. Vs. ITAT (2002) 253 ITR 131 (Del) • Express Newspapers Ltd. Vs. DCIT & Anr (2010) 320 ITR 12 (Mad) • CIT Vs. Bhagwati Developers (P) Ltd. (2003) 261 ITR 658 • CIT Vs. Vardhman Spinning (1997) 226 ITR 296 (P&H) 4.2 It was submitted that the contention of the Revenue that the ITAT in its impugned order has altogether omitted to take note of the submissions on the question of applicability of the case of Shri Brij Bhushan Singal & Others in ITA No. 1412-

1414/Del/2018 to the present case, is factually incorrect, since the Tribunal has taken due note of and discussed the crux of the Departmental submission in para 39.3 at page 102 of the impugned order.

4.3 It was further stated that the Ld. Special Counsel tried to carve out certain dissimilarities of the case of Shri Brij Bhushan Singal vis a vis present case. In this regard it was submitted that the case of Shri Brij Bhushan Singal bears striking resemblance to the facts of the present case making the judgment so rendered was squarely applicable to the facts of the present case and that the holding of the ITAT Delhi Bench in the case of Brij Bhushan Singal & Ors Vs. ACIT are equally applicable to the strikingly similar facts of 14 the present case. Thus the case is fully covered by the judgment rendered by the ITAT In the said case.

4.4 It was submitted that the ITAT has given a specific findings that no reliance could be placed on the statement of Shri R.K. Kedia and the documents seized from his premises, unless the Assessee was granted an opportunity of cross examination of the said person and that not allowing an opportunity of cross examination of the said person despite specific request by the assessee was fatal to the assessment warranting deletion of addition made on the said basis.

4.5 As regards to the alleged admission of the assessee that the LTCG was chargeable to tax under section 68, it was stated that the said surrender was adhoc and made under duress & pressure solely to buy peace of mind without referring to any incriminating material in the course of search and the said offer of additional income which was subsequently withdrawn at the time of filing the return, in response to the notice under section 153A, therefore, it could not form the basis of framing the assessment under section 153A of the Act. Accordingly the impugned surrender and subsequent withdrawal of the same in the present case had no bearing on the applicability of the judgment rendered in the case of Shri Brij Bhushan Singal & Ors, which was squarely applicable to the assessee's case on account of its close proximity on facts.

4.6 It was further submitted that the assessee's name was nowhere mentioned in the documents seized from the premises of SCS and the documents seized from SCS merely contained narration of alleged entries interse between various alleged entry operators and there were noting of few entries with respect to transactions with BPSL Group Companies pertaining to share capital and capital advances with certain companies, which as per the claim of the Revenue Authorities were companies controlled and managed by SCS and thus entries were duly accounted for in the books of such companies. Therefore the same if at all was relevant, would constitute the subject 15 matter of consideration in the assessments of such companies and not to the issue of LTCG in the case of the assessee.

4.7 It was emphasized that the people involved in the alleged transactions were third parties and the present assessees were not concerned either with their statements or their retraction. Therefore if at all those statements were intended to be used in evidence, the assessees were required to be offered a prior opportunity of cross examination.

4.8 It was emphasized that in the case of Shri Brij Bhushan Singal and others, also the impugned material was made available to the assessee therein but since the assessees were not offered any opportunity of cross examination of the third parties from whose possession & control such documents were seized, such documents were held not to have any evidentiary value in the assessments framed in the case of the assessees therein. Therefore the facts of the assessee's case were identical to the facts involved in the case of Shri Brij Bhushan Singal and other which had been followed by the ITAT in the case of the present assessees. It was submitted that the guiding judicial principle in respect of search assessment under section 153A pursuant to serach conducted after 31/05/2003 had been laid down by the Hon'ble Delhi High Court in the case of Principle CIT Vs. Meeta Gutgutia which had been affirmed by Hon'ble Supreme Court and in the case of CIT(C)-III Vs. Kabul Chawla (2015) 61 Taxman.com 412 (Delhi) wherein it has been held that an assessment has to be made under section 153A of the Act only on the basis of seized material and in the absence of any incriminating material the completed assessment can be reiterated and abated assessment or reassessment can be made. And that under section 153A of the Act non pending assessment for unabated assessment years can be interfered with by the A.O. only on the basis of incriminating material unearthed during the course of search in the case of the assessee's, however, nowhere the Hon'ble court used the phraseology " and such other materials or information as are available with the A.O. and relatable to such evidence"

in the context of search assessment under section 153A of the Act.

4.9 Ld. Counsel for the Assessee emphasized that after giving due consideration of the submissions and paper book filed by the Ld. Special Counsel for the Revenue (including all the judgments relied upon by the Ld. DR and alleged points of dissimilarities with the case of Shri Brij Bhushan Singal and others) and the Assessee's Rejoinder and Counter to the same, the ITAT finally passed this order dt. 07/02/2020 interalia holding that the judgment rendered by the Coordinate Bench in the case of Shri Brij Bhushan Singal and others (supra) was wholly relevant to the facts of the present case and following specific findings had been given at page no. 110 at para 48 of the order dt. 07/02/2020.

That admittedly, the appeals under consideration relates to the years prior to the search and the assessment framed were unabated.

That in the present case no incriminating material was found during the course of aforesaid search and even earlier when the search took place on 03/03/2010 and the survey took place on 27/12/2012 no incriminating material was found from the business / residential premises of the assessee.

