Income Tax Appellate Tribunal - Raipur
The Dy. Cit- Cir.-1(1),, Bilaspur(Cg) vs South Eastern Coalfilds Ltd.,, ... on 22 May, 2024
आयकर अपील य अ धकरण यायपीठ रायपुर म।
IN THE INCOME TAX APPELLATE TRIBUNAL,
RAIPUR BENCH, RAIPUR
BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER
AND
SHRI ARUN KHODPIA, ACCOUNTANT MEMBER
Sl. MA Nos. Name of Applicant Name of Respondent Asst. Year
No.
1. 108/RPR/2023 The ACIT, Circle-1(1), South Eastern 2012-13
(arising out of ITA Bilaspur Coalfields Ltd.
No.170/RPR/2018) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
2. 109/RPR/2023 The DCIT, Circle-1(1), South Eastern 2012-13
(arising out of ITA Bilaspur Coalfields Ltd.
No.167/RPR/2018) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
3. 110/RPR/2023 The DCIT, Circle-1(1), South Eastern 2014-15
(arising out of ITA Bilaspur Coalfields Ltd.
No.40/RPR/2023) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
4. 111/RPR/2023 The ACIT, Circle-1(1), South Eastern 2015-16
(arising out of ITA Bilaspur Coalfields Ltd.
No.41/RPR/2023) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
5. 112/RPR/2023 The DCIT, Circle-1(1), South Eastern 2016-17
(arising out of ITA Bilaspur Coalfields Ltd.
No.42/RPR/2023) Seepat Road,
Bilaspur (C.G.)
2
MA Nos. 108 to 120/RPR/2023
PAN: AADCS2066E
6. 113/RPR/2023 The DCIT, Circle-1(1), South Eastern 2013-14
(arising out of ITA Bilaspur Coalfields Ltd.
No.39/RPR/2023) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
7. 114/RPR/2023 The DCIT, Circle-1(1), South Eastern 2009-10
(arising out of ITA Bilaspur Coalfields Ltd.
No.156/RPR/2014) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
8. 115/RPR/2023 The DCIT, Circle-1(1), South Eastern 2009-10
(arising out of ITA Bilaspur Coalfields Ltd.
No.152/RPR/2014) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
9. 116/RPR/2023 The DCIT, Circle-1(1), South Eastern 2010-11
(arising out of ITA Bilaspur Coalfields Ltd.
No.163/RPR/2017) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
10. 117/RPR/2023 The Jt.CIT, (OSD), South Eastern 2010-11
(arising out of ITA Circle-1(1), Bilaspur Coalfields Ltd.
No.66/RPR/2021) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
11. 118/RPR/2023 The DCIT, Circle-1(1), South Eastern 2011-12
(arising out of ITA Bilaspur Coalfields Ltd.
No.144/RPR/2017) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
3
MA Nos. 108 to 120/RPR/2023
12. 119/RPR/2023 The DCIT, Circle-1(1), South Eastern 2011-12
(arising out of ITA Bilaspur Coalfields Ltd.
No.97/RPR/2017) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
13. 120/RPR/2023 The DCIT, Circle-1(1), South Eastern 2010-11
(arising out of ITA Bilaspur Coalfields Ltd.
No.143/RPR/2017) Seepat Road,
Bilaspur (C.G.)
PAN: AADCS2066E
Assessee by : S/shri Ajit Korde, Advocate &
Ankur Goel, CA
Revenue by : Shri Debashis Lahiri, CIT-DR
सुनवाई क तार ख / Date of Hearing : 23.02.2024
घोषणा क तार ख / Date of Pronouncement : 22.05.2024
आदे श / ORDER
PER RAVISH SOOD, JM
The captioned miscellaneous applications filed by the revenue on 09.11.2023 arises from the consolidated order passed by the Tribunal in ITA No.152/RPR/2014 & 12 Others dated 09.06.2023. As the facts and issues involved in the captioned applications are identical and arises from a consolidated order passed by the Tribunal, therefore, the same are being taken up and disposed off by way of a common order.
4
MA Nos. 108 to 120/RPR/2023
2. We shall first take up the application filed by the revenue in MA No.108/RPR/2023 (arising out of ITA No.170/RPR/2018) as the lead matter for adjudication, and the order therein passed shall mutatis-mutandis apply to the remaining miscellaneous applications. For the sake of clarity, the grievance of the department by filing the present application is culled out as under: (relevant extract) " 6. The Hon'ble ITAT in its order has held that the penalty imposed on the assessee violation of the mandate of Sec. 274(1) of the Act as the AO fail to clearly put the assess to notice as regards the default for which penalty u/s.271(1)(c) was sought to be imposed. i.e, 'concealment of income' or 'furnishing of inaccurate particulars of income' or both in Show Cause Notices (SCNs) dated 31.01.2015, 11.04.2017 and 11.08.2017 which left the assessee guessing of the default for which he was being proceeded against, and divested of an opportunity to put forth an explanation before the AO that no such penalty was called for in its case. Accordingly, the ITAT has quashed the penalty order u/s.271(1)(c) for the want of valid assumption of jurisdiction on the part of the A.O. The assessee at the time of penalty proceedings was afforded ample opportunity. The penalty order u/s.271(1)(c) was passed on 04.09.2017 which is more than a year after when the first show cause notice was issued to the assessee. If the assessee was in ambiguity about the default for which penalty u/s.271(1)(c) was sought to be imposed it could have raised concern to the AO, but the assessee had never availed such opportunity. The assessee had at no earlier point of time raised the plea that on account of a defect in the notice, they were put to prejudice. If the case of the assessee is that they have been put to prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter. This was never the plea of the assessee either before the Assessing Officer or before the first Appellate Authority. Hence, the decision of the Hon'ble ITAT the mandate of Sec.274(1) of the Act were violated and quashing the penalty order for want of valid assumption of jurisdiction on the part of the A.O are not acceptable.
