Income Tax Appellate Tribunal - Mumbai
Ito Wd 6(1) (4), Mumbai vs Bloom Systems Pvt. Ltd, Mumbai on 24 July, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL, "B" BENCH
MUMBAI
BEFORE SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT
MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIALMEMBER
M.A. No.67/MUM/2023
(Arising out of ITA No. 2348/MUM/2021 A.Y.2017-18)
&
M.A. No.56/MUM/2023
(Arising out of ITA No. 2404/MUM/2021 A.Y.2019-20)
ITO - 6(1)4, Vs. Bloom Systems Pvt Ltd,
Room No.503, 5th Floor 504, Sai Darshan,
Aayakar Bhavan NC Kelkar Road,
M.K.Road, Dadar (W),
Mumbai -400020. Mumbai-400028.
PAN/GIR No. AAECB3365Q
(अपीलाथ /Applicant ( यथ /Respondent)
Applicant by Sri.Anil Sant.Sr.DR
Respondent Shri.Ajay.R.Singh &
by Shri Akshay Pawar.AR
सन
ु वाई क तार ख/Date of Hearing 28.06.2024
घोषणा क तार ख/Date of Pronouncement 03.07.2024
ORDER
PER PAVAN KUMAR GADALE, JM:
The revenue has filed the miscellaneous applications MA.No.67/M/2023 and MA.No.56/M/2023 in ITA Nos. 2348 & 2404/MUM/2021 for the A.Ys. 2017-18 & 2019-20 seeking recall of the Hon'ble Tribunal order dated 10.05.2022.
2M.A. No. 56 & 67/MUM/2023 Bloom Systems Pvt Ltd, Mumbai
2. At the time of hearing, the Ld.DR submitted that the Hon'ble Tribunal in the consolidated order in ITA Nos. 2348, 2393 & 2404/MUM/2021 for the A.Ys. 2017-18 to 2019-20 placed reliance on the decisions of the Hon'ble Tribunal and held that the employees contribution to PF and ESIC, if remitted beyond the due date prescribed under respective Act but remitted / deposited before due date of filing of return of income u/sec 139(1) of the I T Act would be eligible for deduction. Accordingly, the issue was decided in favour of the assessee and now the Ld.DR has drawn attention to the decision of the Hon'ble Supreme Court in the case of Checkmate Services Pvt Ltd. Vs. CIT 143 taxmann.com 178, wherein the same issue was decided in favour of the revenue.
3. Per contra, the Ld. AR has raised objections for the recall of the Tribunal order and submitted that the revenue cannot file an MA on the subsequent decision of the supreme court reversing the legal principles laid down by the jurisdictional High Court and which did not exist when the Honble Tribunal decided a particular issue and it cannot be tantamount to a mistake apparent on the record and consequently there can be no rectification under the provisions of section 254(2) of the Act. Further the Ld.AR relied on the recent decision of the Honble Supreme court in the case of Govt of NCT of Delhi Vs K.L Rathi steels Ltd In Miscellaneous Application No 414 of 2023 in Civil Appeal no.11857/2016 and others order dated 17-05-2024 (2024 SCC online SC1090) and the Honble Tribunal 3 M.A. No. 56 & 67/MUM/2023 Bloom Systems Pvt Ltd, Mumbai decision in the case of DCIT Vs ANI Integrated Services Ltd in MA.167/Mum/2023 dated 29-05-2024 (2024) 162 taxmann.com 889 (Mum Trib) and prayed for dismissal of miscellaneous applications filed by the revenue.
4. We heard the rival submissions and perused the material on record. The grievance of the revenue envisaged by the Ld. DR that the Hon'ble Supreme Court in the case of Checkmate Services Pvt Ltd. Vs. CIT has observed that the employees contribution towards PF/ESIC under section 36(1(va) of the Act when paid beyond the stipulated time prescribed under the respective Act has to be disallowed. We find the Hon'ble Supreme Court in the case of Govt of NCT Delhi Vs. KL Rathi Steel Ltd and Ors Civil Appeal No. 11875 of 2016 at Para 104 of the judgement held :
"We, thus hold no review is available upon a change or reversal of a proposition of law by a superior court or by a larger bench of this Court overruling its earlier exposition of law whereon the judgment/order under review was based...."