That the present assessment was framed under section 153A of the Act. It is well settled that the addition under section 153A of the Act can be made only on the basis of the incriminating material found during the course of search.

That in the present case the A.O. made the addition under section 68 of the Act on the basis of material found in search which took place in the case of SCS, Shri R.K. Kedia and Pintu.

That the A.O. considered the statement of third parties as incriminating material for the purpose of making the addition in assessment made under section 153A of the Act, however no opportunity to cross examine those parties was provided to the assessee.

That the Ld. CIT(A) himself admitted at page no. 176 of the impugned order that no incriminating material was found from the possession of the assessee during the course of search.

4.10 Our attention was drawn towards para 48 at page no. 112 to 126 of the order dt.

07/02/2020 and it was stated that the relevant excerpts from the order rendered in the case of Shri Brij Bhushan Singal and Others (supra) laying down the broad proposition of 17 law which were found to wholly relevant to the facts of the assessee's case by the ITAT, have been reproduced in the aforesaid referred to para no. 49. It was stated that the contention of the Revenue in the MA that the valuable submissions of the Revenue with respect to the alleged non applicability of the case of Shri Brij Bhushan Singal and Others to the facts of the present case were altogether omitted to be taken note of in the impugned order of the ITAT, was factually incorrect. Rather the submissions of the Ld. DR in this respect were duly considered by the ITAT and found to be untenable.

4.11 As regards to the contention of the Revenue that the ITAT ought to have recorded an explicit finding to the effect that the aforesaid points of distinction raised by the Revenue were not valid or not sufficient to make the case of Brij Bhushan Singal and Others inapplicable was concerned, the same was also fallacious in view of the trite law that it is not open for the party in the MA under section 254(2) of the Act to contend that the ITAT ought to have dealt with or written the order in a particular manner. The reliance was placed on the decision of the ITAT Bangalore Bench in the case of ITO Vs. Karnataka Power Transmission Corporation Ltd. (KPTCL) (2019) 177 DTR (Bang) 241 and of the Hon'ble Jurisdictioal High Court in the case of Popular Engineering Co. Vs. ITAT and Anr reported at (2001) 248 ITR 577 (P&H).

4.12 As regards to the contention of the Ld. Special Counsel for the Revenue that no cognizance was taken by the ITAT on the live nexus between the incriminating material found during the search action at various places / premises, it was submitted that the ITAT has taken a detailed note of all the alleged third party evidence including the details of the various seized documents and the alleged third party statements recorded in the course of various searches, the correlation between the various third party evidences etc at page no. 3 to 23 at para 6 to 7 of the order dt. 07/02/2020 and all the allegations made by the A.O. in the assessment order had been discussed in depth by the ITAT. And that the order passed by the Ld. CIT(A) dismissing the appeal of the assessee had been discussed at length at para 22 to 34 of the aforesaid impugned order. It was pointed out that the submissions of the Ld. Counsel for the assessee were 18 discussed in para 36 to 37 while rival submission of the Ld. Special Counsel for the Revenue alongwith his written submission including all the case laws relied upon, had been discussed in details at para no. 38 to 45, pages 94 to 108 of the impugned order and after taking a detailed note of all the material alleged as incriminating by the Department and the submissions of both the sides with respect to the legal validity and evidentiary value of the same vis a vis the assessment framed, the findings have been given at para no. 48 to 51, page 110 to 127 of the impugned order. It was also stated that after discussing the totality of the facts the ITAT at para 49, pages 112 to 126 has gone on to extensively quote from the order passed by the Coordinate Bench in the case of Shri Brij Bhushan Singal & Ors (supra) rendered on similar facts, wherein various settled principle of law had been discussed in depth by the Coordinate Bench after discussing catena of judicial pronouncement in support of each proposition. The facts of the said case were found by the ITAT to be in close proximity to the facts of the present case, therefore, the said order of the Coordinate Bench was followed. It was submitted that since the ITAT has considered each and every aspect in broad manner therefore the contention of the Ld. Special Counsel for the Revenue that the submission seems to have been omitted from consideration was erroneous and misplaced.

4.13 As regards to this contention of the Ld. Special Counsel for the Revenue that the statement recorded under section 132(4) of the Act were also to be considered as incriminating material, the Ld. Counsel for the assessee pointed out that the ITAT had given a clear cut finding that the addition cannot be made under section 153A of the Act on the basis of the statement recorded under section 132(4) of the Act particularly when the opportunity to cross examine the witness whose statement was relied, was not given to the assessee and that failure to allow opportunity to the assessee to cross-

examine the witness by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order was a serious flaw which makes the order nullity. The reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Andamand Timber Industries Ltd. Vs. CCE(2015) 281 CTR 241.

4.14 It was further stated that para 121 of the order of the ITAT Delhi Bench in the case of Shri Brij Bhushan Singal and Ors has been quoted by the ITAT at page 126 of the impugned order wherein the Coordinate Bench has held that the addition under section 153A is not warranted on the basis of statement of third parties recorded under section 132(4) / 133A and third parties evidences / documents and that presumption under section 132(4A) / 292C is available only in the case of the persons in whose possession and control the documents were found but it is not available in respect to third parties and that after analyzing the legal position, it has been held in para 49 at page 126 & 127of the impugned order that the addition made by the A.O. under section 153A r.w.s 143(3) of the Act and sustained by the Ld. CIT(A) in the absence of any incriminating material found during the course of search under section 132(1) of the Act in respect of unabated A.Y's were not justified, accordingly the same were deleted. It was stated that in the present case since the entries recorded in documents seized from the third parties in course of separate search action in their cases, were not found to be relevant for adjudicating the case of the assessee in respect of unabated assessment year under section 153A of the Act and the ITAT did not feel the need to record separate findings on merits with respect to such third party documentation / statements and the same cannot be construed as an apparent error amenable to a rectification petition under section 254(2) of the Act.