7. The Hon'ble High Court of Madras in the case of Sundaram Finance Ltd. vs. Asst. Commissioner of Income Tax, CO. Circle VI (4), Chennai [2018] 93 taxmann.com 250 (Madras) while dealing with the identical Issue has dismissed the appeal of the assessee. The Special Leave Petition (SLP) filed by the assessee against the order(supra), was dismissed by the Hon'ble Apex Court in 5 MA Nos. 108 to 120/RPR/2023 Sundaram Finance Ltd. vs. Deputy Commissioner of Income Tax, [2018] 99 taxmann.com 152 (SC).
8. Similar issue was also dealt with by the Honbie HIGH COURT OF MADRAS in the case of Gangotri Textiles Ltd. vs. Deputy Commissioner of Income Tax, Corporate Circle 2, Coimbatore [2020] 121 taxmann.com 171 (Madras) wherein Assessing officer levied penalty under section 271(1)(c) which was upheld by both C1T(A) and ITAT -On appeal to High Court, assessee contended that notice issued under section 274 read with section 271(1)(c) was defective as it stated that it appeared to Assessing Officer that assessee concealed particulars of income or furnished inaccurate particulars of income and word 'or' had been used and not 'and'. In support of the contentions the learned counsel of the assessee referred to the following decisions for invoking two limbs of Section 271(1)(c) of IT Act by AO which are enumerated below:
1. CIT v. SSA's Emerald Meadows [2016] 73 taxmann.com 248/242 Taxman 180 (SC)
2. CIT v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 (Kar.)
3. CIT v. SSA's Emerald Meadows [2016] 73 taxmann. com 241 (Kar.)
4. Ventura Textiles v. CIT [2020] 117 taxmann.com 182 (Bom.)
5. S. Chandrasekar v. Asstt. CIT [2017] 88 taxmann.com 459/396 ITR 538 (Kar.)
6. Gayathri Exports v, Asstt. CIT [IT Appeal No. 640 of 2015, dated 24-4-2018]
7. S.P. Prasad v. Asstt. CIT [IT Appeal No. 170 of 2010, dated 20-
11-2018]
8. CIT v. Virgo Marketing (P.) Ltd. [2008] 171 Taxman 156 (Delhi)
9. CIT v. Manu Engg. Works [1980] 122 1TR 306 (Guj.)
10. Pr.CIT v. Smt. Baisetty Revathi [2018] 99 taxmann.com 442/[2017] 398 ITR 88 (Andhra Pradesh HC)
11. ITO v. Nayan C. Shah [IT Appeal No. 2822 (Ahd.) of 2011, dated 7-3-2012]
12. Muninaga Reddy v. Asstt. CIT [2017] 88 taxmann.com 545/396 ITR 398 (Kar.) 6 MA Nos. 108 to 120/RPR/2023
13. Safina Hotels (P.) Ltd. v. CIT [2016] 66 taxmann.com 334/237 Taxman 702 (Kar.) The Hon'ble HIGH COURT OF MADRAS had dismissed the appeal of the assessee. The Hon'ble High Court has discussed the issue in para 8,9,10 &15 of its order. The relevant portion of the order is reproduced verbatim hereunder:
"8 After elaborately hearing the learned counsels on either side and carefully perusing the materials placed before this Court including the decisions relied on by the learned counsels on either side, the first issue to be considered is whether the notice dated 12-3-2015 issued under section 274 r/w. 271(1)(c) of the Act is defective. The argument of M/s. S. Yogalakshrni, learned counsel for the appellant is that the notice stated that it appears to the Assessing Officer that the assessee concealed the particulars of income or furnished inaccurate particulars of income. It is the argument that the word tor' has been used and not 'and' . The Assessing Officer did not apply his mind while issuing the notice to state as to whether he was of the prima facie view that the assessee concealed the particulars of income or furnished inaccurate particulars of Income Therefore it is the submission that this defect is inherent, which goes to the root of the matter and all consequential proceedings would have to be rendered as non-est. Among the decisions, which were relied on by M/s. S. Yogalakshmi, learned counsel for the appellant, emphasis was laid c decision in Manjunatha Cotton & Ginning Factory. This decision is pressed into sena substantiate her contention that if the notice does not specify as to which limb of Section 271(1)(c) is attracted, the penalty proceedings are vitiated. Unfortunately, no contention was advanced by the assessee at any earlier point of time and for the first before this Court such a contention is advanced The submission of the learned counsel that this, being the question of law, can be raised. We do not agree with the submission for more than one reason. Firstly, a defect in the notice, if according to the assessee wo result in a jurisdictional error, is not merely a pure question of law, but a mixed question fact and law. If such is the position, the vigilant assessee, more particularly, a listed company like the assessee before us should point out the factual issue at the very first instance. If that was not done by the assessee, then it goes to show that the assessee not prejudiced by the use of the expression 'or'."
