Income Tax Appellate Tribunal - Hyderabad
Al Habeeb Chrairtable Trust, Hyderabad vs Assessee on 30 March, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'B', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER
M.A.No.181/Hyd/2012
( ITA No.2069/Hyd/2011) : Asstt. Year 2004-05
Al-Habeeb Charitable Trust, V/s. Asstt. Director of Income-tax
Hyderabad. (Exemption) 1, Hyderabad
( PAN - AAATA 8043 K)
(Applicant) (Respondent)
Applicant by : Shri I.Rama Rao
Respondent by : Smt. Vidisha Kalra DR
Date of Hearing 23.11.2012
Date of Pronouncement 11.1.2013
ORDER
Per Saktijit Dey, Judicial Member:
By this application under S.254(2) of the Income-tax Act, 1961, the applicant-assessee has prayed for rectification/recall of the order of this Tribunal dated 30.3.2012 on the appeal of the Revenue, being ITA No.2069/Hyd/2011 and the Cross-Objection of the assessee therein, being C.O. No.81/Hyd/1012, for the assessment year 2004-05, on the ground that certain mistakes apparent from the record have crept into the same.
2. Reiterating the detailed averments made in the present application, the learned counsel for the assessee, Shri I.Rama Rao, submitted that the Tribunal, while passing its order dated 30.3.2012 has exceeded its jurisdiction and has gone beyond the subject matter and scope of the appeal filed by the Revenue. It is submitted that in the grounds of the Revenue in its appeal, there was no ground as to the issue of receipt of capitation fees by the assessee. However, the Tribunal vide para 4 of its order dated 30.3.2012, discussed at length the issue or the capitation fee and finally set aside the order of the CIT(A) and restored the 2 M.A.No.181/Hyd/2012(in ITA No.2069/ Hyd/2011&CO) Al-Habeeb Charitable Trust, Hyderabad.
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matter to the file of the assessing officer with certain directions. He submitted that the issue of receipt or otherwise of the capitation fee by the assessee was neither a subject matter of dispute before the CIT(A) or Tribunal, nor it is the case of the assessing officer that the assessee received capitation fee.
3. Contesting the legality of the action of the Tribunal in adjudicating on an issue not before it in the grounds of appeal, it is pleaded that decision in a case cannot be based on grounds outside the pleadings of the parties and the pleadings and issues are to ascertain the real dispute between the parties to narrow the area of conflict and to see just where the two sides differ. In support of this contention, reliance is placed on the following decisions-
(a) Sri Mahanti Govind Rao V/s. Sita Ram Kesho(1898)325 Ind. App,.
195);
(b) Ms.Trojan & Co. V/s. R.M.N.N.Nagappa Chettiar, AIR 1953 SC 235;
(c) Ishwar Dutt V/s. Land Acquisition Collector & Anr., AIR 2005 SC 3165;
(d) State of Maharashtra V/s. Hindustan Construction Company Ltd.
(2010)AXX 518) It is further submitted that the Tribunal cannot adjudicate or give a finding on a question which is not in dispute and which does not form part of subject matter of appeal as held by the Hon'ble Supreme Court in the case of Periannan V.s. CIT(39 ITR 159); Ramaswamy V/s. CIT(40 ITR 377);
Pakhraj V/s. CIT(49 ITR 293); Greaves V/s. CIT(49 ITR 107); Indira V/s. CIT(30 ITR 320) affirmed in CIT V/s. Indira (39 ITR 546(SC); Orissa Weavers V/s. CIT(187 ITR 646); CIT V/s. Veeraswami (49 ITR 13); and ITO V/s. Rajghoria(119 ITR 872).
4. Placing reliance on Rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963, it is submitted that the appellant shall not, except 3 M.A.No.181/Hyd/2012(in ITA No.2069/ Hyd/2011&CO) Al-Habeeb Charitable Trust, Hyderabad.
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by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal. Though the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this Rule, it is submitted, the Tribunal shall not rest its decision on any other ground unless the party, who may be affected thereby, has had sufficient opportunity of being heard on that ground. Thus, the finding of the Tribunal vide para 4 of the impugned order is in violation of the Rule 11 of the Income-tax (Appellate Tribunal) Rules 1963, and therefore, the order of the Tribunal dated 30.3.2012 requires to be recalled on this count.
5. Taking us through paras 5 and 6 of the order of the Tribunal dated 30.3.2012, it is pointed out that the Tribunal discussed about the allowability of depreciation claim on the fixed assets, and after referring to the decisions of the Jaipur Bench of the Tribunal in the case of Jaipur Stock Exchange (108 TTJ)(Jp); Mahila Sidh Nirman Yojna V/s. IAC(50 ITD 472) and the decision of Cochin Bench of the Tribunal in the case of Dy. CIT V/s. Adi Sankara Trust (46 SOT 230), ultimately set aside the order of the CIT(A) on this aspect and restored the matter to the file of the assessing officer with certain directions for redeciding the issue in accordance therewith.