4.15 As regards to this contention of the Ld. Special Counsel for the assessee that the question as to what constitutes incriminating material was not adjudicated by the ITAT.

It was submitted that the ITAT has discussed the crux of the submissions of the Ld. Counsel for the assessee at para 46 to 47.2 at page no. 108 & 109 and in his written submissions the Ld. Counsel for the Assessee distinguished the case laws relied by the Ld. Special Counsel for the revenue, it had been acknowledged at para no 47.2 at page no. 109 of the impugned order and after having taken an explicit note of the facts and material on record and the submissions advanced by both the sides, the ITAT 20 had given its considered finding and decision at para 48 to 51 at page nos. 110 to 127 and held as under:

It is well settled that the addition u/s 153A of the Act can only be made on the basis of incriminating material found during the course of search-para 48, page110 of the impugned order.

That no incriminating material was found during the course of the search actions in the case of the Assessee(s) para 48, page 110 of the impugned order.

That in the present case, the A.O. made addition u/s 68 on the basis of material found in course of search actions in the cases of SCS, RKK and Pintu, however name of the Assessee was not found recorded in most of the documents found during the aforesaid searches - para 48, page 110 of the impugned order.

That the A.O had proceeded to utilize statements of third parties for making addition u/s 153A, however no opportunity to cross examine those parties was provided to the assessee - para 48, page 110 of the impugned order.

That the Ld. CIT(A) had himself admitted at page 176 of his order that no incriminating material was found from the possession of the assessee during the course of search - para 48, page 110 of the impugned order.

That unless there is incriminating material qua each of the AYs in which additions are sought to be made pursuant to search and seizure operation, the assumption of jurisdiction would be vitiated in law - internal para 35 of the quoted judgment at page 116 of the impugned order.

Statements recorded u/s 132(4) do not by themselves constitute incriminating material as explained by the Hon'ble Delhi High Court in the case of CIT Vs. Harjeev Aggarwal - internal para 38 of the quoted judgment at page 116 of the impugned order.

Not allowing the assessee to cross-examine the witness by the Adjudicating Authority though the statement of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounted to violation of principles of natural justice because of which the assessee was adversely affected - internal para 109 of the quoted judgment, page 117 of the impugned order.

That no reliance can be placed on the testimony of RKK who had indulged in double speaking and taking contrary stands - internal para 113 of the quoted judgment, page 118 of the impugned order.

Confession of undisclosed income obtained under undue influence/coercion if not based upon credible evidence do not serve any useful purpose, the Department should focus on gathering evidences during search/survey operations and strictly avoid obtaining admission of undisclosed income under coercion/undue influence-internal paras 115 & 116 of the quoted judgment, page 119 of the impugned order.

Assessments made pursuant to search operation are required to be based on incriminating materials discovered as a result of search operation in the case of the assessee and not on recorded statements - internal para 117 of the quoted judgment at page 120 of the impugned order.

Any and every document cannot be and is not an incriminating document. No addition can be made for a particular assessment year without there being an incriminating material qua that assessment year which would justify such and addition- internal para 24 of the quoted judgment at page 121 of the impugned order.

No addition could be made u/s 153A where the Department culd not point out from the Panchanama any material found during the course of search which could give even remote possibilities of altering the income of the assessee based on any incriminating documents - internal para 10 of the quoted judgment at page 121 of the impugned order.

No addition can be made u/s 153A on the basis of statements of third parties recorded u/s 132(4) / 133A and third party evidences / documentation. Presumption u/s 132(4A)/292C of the Act is available only in the case of the person in whose possession and control the documents are found but it is not available in respect of third parties- internal para 121 of the quoted judgment at page 126 of the impugned order.

That the additions made by the A.O. u/s 153A r.w.s 143(3) and sustained by the Ld. CIT(A) in the absence of any incriminating material found during the course of search u/s 132(1) of the Act in respect of unabated assessment years in the case of the Assessee(s) herein was not justified and hence deleted - para 49 (bottom), pages 126 & 127 of the impugned order.

Therefore contrary to the averment of the Department in the present Misc. Application, the ITAT has taken due note of the arguments advanced by the Ld. Special Counsel for the assessee in his written submissions and also counter thereto of the Ld. Counsel for the Assessee, the ITAT proceeded to give its explicit findings and decision on the issue in the manner and to the extent deemed relevant for the purpose of deciding the appeal of the assessee for the assessment year under consideration, therefore, it is not open for the Department in its MA under section 254(2) of the Act to challenge the manner in which the impugned order had been written by the ITAT.