9. This very question was considered in the case of Sundaram Finance Ltd., wherein an identical submission was made by the assessee by placing reliance on Manjunatha Cotton and Ginning Factory. The Court taking note of the fact that the authorities concurrently rejected the explanation offered by the assessee and refused to interfere with the factual finding. In paragraph 16 of the 7 MA Nos. 108 to 120/RPR/2023 judgment, the argument regarding defective notice was considered and answered against the assessee which is quoted herein below:
16. We have perused the notices and we find that the relevant columns have been marked, more particularly, when the case against the assessee is that they have concealed particulars of income and furnished inaccurate particulars of income.
Therefore, the contention raised by the assessee is liable to be rejected on facts. That apart, this issue can never be a question of law in the assessee's case, as it is purely a question of fact. Apart from that„ the assessee had at no earlier point of time raised the plea that on account of a defect in the notice, they were put to prejudice. All violations will not result in nullifying the orders passed by statutory authorities. If the case of the assessee is that they have been put to prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter. This was never the plea of the assessee either before the Assessing Officer or before the first Appellate Authority or before the Tribunal or before this Court when the Tax Case Appeals were filed and it was only after 10 years, when the appeals were listed for final hearing, this issue is sought to be raised. Thus on facts, we could safely conclude that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under section 274 r/w, Section 271 of the Act. Therefore, principles of natural justice cannot be read in abstract and the assessee, being a limited company, having wide network in various financial services, should definitely be precluded from raising such a plea at this belated stage.
10. The SLP filed by the assessee against the above decision was dismissed, Sundaram Finance Ltd. (supra) Further; we find that in the reply given by the assessee on 8-4-2015, the assessee would state that there is no concealment any income or furnishing any inaccurate particulars. Therefore, the assessee understood the notice to be a notice for concealment of any income or furnishing any inaccurate particulars and therefore the assessee cannot be permitted to raise a contention before this Court for the first time alleging defect in the notice. Thus, in the considered view of this Court, the assessee is precluded from raising any such contention regarding the validity of the notice.
15. The learned counsel had argued that the defect in the penalty notice Is a question of law which can be raised by the assessee at any point of time. We have considered this submission and we have rejected it. The learned counsel relied on the decision of the Hon'ble Supreme Court in the case of K Lubna to submit that if the factual 8 MA Nos. 108 to 120/RPR/2023 foundation for a case has been laid and the legal consequences of the same having been examined, the examination of such legal consequences would be a pure question of law. We have noted the factual position. The assessee understood the notice to be under both heads, namely, furnishing of inaccurate particulars and concealment of income. This is evident from the assessee's reply dated 8-4-2015 to the show cause notice dated 12-3-2015. Therefore, the decision in the case of K. Lubna does not help the assessee, as there is no substantial question of law arising from such contention.
19. In the result, the tax case appeal is dismissed and the Substantial Questions of law are answered against the assessee. No costs. Consequently, connected miscellaneous petitions are closed."
The Special Leave Petition (SLP) filed by the assessee against the aforesaid order has been I dismissed by the Hon'ble Apex Court in Gangotri Textiles Ltd. vs. Deputy Commissioner of Income Tax, Corporate Circle 2, Coimbatore [2022] 137 taxmann.com 198 (SC)/[2022] 286 Taxman 357 (SC)[18-02-2022].
3. In view of the facts enumerated above and In the light of decision of Hon'ble Apex Court and Hon'ble Madras High Court in the cases of Sundaram Finance Ltd. vs. Asst. Commissioner of Income Tax, and Gangotri Textiles Ltd. vs. Deputy Commissioner of Income Tax, it is explicit that there is an apparent error in the order of the Hon'ble Tribunal and, therefore, this M.A is being filed for recalling the order dated 09.06.2023 in the interest of justice.
4. In a case with similar issues, the Hon'ble Madras High Court has dismissed the appeal of the assessee in Gangotri Textiles Ltd. vs. Deputy Commissioner of Income Tax, Coimbatore [2020] 121 taxmann.com 171 (Madras). Further, Hon'ble Supreme Court of India has also dismissed the Special Leave Petition (SLP) filed by the assessee against the decision of the Madras High Court. In view of the decision of the Hon'ble Supreme Court of India in the case mentioned supra, a cause for filing a Miscellaneous Application to correct that error can be said to have arisen. Moreover, the Hon'ble AP High Court In the case of CIT Vs. Chandulal reported in 152 ITR 238 has held that where assessee dearly understood tile nature of offence alleged against him, notice issued u/s. 274 would not be invalid simply because ITO failed to strike off inappropriate portion of language in said notice describing alleged offence. Also, the Hon'ble AP High court in the case of Sreenivasa Pitty & Sons vs CIT reported in 173 ITR 306, has held that even though the notice was defective, the assessee understood the notice as one for levy of penalty under section 271(1)(c) of the Act and sent a reply on whit penalty was levied. 'Therefore, no prejudice was caused to the 9 MA Nos. 108 to 120/RPR/2023 assessee by the defective n of the notice as he had full opportunity before the ITO to set out his defense against the levy of penalty u/s.271(1)(c) of the IT Act. Moreover, the Hon'ble High Court of Bombay in the of Ventura Textiles Ltd, vs CM Mumbai City-II [2020] 117 taxmann.com (Bombay) has held that 'while we answer question number D i.e. initiation as well as at time of imposition of the penalty the Assessing Officer was not dear as to which limb of sect 271(1)(c) was attracted' is against the appellant/assessee and in favour of the revenue".