5. Further the Hon'ble Tribunal in the case of DCIT Vs ANI Integrated Services Ltd in MA.167/Mum/2023 dated 29-05-2024 has relied on the Honble Supreme Court decision and other judicial decisions and dismissed the miscellaneous application filed by the revenue observing at Para 19 to 23 of the order read as under:
" 19. In a latest judgment, division Bench of three judges vide judgment and order dated 17/05/2024 in the case of Govt. of NCT of 4 M.A. No. 56 & 67/MUM/2023 Bloom Systems Pvt Ltd, Mumbai Delhi vs. M/s. K.L. Rathi Steels Limited and Others in Miscellaneous Application No.414 of 2023 in Civil Appeal No.11857/2016 alongwith various other Miscellaneous Applications had elaborated this entire law and review based on subsequent judgment of the Hon'ble Supreme Court and interpreting Rule 1 of order XLVII of CPC specifically the scope of Explanation in Rule 1 as incorporated above.
39. Order XVLII does not end with the circumstances as section 114, CPC, the substantive provision, does. Review power under section 114 read with Order XLVII, CPC is available to be exercised, subject to fulfilment of the above conditions, on setting up by the review petitioner any of the following grounds:
(i) discovery of new and important matter or evidence; or
(ii) mistake or error apparent on the face of the record; or
(iii) any other sufficient reason.
40. Insofar as (i) (supra) is concerned, the review petitioner has to show that such evidence (a) was actually available on the date the court made the order/decree, (b) with reasonable care and diligence, it could not be brought by him before the court at the time of the order/decree, (c) it was relevant and material for a decision, and (d) by reason of its absence, a miscarriage of justice has been caused in the sense that had it been produced and considered by the court, the ultimate decision would have been otherwise.
41. Regarding (ii) (supra), the review petitioner has to satisfy the court that the mistake or error committed by it is self-evident and such mistake or error can be pointed out without any long-drawn process of reasoning; and, if such mistake or error is not corrected and is permitted to stand, the same will lead to a failure of justice. There cannot be a fit-in all definition of "mistake or error apparent on the face of the record" and it has been considered prudent by the courts to determine whether any mistake or error does exist considering the facts of each individual case coming before it.
42. With regard to (iii) (supra), we can do no better than refer to the traditional view in Chhajju Ram (supra), a decision of a Bench of seven Law Lords of the Judicial Committee of the Privy Council. It was held there that the words "any other sufficient reason" means "a reason sufficient on grounds at least analogous to those specified immediately previously", meaning thereby (i) and (ii) (supra). Notably, 5 M.A. No. 56 & 67/MUM/2023 Bloom Systems Pvt Ltd, Mumbai Chhajju Ram (supra) has been consistently followed by this Court in a number of decisions starting with Moran Mar Basselios Catholics v. Most Rev. Mar Poulose Athanasius.
43. There are recent decisions of this Court which have viewed 'mistake' as an independent ground to seek a review. Whether or not such decisions express the correct view need not detain us since the review here is basically prayed in view of the subsequent event.
44. As noted above, the Explanation in Rule 1 Order XLVII was inserted in 1976. It reads: "Explanation.-- The fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior court in any other case, shall not be a ground for the review of such judgment."
xxxxxxxxxxxx xxxxxxxxxxxx I. PRECEDENTS CONSIDERING THE EXPLANATION
48. There are a few decisions of this Court where the Explanation to Rule 1 of Order XLVII, CPC has since been considered.
49. The earliest decision is Shanti Devi v. State of Haryana29 where the Court rejected the review petition by holding that the contention that the judgment sought to be reviewed was overruled in another case subsequently is no ground for reviewing the said decision. Explanation to Order XLVII Rule 1 of the Code of Civil Procedure clearly rules out such type of review proceedings.
50. Reference may next be made to the decision in Union of India v. Mohd Nayyar Khalil30. There, the impugned order had followed a three-Judge Bench judgment of this Court. Such judgment was admittedly pending consideration before a Constitution Bench. Taking note of such facts, it was held that:
"2. *** Even if the question regarding the legality of the said three-Judge Bench decision is pending scrutiny before the Constitution Bench the same is not relevant for deciding the review petition for two obvious reasons -- firstly, this was not pointed out to the Bench which decided the civil appeal; and secondly, by the time the impugned order was passed the three- Judge Bench judgment had not been upset and even in future if the Constitution Bench takes a contrary view it would be a 6 M.A. No. 56 & 67/MUM/2023 Bloom Systems Pvt Ltd, Mumbai subsequent event which cannot be a ground for review as is clear from the explanation to Order 47 Rule 1(2) of the Code of Civil Procedure ***".