4.16 As regards to the submission of the Ld. Standing Counsel for the Department that the issue as to what constitutes incriminating material was not pressed into service in the case of Shri Brij Bhushan Singal and Others (supra) was considered. It was stated that much like the case of the assessee(s) herein, the case of the Department in Brij Bhushan Singal & Ors was also based on the premise that the third party documentation and evidence constituted incriminating material which could be utilized in assessment framed under section 153A of the Act. In the case of the assessees, the evidentiary value of such third party documentation and statements vis a vis the assessment under section 153A of the Act in the case of the assessee therein was pressed into service with significant force by the Department in the said case and after considering the totality of the fact, the submission advanced by both the sides and the various judicial pronouncement on the said issue, the ITAT Delhi Bench in the case of Shri Brij Bhushan Singal and Ors (supra) at page no. 117 of the order in the said case, held that the assessment made pursuant to search operation are required to be based on incriminating material discovered as a result of search operation in the case of assessee 22 and further held at para 121 of the said order that no addition under section 153A of the Act could be made in the case of the assessee on the basis of statements of third party recorded under section 132(4)/133A of the Act. Therefore the contention of the Department that the said issue was not before the Coordinate Bench of the ITAT in the case of Shri Brij Bhushan Singal and Ors. was factually incorrect.

4.17 As regards to the allegation of the Department that the reliance placed by the special counsel for the Revenue that judgment rendered in various case laws were not considered by the ITAT. It was submitted that the ITAT had taken note of the aforesaid judgments at para 45, page 107 of the impugned order.

4.18 It was pointed out that the assessee in his rejoinder dt. 07/08/2019 differentiated the judgments relied by the Ld. Special Counsel for the Revenue which was taken note by the ITAT. Therefore this allegation had no footing to stand particularly when the ITAT at para 47.2 page 109 of the impugned order had given due cognizance to the fact that the Ld. Counsel for the Assessee vide his written submission distinguished all the case laws relied upon by the Ld. Special Counsel for the Revenue.

4.19 It was reiterated that there had been no failure on the part of the ITAT to consider the submissions made on behalf of the Department and the ITAT had passed a well reasoned order after taking due cognizance of the submissions made on behalf of the Department and the assessee. Contrary to the contention of the Department, the judgment of Coordinate Bench in the case of Shri Brij Bhushan Singal and Ors. was very much relevant to the strikingly similar facts of the present case. And the Department in questioning the decision of the ITAT to the extent it holds that the judgment rendered by the Coordinate Bench in the case of Shri Brij Bhushan Singal and Ors as relevant to the facts of the present case vide the impugned Misc. Application has in effect challenged the correctness of the decision rendered by the ITAT which is beyond the scope of the powers conferred under section 254(2) of the Act. The reliance was placed on the following case laws:

i. CIT Vs. Earnest Exports Ltd. (2010) 323 ITR 577 (Bom) ii. T.S. Balaram, ITO Vs. Volkart Brothers & Ors (1971) 82 ITR 50 (SC) 23 iii. Popular Engineering Co. Vs. ITAT & Anr (2001) 248 ITR 577 (P&H) 4.20 It was further submitted that the ITAT in the instant case has passed a well reasoned order in consonance with the judicial principles laid down by the Hon'ble Apex Court in the case of Shukla & Brothers (2010) 3 taxmann.com 622(SC)(supra) wherein all the four purposes of judgments as enlisted at para 18 of the said order stood fulfilled in the impugned order of the ITAT in the instant case viz.

i. There is adequate clarity of thoughts;

ii. The decision has been well explained by the Hon'ble Bench; iii. The reasons for decision have been well communicated in the impugned order iv. The impugned order is well reasoned 4.21. Accordingly it was submitted that the Misc. Application moved by the Department is devoid of any merit and beyond the purview of rectification application under section 254(2) of the Act therefore the same may be rejected.

5. In his rejoinder the Ld. Standing Counsel for the Department gave in writing as under:

BRIEF SUBMISSIONS OF REVENUE ON THE REJOINDER FILED

1. Revenue has already made its submissions with regard to the exact details of the mistakes that have inadvertently crept in the order and has also made oral submissions to the effect that these constitute mistakes of 'fact' and mistakes of 'law' and these are so vital as are likely to change the course of the decision of the Hon'ble Tribunal and hence these mistakes deserve to be rectified.

2. These written submissions only seek to submit reply to the submissions, both oral and written, of the Learned Counsel for the assessee, particularly the written counter filed against the Miscellaneous Application of the Revenue, a copy of which has since been made available to us.

3. It is submitted with utmost respect and with all humility that these written submissions seek only to reiterate what was submitted during the course of hearing of the merit appeal. The issue in the present proceeding is a very limited one- Whether there is any mistake apparent from record in the order of Hon'ble IT AT, which deserves to be rectified.

Revenue has urged that non-consideration of certain vital submissions does constitute a mistake apparent from record.

4. In the present case, the Hon'ble Bench has only given its final finding relying solely on the decision of the Coordinate Bench at Delhi in the case of Brij Bhushan Singal & ors. It has reproduced some of the submissions of Revenue but when it comes to analysis and final findings, the Hon'ble Bench has not returned any finding on these vital submissions including the critical points of distinction between the facts of the present case and those of the case before the Coordinate Bench. The discussion does not state whether these submissions have merit or these are rejected. The rationale of such a finding is primary 24 since the lower authorities have already ruled against the appellant on such contentions to sustain the additions. Such a finding becomes even more necessary since the Hon'ble ITAT is the last fact-find authority. Mere reproduction of the arguments advanced by the parties does not tantamount to consideration of the same while deciding the issue.