5. Considering the above facts, Miscellaneous Application u/s 254(2) of the Income Tax 1961 before the Hon'ble ITAT, Raipur Is required to be filed with a request to consider the case Merits rather than dismissing the appeal of the department merely on the basis non-striking relevant limb in the show-cause notice as the Hon'ble ITAT was not justified in dismissing the appeal filed by the Department and allowing the appeal of the assessee."
3. The Ld. Departmental Representative ( for short 'DR') has filed before us written submissions/report which reads as under:
" The consolidated order in the case for AYs 2009- 10 to 2016- 17 has quashed penalty orders passed by the AO in these years considering the fact that by not clearly pointing out whether the penalty was being initiated for concealment of income or for furnishing of inaccurate particulars in the notice, the AO had failed to assume jurisdiction.
Revenue has argued, following the principle set in the case of Sundaram Finance Ltd., [2018] 403 ITR 407 (Madras), upheld in [2018] 99 taxmann.com 152 (SC), that the issue herein is principally a question of putting the assessee to prejudice or not. In other words, whether principles of natural justice were violated or not.
During the course of hearing, I had also pointed out that Hon'ble Apex court in the case of Selvi J. Jayalalitha, [2017] 392 ITR 97 (SC), at para 174 etc., has clearly pointed out that the issues involved in penalty proceeding are different from those involved in the assessment proceedings. Therefore, findings in the assessment proceedings cannot automatically be adopted in the penalty order.
In the penalty proceedings, the issues are to be considered a fresh to ascertain the offence or violation. In other words, whether penalty is fit to be imposed on account of concealment or due to furnishing of inaccurate particulars, has to be ascertained in the course of penal proceedings.
10
MA Nos. 108 to 120/RPR/2023 This, manifestly, signifies that failure to indicate either of the options in the penalty notice will not vitiate principles of law. So far the case laws are concerned, it will be pertinent to mention that after considering the cases relied upon by the Id. Bench, Hon'ble Bombay high court in the case of Veena Estate (P.) Ltd., [2024] 158 taxmann.com 341 (Bombay), has held the issue in favour of Revenue.
Further, in the case of the assessee while detection of short credit of income. disallowance of claims of 'land compensation & rehabilitation' and payments to ESM transporters, in absence of bills & vouchers etc., constituted concealment of income; additions made on account of L D penalty, prior period interest claims etc. were due to filing of inaccurate particulars. Therefore, the AO appropriately did not choose either of the options as both were fit for application, depending on the facts behind a particular addition." The Ld. Senior DR submitted that as the orders passed by the Tribunal suffers from a mistake which is patent and apparent from record, therefore, the same is rendered as amenable for rectification under sub-section (2) of Section 254 of the Act.
4. On a perusal of the contents of the aforesaid miscellaneous application, it transpires that it is the claim of the revenue that the order passed by the Tribunal while disposing off the assessee's appeal suffers from a mistake which is apparent from record. Elaborating on its claim, it is stated by the revenue that the Tribunal had failed to appreciate that a notice u/s. 274 of the Act would not be rendered as invalid simply because the A.O had failed to strike-off the irrelevant limb in the body of the said show cause notice. Also, the revenue by drawing support from judicial pronouncements had stated that no prejudice was caused to the assessee by the defective nature of notice as 11 MA Nos. 108 to 120/RPR/2023 it had full opportunity before the A.O to set out its defense against the levy of penalty u/s. 271(1)(c) of the Act. It is, thus, the claim of the revenue that the failure of the Tribunal to consider the aforesaid material facts had rendered its order as suffering from a mistake apparent from record making it amenable for rectification under sub-section (2) of Section 254 of the Act.
5. Shri Ajit Korde, Ld. Authorized Representative (for short 'AR') for the assessee company at the threshold submitted that as the Tribunal after deliberating at length on the issue, had dismissed the appeal of the revenue, based on a well-reasoned order and the department had failed to point out any mistake apparent from record emanating therefrom, thus, the same falls beyond the scope and ken of the power vested with the Tribunal u/s. 254(2) of the Act which is confined only to rectification of a mistake apparent and obvious from record. It was submitted by the Ld. AR that the revenue could not bring out a case through its miscellaneous application which would bring it within the purview of "mistake apparent from record". It was further submitted by the Ld. AR that the department by filing the present application is seeking a review of the order of the Tribunal which is not permissible u/s.254(2) of the Act. The Ld. AR in support of his aforesaid contention had relied on the judgment of the Hon'ble High Court of Madras in the case of Visvas Promoters (P) Ltd. Vs. ITAT, (2009) 185 Taxman 145 (Madras) and the order of the ITAT, Raipur in the case of ACIT-1(1), Raipur Vs. M/s. Manoj Kumar Agrawal, MA No.24/RPR/2019 dated 17.04.2023.