(emphasis supplied) The principle, thus, laid down is that a decision being upset in the future would be a subsequent event which could not be a ground to seek review.
51. In Nand Kishore Ahirwar v. Haridas Parsedia, a Bench of three Hon'ble Judges, while dismissing the review petitions before it, made pertinent observations reaching out to the very core of the said Explanation. This Court observed that simply because there has been a Constitution Bench decision, passed in the aftermath of the judgment impugned, would be no ground for a review of the said judgment. It also went on to observe that a reference to a Constitution Bench would stand on a still weaker footing.
52. The question arising for decision in State of West Bengal v. Kamal Sengupta32 was whether a tribunal established under section 4 of the Administrative Tribunals Act, 1985 can review its decision on the basis of a subsequent order/decision/judgment rendered by a coordinate or larger Bench or any superior court or on the basis of subsequent event/development. It was contended on behalf of the State that any subsequent decision on an identical or similar point by a coordinate or larger Bench or even change of law cannot be made the basis for recording a finding that the order sought to be reviewed suffers from an error apparent on the face of the record. After considering a host of decisions with a finetooth comb, the Court went on to cull out the principles of review in paragraph 35 of the decision which is extracted hereunder:
"35. The principles which can be culled out from the above noted judgments are:
(i) The power of the Tribunal to review its order/decision under Section 22(3)(f) of the Act is akin/analogous to the power of a civil court under Section 114 read with Order 47 Rule 1 CPC.
(ii) The Tribunal can review its decision on either of the grounds enumerated in Order 47 Rule 1 and not otherwise.
(iii) The expression 'any other sufficient reason' appearing in Order 47 Rule 1 has to be interpreted in the light of other specified grounds.7
M.A. No. 56 & 67/MUM/2023 Bloom Systems Pvt Ltd, Mumbai
(iv) An error which is not self-evident and which can be discovered by a long process of reasoning, cannot be treated as an error apparent on the face of record justifying exercise of power under Section 22(3)(f).
(v) An erroneous order/decision cannot be corrected in the guise of exercise of power of review.
(vi) A decision/order cannot be reviewed under Section 22(3)(f) on the basis of subsequent decision/judgment of a coordinate or larger Bench of the tribunal or of a superior court.
(vii) While considering an application for review, the tribunal must confine its adjudication with reference to material which was available at the time of initial decision. The happening of some subsequent event or development cannot be taken note of for declaring the initial order/decision as vitiated by an error apparent.
(viii) Mere discovery of new or important matter or evidence is not sufficient ground for review. The party seeking review has also to show that such matter or evidence was not within its knowledge and even after the exercise of due diligence, the same could not be produced before the court/tribunal earlier."
(emphasis supplied)
53. This Court, in Subramanian Swamy v. State of Tamil Nadu33, has read the Explanation as follows:
"52. *** The Explanation to Order XLVII, Rule 1 of Code of Civil Procedure 1908 provides that if the decision on a question of law on which the judgment of the court is based, is reversed or modified by the subsequent decision of a superior court in any other case, it shall not be a ground for the review of such judgment. Thus, even an erroneous decision cannot be a ground for the court to undertake review, as the first and foremost requirement of entertaining a review petition is that the order, review of which is sought, suffers from any error apparent on the face of the order and in absence of any such error, finality attached to the judgment/order cannot be disturbed."8
M.A. No. 56 & 67/MUM/2023 Bloom Systems Pvt Ltd, Mumbai
54. The final one is a decision of the Constitution Bench in Beghar Foundation v. K.S. Puttaswamy34. The majority was of the following view:
"2. The present review petitions have been filed against the final judgment and order dated 26-9-2018. We have perused the review petitions as well as the grounds in support thereof. In our opinion, no case for review of judgment and order dated 26-9-2018 is made out. We hasten to add that change in the law or subsequent decision/judgment of a coordinate or larger Bench by itself cannot be regarded as a ground for review. The review petitions are accordingly dismissed."
Xxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxx
89. The relevant principles deducible from the precedents on the Explanation to Rule 1 that we have considered, for the purpose of deciding the present reference, are as follows:
a) in case of discovery of a new or important matter or evidence, such matter or evidence has to be one which existed at the time when the decree or order under review was passed or made; and
b) Order XLVII would not authorize the review of a decree or order which was right when it was made on the ground of some subsequent event.
What follows is that Order XLVII of the CPC does not authorize a review of a decree, which was right, on the happening of some subsequent event.
90. With the introduction of the Explanation, there seems to be little room for any serious debate on the point under consideration. Parliament, in its wisdom, has accepted what the Law Commission recommended. Resultantly, what the statute prohibits, cannot be permitted by the Court. If permitted, the Court would be acting contrary to law. What the Parliament has done, the Court cannot undo unless the law enacted by the Parliament is declared ultra vires. The vires of the Explanation not being under challenge during more than four decades of its existence, it is not for the Court to ignore the Explanation.
Xxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxx 9 M.A. No. 56 & 67/MUM/2023 Bloom Systems Pvt Ltd, Mumbai
104. We, thus, hold that no review is available upon a change or reversal of a proposition of law by a superior court or by a larger Bench of this Court overruling its earlier exposition of law whereon the judgment/order under review was based. We also hold that notwithstanding the fact that Pune Municipal Corporation (supra) has since been wiped out of existence, the said decision being the law of the land when the Civil Appeals/Special Leave Petitions were finally decided, the subsequent overruling of such decision and even its recall, for that matter, would not afford a ground for review within the parameters of Order XLVII of the CPC.
(Emphasis added) The aforesaid judgment of the Hon'ble Supreme Court had elaborately dealt the issue of power to rectify error and power to review and after referring to catena of decisions of the Hon'ble Supreme Court categorically held that, if the judgment has been passed by the Court following another judgment and subsequently by later judgment, the decision has been overruled or reversed, cannot have the effect of reopening or reviewing the former judgment based on following overruled judgment nor can the same be reviewed. The aforesaid judgment clearly clinches the issue that the subsequent judgment of the Hon'ble Supreme Court in the case of Checkmate Services P Ltd. Vs CIT reported in 143 Taxmann.com 178, the earlier judgment passed by the Tribunal based on the binding precedents cannot be recalled or reviewed. Once this is the law of the land, then we are unable to appreciate the contention of the Revenue that the judgment of the Tribunal should be recalled which has been passed following catena of judgment of the Hon'ble Jurisdictional High Court and other High Courts prevalent at that time in light of the subsequent judgment of the Hon'ble Supreme Court this would be against the principle of law laid down by the Hon'ble Supreme Court in the aforesaid cases specially once this law has been upheld by the Hon'ble Supreme Court in various judgments which we are bound to follow.
20. We are aware that many of the Co-ordinate Benches have recalled the order of the Tribunal on this issue on the principle of the Hon'ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. reported in (2008) 305 ITR 227. In the aforesaid case the issue was that the Tribunal has passed an order on 27/10/2000 upholding the decision of CIT that assessee was not entitled for exemption u/s.11. Thereafter, the Miscellaneous 10 M.A. No. 56 & 67/MUM/2023 Bloom Systems Pvt Ltd, Mumbai Application was filed u/s. 254(2) to rectify the error committed by the Tribunal in the decision rendered by any appeal as it has not followed the judgment of the Hon'ble Jurisdictional High Court in the case of Hiralal Bhagwati vs. CIT reported in [2000] 246 ITR 188; Suhrid Geigy Ltd vs. Commissioner of Surtax reported in (1999) 237 ITR 834 which was already available on the date of the order. Thus, non- consideration of binding decision of the Jurisdictional High Court which was not followed by the Tribunal, rather it was not brought to the notice of the Tribunal therefore, Miscellaneous Application was filed and Tribunal had then recalled the order. Against this recalling of the order, Revenue had filed the writ petition which was dismissed by the Hon'ble High Court. Thus, before the Hon'ble Supreme Court one of the question was, whether the ITAT was right in exercising the powers under sub-section (2) of Section 254 on the ground that there was a mistake apparent from record committed by the Tribunal while deciding the appeal and whether it could have recalled the