5. Whether an argument, which is likely to change the course of final decision, has been accepted or rejected after consideration is not a matter of guess work nor can it be left to the parties to make their own conjectures. Revenue has already drawn attention of the Hon'ble Bench to the observations of Hon'ble Supreme Court in this regard in the case of Shukla & Brothers reported in (2010) 3 taxmann.com 622 (SC). These are being reproduced for ease of reference.

i. In Para 18, the Hon'ble Apex court quotes with approval the words of Justice Atkinson:

"The first matter to consider is the purpose of the judgment. To my mind there are four purposes for any judgment that is written:

(1)            to clarify your own thoughts;
(2)            to explain your decision to the parties;
(3)            to communicate the reasons for the decision to the public; and
(4)            to provide reasons for an appeal Court to consider. "


ii.   In Para 21, the Hon'ble Supreme Court states as under:

"There is hardly any statutory provision under the Income Tax Act or under the Constitution itself requiring recording of reasons in the judgments but it is no more res Integra and stands unequivocally settled by different judgments of this Court holding that, the courts and tribunals are required to pass reasoned judgments/orders. In fact, Order XIV Rule 2 read with Order XX Rule 1 of the Code of Civil Procedure requires that, the Court should record findings on each issue and such findings which obviously should be reasoned would form part of the judgment, which in turn would be the basis for writing a decree of the Court."

iii. In Para 12 of the said judgement, the Hon'ble Supreme Court states as under:

"At the cost of repetition, we may notice, that this Court has consistently taken the view that recording of reasons is an essential feature of dispensation of justice. A litigant who approaches the Court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. These principles are not only applicable to administrative or executive actions, but they apply with equal force and, in fact, with a greater degree of precision to judicial pronouncements. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the Court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher Court in the event of challenge to that judgment. Now, we may rejer to certain judgments of this Court as well as of the High Courts which have taken this view. "

6. The Hon'ble 1TAT u/s 254(2) of the Act is bestowed with the power of rectification of order where there are any mistakes apparent on record. It was contended that the Tribunal does not have the power to review its own order and only mistakes apparent on the face of record may be rectified. The submissions of Revenue cannot be suggested to infer that the order should be reviewed. The mistake, if any, has got to be rectified irrespective of the consequences that follow. If rectification of an apparent mistake leads to recall of the order or reversal of the final finding, so be it. Mistake cannot be allowed to exist merely on the apprehension that its rectification may have reversal of the finding.

7. The contention that the Revenue is trying to dictate how the order should be drafted is highly misleading. There is no such suggestion. The finding that certain argument has merit or deserves to be rejected can returned in several paras or in one sentence or even in one word. So long as the order returns the finding, it will be taken that the argument has been considered. However, if there is no whisper as to the merit of such vital facts or legal arguments, particularly when there is concurrent finding of the authorities below, it would constitute a mistake and ought to be rectified.

8. The attention of the Hon'ble Bench is drawn to the following observations of various judicial forums:

i. "Exercise of power to rectify an error apparent from the record is conferred upon the Income-tax Officer in aid of enforcement of a right. The Income-tax Officer is an officer concerned with assessment and collection of revenue, and the power to rectify the order of assessment conferred upon him is to ensure that injustice to the assessee or to the revenue may be avoided. It is implicit in the nature of the power and its entrustment to the authority invested with quasi-judicial functions under the Act, that to do justice it shall be exercised when a mistake apparent from the record is brought to his notice by a person concerned with or interested in the proceeding.

The High Court was, in our judgment, in error in assuming that exercise of the power was discretionary, and the Income-tax Officer could, even if the conditions for its exercise were shown to exist, decline to exercise the power."

[L. Hirday Narain v. Income-tax Officer [1970J 78ITR 26 (SC)] ii. "Scope of the Power of Rectification

12. As stated above, in this case we are concerned with the application under Section 254(2) of the 1961 Act. As stated above, the expression "rectification of mistake from the record" occurs in Section 154. It also finds place in Section 254(2). The purpose behind enactment of Section 254(2) is based on the fundamental principle that no party appearing before the Tribunal, be it an assessee or the department, should suffer on account of any mistake committed by the Tribunal. This fundamental principle has nothing to do with the inherent powers of the Tribunal. In the present case, the Tribunal in its Order dated 10-9-2003 allowing the Rectification Application has given a finding that Samtel Color Ltd.'s case (supra) was cited before it by the assessee but through oversight it had missed out the said judgment while dismissing the appeal filed by the assessee on the question of admissibility/allow ability of the claim of the assessee for enhanced depreciation under Section 43A. One of the important reasons for giving the power of rectification to the Tribunal is to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record.

13. "Rule of precedent" is an important aspect of legal certainty in rule of law. That principle is not obliterated by Section 254(2) of the Income Tax Act, 1961. When prejudice results from an order attributable to the Tribunals mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. In the present case, the Tribunal was justified in exercising its powers under Section 254(2) when it was pointed out to the Tribunal that the judgment of the co-ordinate Bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material, which was already on record. The Tribunal has acknowledged its mistake; it has accordingly rectified its order. In our view, the High Court was not justified in interfering with the said order. We are not going by the doctrine or concept of inherent power. We are simply proceeding on the basis that if prejudice had resulted to the party, which prejudice is attributable to the Tribunal's mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake, which had been done in the present case." \Honda Siel Power Products Ltd. Vs. Commissioner of Income Tax [2007J295 ITR 466 (SC), (2007)12SCC596] 26 iii. "We are not prepared to agree with the said submission. The power intended to be given under section 154 is to rectify an error apparent on the fact of the record.