12
MA Nos. 108 to 120/RPR/2023
6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and material available on record as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
7. Apropos the reliance placed by the revenue on the judgments of the Hon'ble non-jurisdictional high courts, we are afraid that the same cannot be pressed into service for seeking a review of the order passed by the Tribunal. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC). The Hon'ble Apex Court had, inter alia, observed that where the judgment of the Jurisdictional High Court or that of the Apex Court was not brought to the notice of the Tribunal in the course of the original proceedings, the same renders the order so passed as suffering from a mistake apparent from record which thus renders the same amenable for rectification u/s. 254(2) of the Act. For the sake of clarity, the observation of the Hon'ble Apex Court is culled out as under:
"As stated earlier, the decision was rendered in appeal by the Income Tax Appellate Tribunal, Rajkot. Miscellaneous Application came to be filed by the assessee under sub- section (2) of Section 254 of the Act stating therein that a decision of the `Jurisdictional Court', i.e. the High Court of Gujarat in Hiralal Bhagwati was not brought to the notice of the Tribunal and thus there was a "mistake apparent from record" which required rectification.
The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a "mistake apparent from the record"? In our opinion, both - the Tribunal and the High Court - were right in holding 13 MA Nos. 108 to 120/RPR/2023 that such a mistake can be said to be a "mistake apparent from the record"
which could be rectified under Section 254(2)."
Although the judgment of the Hon'ble non-jurisdictional High Courts are binding on the Tribunal in the course of the appellate proceedings, but the same as observed by us hereinabove, cannot form a basis for seeking u/s. 254(2) of the Act a rectification of the order passed by the Tribunal.
8. We are of the view that that in the garb of the aforesaid miscellaneous application the revenue is seeking a review of the order of the Tribunal, which is beyond the scope of its powers as envisaged u/s. 254(2) of the Act. Our aforesaid view is supported by the judgment of the Hon'ble Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50 (SC), wherein the Hon'ble Apex Court had 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 points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question.......an error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on debatable point of law is not a mistake apparent from the record........"
Also, similar view had been taken by the Hon'ble Supreme Court in the case of Commissioner of Income Tax (IT-4) Vs. Reliance Telecom Ltd., (2021) 133 taxmann.com 41 (SC), wherein it was held as under: 14
MA Nos. 108 to 120/RPR/2023 "From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by Section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT.
6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under Section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that.
Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case."
(emphasis supplied by us)
9. Also, we find that the Hon'ble High Court of Bombay in the case of CIT Vs. Ramesh Electric & Trading Company, (1993) 203 ITR 497 (Bom.) had held that the scope of section 254(2) is limited to rectification of a mistake apparent from record itself and not rectification in error of judgment. The relevant observations of the Hon'ble High Court are as under:
"Under s. 254(2) of the IT Act, 1961, the Tribunal may, 'with a view to rectifying any mistake apparent from the record', amend any order passed by it under subs (1) within the time prescribed therein. It is an accepted position that the Tribunal does not have any power to review its own orders under the provisions of the IT Act, 1961.15
MA Nos. 108 to 120/RPR/2023 The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order. In the present case, in the first order, there is no mistake which is apparent from the record at all. The Tribunal was required to decide whether the commission payment of Rs.54,000 was deductible under s. 37. After examining the circumstances, the Tribunal came to a conclusion that it was not so deductible. The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake the Tribunal is entitled to correct is not an error of judgment but a mistake which is apparent from the record itself. The Tribunal has, patently, far exceeded its jurisdiction under s. 254(2) in redeciding the entire dispute which was before it, in this fashion, and the Tribunal has committed a gross and inexplicable error. Failure by 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."
10. Apropos the reliance drawn by the revenue from the orders of the Hon'ble Apex Court wherein Special Leave Petitions (SLPs) filed by the respective assessees on the subject issue had been dismissed, we are of the view that as a mere dismissal of the SLP does not tantamount to merger of the orders of the Hon'ble High Courts with that of the Hon'ble Apex Court, therefore, support drawn by the department by construing the dismissal of the SLPs by the Hon'ble Apex Court as an order of the Hon'ble Apex Court does not merit acceptance. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of Kunhaymmed and Others Vs. State of Kerala & Another, 245 ITR 360 (SC). The Hon'ble Apex Court in its aforesaid order had inter alia, observed that if the petition seeking grant of leave to appeal is dismissed, it is an expression of opinion by the Court that a case for invoking appellate jurisdiction of the Court was not made out. It was 16 MA Nos. 108 to 120/RPR/2023 further observed that an order refusing special leave to appeal may be a non- speaking order or a speaking one but in either case it does not attract the doctrine of merger. The Hon'ble Apex Court had observed that an order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed. It was further observed that whatever be the phraseology employed in the order of dismissal, if it is a non- speaking order, i.e. it does not assign reasons for dismissing the special leave petition, it would neither attract the doctrine of merger so as to stand substituted in place of the order put in issue before it nor would it be a declaration of law by the Supreme Court under Article 141 of the Constitution for there is no law which has been declared. For the sake of clarity the observations of the Hon'ble Apex Court are culled out as under:
"Dismissal at stage of special leave - without reasons - no res judicata, no merger Having so analysed and defined the two stages of the jurisdiction conferred by Article 136, now we proceed to deal with a number of decisions cited at the Bar during the course of hearing and dealing with the legal tenor of an order of Supreme Court dismissing a special leave petition. In Workmen of Cochin Port Trust Vs. Board of Trustees of the Cochin Port Trust and Another 1978 (3) SCC 119, a Three-Judges Bench of this Court has held that dismissal of special leave petition by the Supreme Court by a non-speaking order of dismissal where no reasons were given does not constitute res judicata. All that can be said to have been decided by the Court is that it was not a fit case where special leave should be granted. That may be due to various reasons. During the course of the judgement, their Lordships have observed that dismissal of a special leave petition under Article 136 against the order of a Tribunal did not necessarily bar the entertainment of a writ petition under Article 226 against the order of the Tribunal. The decision of Madras High Court in The Management of W. India Match Co. Ltd. Vs. Industrial Tribunal, AIR 1958 Mad 398, 403 was cited before their Lordships. The High Court had taken the view that the right to apply for leave to appeal to Supreme Court under Article 136, if it could be called a right at all, cannot be equated to 17 MA Nos. 108 to 120/RPR/2023 a right to appeal and that a High Court could not refuse to entertain an application under Article 226 of the Constitution on the ground that the aggrieved party could move Supreme Court under Article 136 of the Constitution. Their Lordships observed that such a broad statement of law is not quite accurate, although substantially it is correct.