earlier order of the Tribunal on that ground. Thus, the core issue was, whether non-consideration of a decision of the Jurisdictional High Court or of the Hon'ble Supreme Court which was already existing at that time when the judgment was rendered by the Tribunal can be stated to be mistake apparent from the record. The Hon'ble Supreme Court upheld that the Tribunal was right in holding that it was a mistake which can be said to be mistake apparent from the record which could be rectified u/s.254(2). There was no such principle which has been laid down that if after passing of the order of the Tribunal which has attained finality between the parties and in subsequent judgment is rendered by the superior Court, the same should also be recalled within the scope of Section 254(2). Though the Hon'ble Supreme Court had referred to a decision of Gujarat High Court in the case of Suhrid Geigy Ltd vs. Commissioner of Surtax reported in (1999) 237 ITR 834 that if the point is covered by the decision of the Hon'ble Jurisdictional High Court rendered prior or even subsequent to the order of rectification, it could be a mistake apparent from the record u/s. 254(2) and could be corrected by the Tribunal. However, the Hon'ble Supreme Court has referred this judgment and only held that if a judgment is being rendered by any High Court or Supreme Court that means the law was always being the same and if a subsequent decision alters the earlier one, the later decision does not make a new law. This observation of the Court does not lead to any inference to draw that any rectification order u/s. 254(2) can be based on subsequent judgment which comes later on. On the contrary, all the aforesaid judgments of Hon'ble Supreme Court which we have quoted above extenso have clearly held that there would be no review or recall 11 M.A. No. 56 & 67/MUM/2023 Bloom Systems Pvt Ltd, Mumbai of the order based on the subsequent judgment. Finally, the Hon'ble Supreme Court in the case of Saurashtra Kutch Stock Exchange Ltd. on the fact of the case has concluded as under:-
"In the present case, according to the assessee, the Tribunal decided the 47 matter on October 27, 2000. Hiralal Bhagwati was decided a few months prior to that decision, but it was not brought to the attention of the Tribunal In our opinion, in the circumstances, the Tribunal has not committed any error of law or of junsdiction in exercising power under sub-section (2) of section 254 of the Act and in rectifying the "mistake apparent from the record" Since no error was committed by the Tribunal in rectifying the mistake, the High Court was not wrong in confirming the said order Both the orders, therefore, in our opinion, are strictly in consonance with law and no interference is called for."
21. The sequitor of the aforesaid decision of the Hon'ble Supreme Court is that, if already existing judgment of Jurisdictional High Court is not brought to the notice or attention of the Tribunal, then the Tribunal can recall the order while exercising the powers u/s.254(2).
22. Even otherwise also once in the latest decision in the case of CIT vs. Reliance Telecom Ltd. (supra) the Hon'ble Supreme Court have clearly held that the powers u/s. 254(2) of the Income Tax are akin to Order XLVII Rule 1 CPC, then it cannot be held that scope of power u/s.254(2) is beyond and much larger than scope of review as given in the Order XLVII Rule 1 of CPC. In fact, the scope of Section 254(2) is much limited and the scope of review is much wider. Accordingly, in view of the law laid down by the Hon'ble Constitutional Bench of the Hon'ble Supreme Court and several other judgments of Hon'ble Supreme Court cited supra, we hold that order of the Tribunal cannot be recalled based on the subsequent judgment of the Hon'ble Supreme Court when the order of the Tribunal had attained finality between the parties. Consequently, the Miscellaneous Application filed by the department is dismissed.
23. In the result, Miscellaneous Application of the Revenue is dismissed."
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6. Accordingly, in view of the law laid down by the Honble constitutional bench of the Honble Supreme Court and several other judgements of Honble Supreme Court. We fallow the judicial precedent and hold that the order of the Honble Tribunal cannot be recalled based on the subsequent judgement of the Honble Supreme Court, when the order of the Tribunal had attained finality between the parties. And the miscellaneous applications filed by the revenue are dismissed.
7. In the result, both the miscellaneous applications filed by the revenue are dismissed and the request for constitution of Special Bench by the assessee is withdrawn.
Order pronounced in the open court on 03.07.2024.
d/- Sd/- Sd/- Sd/-
(NARENDRA KUMAR BILLAIYA) (PAVAN KUMAR GADALE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 03/07/2024
KRK
Copy of the Order forwarded to:
1. The Appellant,
2. The Respondent
3. The CIT(A)-
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.
//True Copy//