Amendment of the order is the consequence of the rectification and its purpose is to give effect to the rectification. If the rectification involves an amendment, which will affect the whole of the order, it cannot be said that simply because of the use of the word "amend", which normally may not mean the cancellation of the whole order, the Income Tax Officer should be powerless to rectify the mistake or error which is apparent on the face of the order. The word "amend" with reference to legal documents means correct an error and the expression "amend the order" would mean correct the error in the order. Under section 154 power to rectify the error is to be exercised by correcting the error in the order and the correction must, therefore, extend to the elimination of the error. What the effect of the elimination of the error will be on the original order will depend upon each case. It may be that the elimination of the error may affect only a part of the order. It may also be that the error may be such as may go to the root of the order and its elimination may result in the whole order falling to the ground. In our opinion the Income Tax Officer will be able to amend or correct the order to the extent to which the correction is necessary for rectification of the error and such correction may extend either to the whole of the order or only to part of it. In our opinion, therefore, the Tribunal was right in the view that it has taken and the question raised on the reference must consequently be answered against the department."

[Blue Star Engineering Co. (Bombay) (P.) Ltd. vs. Commissioner of Income Tax, Bombay City (18.12.1968 - BOMHC) : MANU/MH/0022/1968, (1969) 73 ITR 283] iv. "Under section 154, the power to rectify the error must extend to the elimination of the error, even though the error may be such as to go the root of order and its elimination may result in the whole order falling to the ground." [CIT v S.S. Gupta (2002) 257ITR 440 (Raj.)] v. "Mistake" is an ordinary word, but in taxation law, it has a special signification. It is not an arithmetical or clerical error alone that comes within its purview. It comprehends errors which, after a judicious probe into the record from which it is supposed to emanate, are discerned. The word "mistake" is inherently indefinite in scope, as what may be a mistake for one may not be one for another. It is mostly subjective and the dividing line in border areas is thin and indiscernible. It is something which a duly and judiciously instructed mind can find out from the record.

{[T.S. Rajam v. Controller of Estate Duty, (1968) 69 ITR 342, 349(Mad)]. Also see, CITv. M.M.T.C/a>. Ltd., (2000) 246ITR 725, 727-28(Del)} vi. Even then this principle is not always easy of application as was emphasized by the Supreme Court in K.M. Shanmugam v. S. R. V. S. (P.) Ltd. [AIR 1963 SC 1626, 1630]. As observed by the Supreme Court in that case the concept comprised many imponderables and it was not capable of precise definition because no objective criterion could be laid down, the apparent nature of an error, to a large extent, being dependent upon the subjective element. It depended, however, on the facts and circumstances of each case. [CITv. ITAT, (1977) 109ITR 267, 276(Cal)J. vii. At the same time, a mistake capable of being rectified under section 154 is not confined to clerical or arithmetical mistakes."

[M. Subbaraja Mudaliar v. C1T, (1958) 33 ITR 228(Mad); National Rayon Corporation Ltd. v. G. R. Bahmani, (1965) 56 ITR 114(Bom) ; ArvindN. Mafatlal v. ITO, (1957) 32 ITR 350(Bom) ; Ved Parkash Madan Lai v. CIT, (1976) 102 ITR 213(Punj)] viii. "There is no warrant in the Act authorising introduction of an error in the course of proceedings for rectification of another error. The fetters on the jurisdiction to rectify so as to confine the jurisdiction only to patent errors which did not involve any doubt or dispute will not apply to the consequential issues that flow from the application for rectification being accepted. The same result follows even in a case of suo motu rectification. The acceptance of the contrary view would be to allow one party to get away with an inequitable or unjust or even an illegal order. It would be an abdication of jurisdiction by 27 the rectifying authority if it has to leave the matter without considering the unjust consequences flowing from its own order."

[G. Balakrishnan & Bros. P. Ltd. v. State of Tamil Nadu, (1978) 41 STL 450, 454-55(Mad)]

9. The order of the Tribunal fails to consider and contradicts its own stand taken in the case of Brij Bhushan Singal & others, wherein it was clearly expressed and relied upon that the case would have been different (against the assessee) if there was a voluntary disclosure in a search. On the other hand, where there is a voluntary disclosure as in the present case, the Tribunal completely ignores such fact by accepting the baseless and unworthy differentiations drawn by the appellant. The order does not give any consideration to a number of areas of differentiations drawn by the Revenue nor does it revert with any finding of why such arguments were denied or rejected.

10. The MA presents similar other mistakes of Taw' and 'fact' pointing out how the vital arguments have remained to be considered.

11. Therefore, it is humbly prayed that the MA may kindly be considered, and the mistakes may kindly be suitably rectified.

6. We have considered the submissions of both the parties at length and gone through the material available on the record. In the present case it is noticed that the Department vide the present Misc. Application has primarily contended that certain vital submissions advanced on behalf of the Revenue were ignored / not considered by the ITAT. The said allegation has no basis since all the relevant findings given by the A.O. for present case, findings given by the Ld. CIT(A), the argument advanced by the Ld. Special Counsel for the Revenue and his reliance placed on various judgments, the submission of the Ld. Counsel for the Assessee alongwith various case laws relied upon by him and the rejoinder of the Ld. Special Counsel for the Revenue have been discussed in detail in the impugned order dt. 07/02/2020 and that after considering all the aforesaid facts as well as the argument alongwith various judicial pronouncement, a just decision has been taken by the ITAT. The contention of the Ld. Counsel for the Assessee that the facts of the assessees cases were different from case of Shri Brij Bhushan Singal and Ors had already been considered and thereafter it has been held that the facts of the present case were similar to the fact of the case of Shri Brij Bhushan Singal and Ors, therefore this contention of the Ld. Special Counsel for the Assessee that the ITAT omitted to take note of the submission advanced on behalf of the revenue in the impugned order was factually incorrect.