In Indian Oil Corporation Ltd. Vs. State of Bihar and Ors. - AIR 1986 SC 1780 there was a labour dispute adjudicated upon by an award made by the Labour Court. The employer moved the Supreme Court by filing special leave petition against the award which was dismissed by a non-speaking order in the following terms :-
The special leave petition is dismissed. Thereafter the employer approached the High Court by preferring a petition under Article 226 of the Constitution seeking quashing of the award of the Labour Court. On behalf of the employee the principal contention raised was that in view of the order of the Supreme Court dismissing the special leave petition preferred against the award of the Labour Court it was not legally open to the employer to approach the High Court under Article 226 of the Constitution challenging the very same award. The plea prevailed with the High Court forming an opinion that the doctrine of election was applicable and the employer having chosen the remedy of approaching a superior court and having failed therein he could not thereafter resort to the alternative remedy of approaching the High Court. This decision of the High Court was put in issue before the Supreme Court. This Court held that the view taken by the High Court was not right and that the High Court should have gone into the merits of the writ petition. Referring to two earlier decisions of this Court, it was further held :-
the effect of a non-speaking order of dismissal of a special leave petition, without anything more indicating the grounds or reasons of its dismissal must, by necessary implication, be taken to be that this Court had decided only that it was not a fit case where special leave should be granted. This conclusion may have been reached by this Court due to several reasons. When the order passed by this Court was not a speaking one, it is not correct to assume that this Court had necessarily decided implicitly all the questions in relation to the merits of the award, which was under challenge before this Court in the special leave petition. A writ proceeding is a wholly different and distinct proceeding. Questions which can be said to have been decided by this Court expressly, implicity or even constructively while dismissing the special leave petition cannot, of course, be re- opened in a subsequent writ proceeding before the High Court. But neither on the principle of res judicata nor on any principle of public policy analogous thereto, would the order of this Court dismissing the special leave petition operate to bar the trial of identical issues in a separate proceeding namely, the writ proceeding before the High Court merely on the basis of an uncertain assumption that the issues must have been decided by this Court at least by implication. It is not correct or safe to extend the principle of res judicata or constructive res judicata to such an extent so as to found it on mere guesswork.18
MA Nos. 108 to 120/RPR/2023 It is not the policy of this Court to entertain special leave petitions and grant leave under Article 136 of the Constitution save in those cases where some substantial question of law of general or public importance is involved or there is manifest injustice resulting from the impugned order or judgment. The dismissal of a special leave petition in limine by a non-speaking order does not therefore justify any inference that by necessary implication the contentions raised in the special leave petition on the merits of the case have been rejected by this Court. It may also be observed that having regard to the very heavy backlog of work in this Court and the necessity to restrict the intake of fresh cases by strictly following the criteria aforementioned, it has very often been the practice of this Court to grant special leave in cases where the party cannot claim effective relief by approaching the concerned High Court under Article 226 of the Constitution. In such cases also the special leave petitions are quite often dismissed only by passing a non-speaking order especially in view of the rulings already given by this Court in the two decisions afore-cited, that such dismissal of the special leave petition will not preclude the party from moving the High Court for seeking relief under Article 226 of the Constitution. In such cases it would work extreme hardship and injustice if the High Court were to close its doors to the petitioner and refuse him relief under Article 226 of the Constitution on the sole ground of dismissal of the special leave petition.
In our opinion what has been stated by this Court applies also to a case where a special leave petition having been dismissed by a non- speaking order the applicant approaches the High Court by moving a petition for review. May be that the Supreme Court was not inclined to exercise its discretionary jurisdiction under Article 136 probably because it felt that it was open to the applicant to move the High Court itself. As nothing has been said specifically in the order dismissing the special leave petition one is left merely guessing. We do not think it would be just to deprive the aggrieved person of the statutory right of seeking relief in review jurisdiction of the High Court if a case for relief in that jurisdiction could be made out merely because a special leave petition under Article 136 of the Constitution had already stood rejected by the Supreme Court by a non-speaking order.
In M/s. Rup Diamonds and others Vs. Union of India and others AIR 1989 SC 674, the law declared by this Court is that it cannot be said that the mere rejection of special leave petition could, by itself, be construed as the imprimatur of this Court on the correctness of the decision sought to be appealed against.
In Wilson Vs. Colchester Justices 1985 (2) All England Law Reports 97, the House of Lords stated;
There are a multitude of reasons why, in a particular case, leave to appeal may be refused by an Appeal Committee. I shall not attempt to embark on an exhaustive list for it would be impossible to do so. One reason may be that the particular case raises no question of general principle but turns on its own facts. Another may be that the facts of the particular case are not suitable as a 19 MA Nos. 108 to 120/RPR/2023 foundation for determining some question of general principle. . Conversely the fact that leave to appeal is given is not of itself an indication that the judgments below are thought to be wrong. It may well be that leave is given in order that the relevant law may be authoritatively restated in clearer terms. In Supreme Court Employees Welfare Association Vs. Union of India and Another 1989 (4) SCC 187, and Yogendra Narayan Chowdhury and Others Vs. Union of India and Others 1996 (7) SCC 1, both decisions by Two-Judges Benches, this Court has held that a non-speaking order of dismissal of a special leave petition cannot lead to assumption that it had necessarily decided by implication the correctness of the decision under challenge. We may refer to a recent decision, by Two-Judges Bench, of this Court in V.M. Salgaocar & Bros. Pvt. Ltd. Vs. Commissioner of Income Tax 2000 (3) Scale 240, holding that when a special leave petition is dismissed, this Court does not comment on the correctness or otherwise of the order from which leave to appeal is sought. What the Court means is that it does not consider it to be a fit case for exercising its jurisdiction under Article 136 of the Constitution. That certainly could not be so when appeal is dismissed though by a non- speaking order. Here the doctrine of merger applies. In that case the Supreme Court upholds the decision of the High Court or of the Tribunal. This doctrine of merger does not apply in the case of dismissal of special leave petition under Article 136. When appeal is dismissed, order of the High Court is merged with that of the Supreme Court. We find ourselves in entire agreement with the law so stated. We are clear in our mind that an order dismissing a special leave petition, more so when it is by a non-speaking order, does not result in merger of the order impugned into the order of the Supreme Court. A few decisions which apparently take a view to the contrary may now be noticed. In Sree Narayana Dharmasanghom Trust Vs. Swami Prakasananda and Others 1997 (6) SCC 78, it was held that a revisional order of the High Court against which a petition for special leave to appeal was dismissed in limine could not have been reviewed by the High Court subsequent to dismissal of S.L.P. by Supreme Court. This decision proceeds on the premises, as stated in para 6 of the order, that It is settled law that even the dismissal of special leave petition in limine operates as a final order between the parties. In our opinion, the order is final in the sense that once a special leave petition is dismissed, whether by a speaking or non- speaking order or whether in limine or on contest, second special leave petition would not lie. However, this statement cannot be stretched and applied to hold that such an order attracts applicability of doctrine of merger and excludes the jurisdiction of the Court or authority passing the order to review the same.
In State of Maharashtra and Anr. Vs. Prabhakar Bhikaji Ingle 1996 (3) SCC 463, the view taken by a Two-Judges Bench of this Court is that the dismissal of special leave petition without a speaking order does not constitute res judicata but the order dealt with in S.L.P., disposed of by a non-speaking order cannot be subjected to review by the Tribunal. In our opinion the law has been too 20 MA Nos. 108 to 120/RPR/2023 broadly stated through the said observation. Learned Judges have been guided by the consideration of judicial discipline which, as we would shortly deal with, is a principle of great relevance and may be attracted in an appropriate case. But we find it difficult to subscribe to the view, as expressed in this decision, that dismissal of SLP without a speaking order amounts to confirmation by Supreme Court of the order against which leave was sought for and the order had stood merged in the order of Supreme Court."
11. We shall now in the backdrop of our aforesaid observations deal with the respective cases as had been relied upon by the revenue in its miscellaneous applications/written submissions, wherein the SLPs had been dismissed by the Hon'ble Apex Court :-
A) M/s. Sundaram Finance Limited Vs. DCIT, SLP (Civil) Diary No. (s) 34548/2018 dated 26.10.2018
12. On a perusal of the order of the Hon'ble Apex Court, it transpires that the SLP filed by the assessee was dismissed in limine. Accordingly, in the backdrop of our aforesaid deliberations that in a case where the SLP is dismissed in limine, there would be no merger of the order of the Hon'ble High Court with that of the Hon'ble Apex Court, we are of the view that the dismissal of SLP of the assessee in the aforementioned case cannot be construed as merger of the order of the High Court in that of the Hon'ble Apex Court as had been claimed by the revenue before us.