6.1 In the present case, the submissions as well as the cases relied upon by the Ld. Counsel for the Assessee have been mentioned at para 36 to 37.4 page no. 78 to 94 28 and the counter arguments alongwith case laws relied by the Ld. Special Counsel for the Revenue are mentioned at page no. 94 to 108 in para 38 to 45, contents of the rejoinder by the Ld. Counsel for the Assessee are mentioned at para 46 to 47.2 at page no. 105 to 110 of the impugned order. Thereafter the findings have been given and the conclusion drawn by the ITAT in page no. 110 to 127 in Para 48 to 51 of the impugned order. Therefore, in this Misc. Application the Revenue wrongly alleged that the non cognizance of the live nexus existing between the incriminating material found during the search action at various places / premises and non adjudication of the question as to what constitutes the incriminating material, the said allegation is factually incorrect. Since this issue has been discussed at page no. 110 to 112 at para nos. 48 to 48.5 of the impugned order.

6.2 The another contention of the Department is that there was omission to take into consideration the reliance placed by the Revenue on the various decision and return a finding with regard to vital submission of the Revenue is concerned, we have already pointed out that all the submissions and the case laws relied by the Ld. Special Counsel for the revenue find place at page no. 94 to 108 in para 38 to 45 of the impugned order and after considering those submissions as well as case laws, the conclusion has been drawn by the ITAT.

6.3 The another contention of the Department is that the valuable submission of the Revenue with respect to the alleged non applicability of the case of Shri Brij Bhushan Singal and others in ITA No. 1412 to 1414/Delhi/2018 to the facts of the present case were all together omitted to be taken note of in the impugned order by the ITAT, is factually incorrect, since the contention of the Ld. Special Counsel for the Assessee was duly considered and thereafter it was found that the facts of the present case are similar to the facts of the case of Shri Brij Bhushan & Others (supra). In the said case also the A.O. relied the statement of the third parties and opportunity to cross examine the third parties whose statement were relied was not given to the assessee, in the present case also the specific request was made by the assessee for cross examination which was not provided. Infact the case of Shri Brij Bhushan Singal & Others bears a striking resemblance to the facts of the present case. In the said case, it was held that the addition under section 153A can only be made on the basis of incriminating material 29 found during the course of search and opportunity of cross examination of the person whose statement were relied upon by the A.O. were required to be given to the assessee and no reliance could be placed on the testimony of the person who was taking contradictory stand in his statement and that the assessments under section 153A pursuant to a search operation are required to be based on incriminating material discovered as a result of search operation in the case of the assessee and not on the recorded statement of third party which were not cross examined by the assessee and that the presumption under section 132(4A) / 292 C of the Act is available only in the case of person in whose possession and control the documents were found. Therefore, the Tribunal rightly followed the decision of the ITAT Delhi Bench in the case of Shri Brij Bhushan Singal and others (supra). It is a trite that correctness of the decision recorded by the ITAT cannot be challenged by the Revenue in garb of rectification petition under section 254(2) of the Act which is confined to the rectification of mistake apparent from the record which must be patent, self evident, glaring, obvious, whose discovery is not dependent on argument or elaboration and does not require complicated process of investigation, arguments or proof.

6.4 On a similar issue the Hon'ble Apex Court in the case of T.S. Balaram, ITO, Company Circle IV, Bombay Vs. Volkart Brothers Ant Others (supra) held as under:

" A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on pints on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record."

6.5 Similarly the Hon'ble Jurisdictional High Court in the case of CIT Vs. Vardhman Spinning (1997) reported in 226 ITR 296 (supra) held as under;

"The Appellate Tribunal is a creation of a statute and it can exercise only those powers which have been conferred upon it. The only power conferred on the Tribunal under section 254(2) of the Income-Tax Act, 1961, is to rectify any mistake apparent from the record. The jurisdiction to review or modify orders passed by the authorities under the Act cannot be inferred on the basis of a supposed inherent right. Under section 254(1) of the Act, the Appellate Tribunal, after hearing the contesting parties, can pass such orders as it deems fit. Section 254(2) of the Act specifically empowers the Appellate Tribunal, at any time within four years of the date of an order, to amend any order passed by it under section 254(1) of the Act, with a view to rectify any mistake apparent from the record, either suo motu or on an application made. Similar powers have been conferred under section 154 of the Act on every income-tax authority to rectify its mistakes which are apparent from the record. What can be rectified under these two sections is a mistake which is apparent and patent. The mistake has to be such for which no elaborate reasons or inquiry is necessary. Where two opinions are possible, then it cannot be said to be an error apparent on the basis of the record."

6.6 Similarly the Hon'ble Madras High Court in the case of Express Newspapers Ltd. Vs. DCIT And Another (2010) reported in 320 ITR 12 (supra) held as under:

" A patent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of the record and can be corrected under section 254(2) of the Income-tax Act, 1961. Section 254(2) does not confer power on the Tribunal to review its order. Under the grab of rectification of mistake, it is not possible for a party to take further chance of re-arguing the appeal already decided."