B) M/s. Gangotri Textiles Ltd. Vs. DCIT, SLP (Civil) Nos. 1604-1605/2022 dated 18.02.2022
(i) On a perusal of the aforesaid order of the Hon'ble Apex Court, we find that the Hon'ble Apex Court had refrained from interfering with the judgment 21 MA Nos. 108 to 120/RPR/2023 passed by the Hon'ble High Court in exercise of power under Article 136 of the Constitution of India;
(ii) As observed by us hereinabove, the aforesaid dismissal of the SLP by the Hon'ble Apex Court would not tantamount to merger of the order of the Hon'ble High Court in that of the Hon'ble Apex Court;
(iii) Alternatively, a perusal of the order of the Hon'ble High Court of Madras in M/s. Gangotri Textiles Ltd. Vs. DCIT, Koimbatore, Tax Case No.266 of 2018 dated 25.08.2020, reveals that the same is distinguishable on facts. The Hon'ble High Court had dismissed the appeal of the assessee primarily for the reason that the assessee appellant had raised the contention qua validity of the jurisdiction assumed by the A.O in absence of striking off the irrelevant default in the body of the show cause notice issued u/s. 274 of the Act for the first time before the Court. It was observed by the Hon'ble Court that as the aforesaid issue was not merely a pure question of law but a mixed question of facts and law which the assessee ought to have raised at the very first instance before the lower authorities, therefore, it could not be raised for the first time before the Court. Accordingly, as the facts involved in the present case are distinguishable as against those involved in the aforementioned case, therefore, on the said count also, support drawn by the department in the aforesaid case, would not carry its case any further. 22
MA Nos. 108 to 120/RPR/2023 C) State of Karnataka Vs. Selvi J. Jaylalitha and others (2017) 392 ITR 97 (SC),
13. On a perusal of the aforesaid order of the Hon'ble Apex Court, we find that the same was rendered in context of the issue that income tax returns and order passed in the income tax proceedings would not by itself prove that income was lawfully earned by the assessee. We are of the view that as the issue involved in the present case before us is distinguishable on facts as against those involved in the aforementioned case before the Hon'ble Apex Court, therefore, the same would not assist the case of the revenue.
14. As we had after drawing support from a host of judicial pronouncements taken a conscious view while disposing off the appeal as regards the subject issue which was there before us, i.e. validity of the jurisdiction assumed by the A.O for imposing penalty u/s. 271(1)(c) of the Act in absence of striking off the irrelevant default in the body of the show cause notice issued u/s. 274 of the Act, therefore, the view so taken by us, cannot be sought to be reviewed in the garb of an application filed by the revenue u/s. 254(2) of the Act. As the department had failed to point out as to how the order passed by us while disposing off the captioned appeal suffers from any mistake which is glaring, patent, obvious and apparent from record, therein, rendering the same amenable for rectification under sub-section (2) to Section 254 of the Act, therefore, the present application filed by it does not merit acceptance. As the review of an order passed by the Tribunal does not fall within the scope and 23 MA Nos. 108 to 120/RPR/2023 gamut of the jurisdiction vested u/s. 254(2) of the Act, therefore, we are afraid that the present application filed by the revenue cannot be accepted.
15. Before parting, we may herein observe, that as stated by the Ld. AR, and rightly so, the revenue in the garb of the present application filed u/s. 254(2) of the Act had, in fact, sought for a review of the order so passed by us while disposing off the appeal which as observed by us hereinabove does not fall within realm of the powers vested with us u/s. 254(2) of the Act. Accordingly, the miscellaneous application filed by the revenue u/s.254(2) of the Act is dismissed in terms of our aforesaid observations.
16. Resultantly, the miscellaneous application filed by the revenue in MA No.108/RPR/2023 for A.Y.2012-13 being devoid and bereft of any substance is dismissed in terms of our aforesaid observations.
MA Nos. 109 to 120/RPR/2023
17. As the facts and issues involved in the captioned miscellaneous applications filed by the revenue remains the same as were there before us in the aforementioned MA No.108/RPR/2023 for assessment year 2012-13, therefore, our order therein passed while disposing off the said application shall apply mutatis-mutandis for disposing off the captioned applications in MA No.109 to 120/RPR/2023 for A.Ys. 2012-13, 2014-15, 2015-16, 2016-17, 2013-14, 2009-10, 2010-11, 2011-12.
24
MA Nos. 108 to 120/RPR/2023
18. Resultantly, the miscellaneous applications filed by the revenue in MA No.109 to 120 /RPR/2023 for A.Ys. 2012-13, 2014-15, 2015-16, 2016-17, 2013-14, 2009-10, 2010-11, 2011-12 being devoid and bereft of any substance are dismissed in terms of our aforesaid observations.
19. In the combined result, all the miscellaneous applications filed by the revenue are dismissed in terms of our aforesaid observations.
Order pronounced in open court on 22nd day of May, 2024.
Sd/- Sd/-
ARUN KHODPIA RAVISH SOOD
(ACCOUNTANT MEMBER) (JUDICIAL MEMBER)
रायपुर/ RAIPUR ; दनांक / Dated : 22nd May, 2024.
SB
आदे श क त ल प अ े षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals), Raipur (C.G.)
4. The Pr. CIT-1, Raipur (C.G)
5. वभागीय त न ध, आयकर अपील य अ धकरण, रायपुर बच,
रायपुर / DR, ITAT, Raipur Bench, Raipur.
6. गाड फ़ाइल / Guard File.
आदे शानुसार / BY ORDER,
// True Copy //
नजी स चव / Private Secretary
आयकर अपील य अ धकरण, रायपुर / ITAT, Raipur.