It has further been held that " the Tribunal in its order on the appeal had allowed the claim for losses under three heads: (a) claim of loss relating to potato business; (b) claim of loss relating to the dealing in shares and securities; and (c) claim relating to scrap dealings. In respect of all the three points, the Tribunal had considered and discussed all the contentions raised and argued by both the parties elaborately and ultimately recorded its findings. A clear adjudication had been made. The Tribunal was not justified in reviewing its order."

The aforesaid order of the Hon'ble Apex Court has been affirmed by the Hon'ble Supreme Court as reported at (2011) 334 ITR 1(St).

6.7 In the present case as we have already pointed out that there is no mistake apparent from the record therefore by keeping in view the ratio laid down in the aforesaid referred to cases, we are of the view that the Misc. Application moved by the Department is not maintainable. In the present case, it appears that the Department wants to get the order passed by the Tribunal reviewed which is not permissible as the ITAT has no power to review its order and the right platform / forum for redressal of this grievance on any special question of law arising from the order of the ITAT would be the Hon'ble High Court under section 260A of the Act.

6.8 On a similar issue the Hon'ble Kolkata High Court in the case of CIT vs. Bhagwati Developers (P) Ltd. (reported in (2003)261 ITR 658 held as under:

" Under section 254(2), the Appellate Tribunal is clothed with the power to amend with a view to rectify any mistake apparent from the record either on its own motion or on an application by the assessee or the Assessing Officer concerned. The law by now is well- settled. Section 254(2) does not confer a power on the Tribunal to review its earlier order. A mistake apparent from the record must be an obvious and patent mistake and not something which could be established by a long drawn process of reasoning on points on which there may be conceivably two opinions."

6.9 A similar view has been taken by the Hon'ble Delhi High Court in the case of Ras Bihari Bansal Vs. CIT and Another (2007) 293 ITR 365 (Delhi) wherein it has been held as under:

" Section 254 of the Income-tax Act, 1961, enables the concerned authority to rectify any "mistake apparent from the record". It is well settled that an oversight of a fact cannot constitute an apparent mistake rectifiable under this section. Similarly, failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion, is not an error apparent on the record, although it may be an error of judgment. The mere fact that the Tribunal had not allowed a deduction, even if the conclusion is wrong, will be no ground for moving an application under section 254(2) of the Act. Further, in the garb of an application for rectification, the assessee cannot be permitted to reopen and re- argue the whole matter, which is beyond the scope of the section."

7. In the present case, it has also been mentioned in the Misc. Application that the ITAT ought to have passed a reasoned order in accordance with the observation of the Hon'ble Supreme Court in the case of Shukla & Brothers reported in (2010) 3 taxmann.com 622. In the said case, the Hon'ble Apex Court in para 18 quotes " words of Justice Atkinson" :

" The first matter to consider is the purpose of the judgment. To my mind there are four purposes for any judgment that is written:

(1) to clarify your own thoughts;

(2) to explain your decision to the parties;

(3) to communicate the reasons for the decision to the public; and (4) to provide reasons for an appeal Court to consider."

And in para 12 of the said order, it has been held as under:

"At the cost of repetition, we may notice, that this Court has consistently taken the view that recording of reasons is an essential feature of dispensation of justice. A litigant who approaches the Court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could be laed to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. These principles are not only applicable to administrative or executive actions, but they apply with equal force and, in fact, with a greater degree of precision to judicial pronouncements. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the Court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher Court in the event of challenge to that judgment. Now, we may refer to certain judgments of this Court as well as of the High Courts which have taken this view."

7.1 However in the present case the ITAT passed the order in consonance with judicial principle laid down by the Hon'ble Apex Court in the aforesaid referred to case of Shukla & Brothers and all the four preposition of judgment stands fulfilled in the impugned order of the ITAT dt. 07/02/2020 in ITA No. 706/Chd/2018 for the A.Y. 2008-09 viz;

i.         There is adequate clarity on thought
ii.        Decision has been well reasoned
                                                                                           32

iii. The reason for decision have been well communicated.

iv.    The order is well reasoned



7.2    In the present case since all the arguments alongwith the various judicial

pronouncements relied upon by both the parties, were duly considered, there exists no manifest error in the decision of the ITAT. Therefore, in view of the totality of the fact as discussed herein above, we do not see any merit in this Misc. Application moved by the Department.

8. In all other Misc. Applications i.e MA No. 32 to 36/Chd/2020 , the facts are identical and even the rival submissions were similar therefore our findings given in respect of Misc. Application No. 31/Chd/2020 shall apply mutatis mutandis for all other Misc. Applications.

9. In the result, Misc. Applications moved by the Department are dismissed.


       (Order pronounced in the Court on. 18/03/2021)




       Sd/-                                                         Sd/-
   आर.एल. नेगी                                                   एन.के.सैनी,
    (R.L. NEGI )                                               ( N.K. SAINI)
 या#यक सद%य/ Judicial Member                              उपा य / VICE PRESIDENT
AG
Date: 18/03/2021


          आदे श क!   त,ल-प अ.े-षत/ Copy of the order forwarded to :

          1. अपीलाथ / The Appellant
          2.   यथ / The Respondent
          3. आयकर आय/
                    ु त/ CIT
          4. आयकर आय/
                    ु त (अपील)/ The CIT(A)

5. -वभागीय त न4ध, आयकर अपील&य आ4धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH

6. गाड फाईल/ Guard File

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Income Tax Appellate Tribunal - Chandigarh

Dcit, Cc-1, Chandigarh vs Smt. Aarti Singal, Chandigarh on 18 March, 2021