6. It is further argued that even on the issue of depreciation, the Tribunal has gone beyond the grounds raised by the Revenue, and in any event, considering the contradictory decisions of the co-ordinate Benches of the Tribunal on that issue. The Tribunal should have referred the matter to the Hon'ble President for constitution of a Special Bench. Reliance in this behalf has been placed on the decision of the Hon'ble Supreme Court in the case of Union of India V/s. Paras Laminates Pvt. Ltd.(186 ITR 722). Also placing reliance on the decisions of various High Courts, which accordingly cover the issue in dispute against the Department, it is submitted that the order of the Tribunal suffers from the vice of patent 4 M.A.No.181/Hyd/2012(in ITA No.2069/ Hyd/2011&CO) Al-Habeeb Charitable Trust, Hyderabad.
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and apparent mistake on the face of the record, and hence, in all fairness the order of the Tribunal dated 30.3.2012 in ITA No.2069/Hyd/2011 is liable to be recalled.
7. While dealing with the Cross-objection of the assessee, which is on the issue of legality and validity of the reopening of assessment, learned counsel submitted, the Tribunal dismissed the same on the ground that no serious arguments were advanced by the learned counsel for the assessee. Clarifying the position in this behalf, it is submitted that the Advocate was instructed only to seek adjournment of the case, and that being the case, he had no instructions to argue the case, and it is for that reason that he did not argue the case. In any event, it is submitted that the Tribunal in all fairness, should have dealt with the grounds taken in the Cross-Objections first, as the same go to the root of the matter, since those grounds question the very legality and validity of the re-assessment proceedings. With regard to the other ground of cross-cross objection, which disputed the correctness of the direction of the CIT(A) to the assessing officer to verify the receipt of capitation fee, if any, and submitted that the said direction of the CIT(A) was given enhancing the scope of adjudication of the appeal by the CIT(A), and further, the same having been not done after giving reasonable opportunity of hearing to the assessee to put forth its case, it is in violation of the principles of natural justice. It is further submitted in this behalf placing reliance on the decision in the case of Abdul Sattar V/s. CIT (174 ITR 368) that during the re-assessment proceedings, the CIT(A) can do what the assessing officer himself could not have done. Placing further reliance on the decisions of the Lahore High Court in the case of CIT V/s. Nawab Shah Nawaz Khan (6 ITR 370) and CIT V/s. Khemchand Ramdas (6 ITR 414), it is submitted that the CIT(A) cannot direct the assessing officer after the time limit for making the assessment has expired, to make a fresh assessment in respect of fresh item of income, which was not covered by the original proceedings.
5 M.A.No.181/Hyd/2012(in ITA No.2069/ Hyd/2011&CO) Al-Habeeb Charitable Trust, Hyderabad.
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8. The Learned Departmental Representative, on the contrary, opposing the above contentions of the assessee, strongly supporting the order of the Tribunal dated 30.3.2012 submitted that there is no mistake apparent from record in the order of the Tribunal, and all that the assessee is seeking through its elaborate arguments, is only a review of the order of the Tribunal dated 30.3.2012, by re-arguing its case. Since such a review is not possible in these proceedings under S.254(2) of the Act, it is submitted that the present application of the assessee is liable to be rejected.
9. We have considered the rival submissions and perused the order of this Tribunal dated 30.3.2012, in the light of the detailed averments made on various aspects by the assessee in the present application, and the strenuous arguments advanced by the learned counsel for the assessee in support thereof. We have also considered the case-law relied upon by the assessee in support of the present application. The main plank of the argument of the assessee in the present application is that the Tribunal has travelled beyond the scope of its adjudication under the statute, and has dealt with the issues which were not covered by the grounds raised by the Revenue in its appeal and hence were not the subject matter of appeal. Such issues which according to the assessee are not covered by the grounds of appeal are with regard to receipt or otherwise of the capitation fee by the assessee; and allowability of depreciation on fixed assets. On careful consideration of the matter, in the light of the grounds taken by the Revenue in its appeal, we find no merit in the contentions of the assessee based on the limitations with regard to scope of adjudication by the Tribunal. In as much as the grounds of the Revenue deal with the assessee's claim for exemption of its income under S.10(23C)/S.11 of the Income-tax Act, it is the entire assessment as such, that becomes the subject matter of appeal before the Tribunal, and while deciding such an issue, it is the bounden duty of the Tribunal to get 6 M.A.No.181/Hyd/2012(in ITA No.2069/ Hyd/2011&CO) Al-Habeeb Charitable Trust, Hyderabad.
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all the relevant factors verified by the lower authorities, before the exemption from tax claimed by the assessee is allowed. While discharging the onerous duty of adjudication on an appeal, the power of the Tribunal is not fettered by the presence or absence of the specific words like 'capitation fee', and it can consider and give appropriate directions in relation to any aspect, that has a bearing on the determination of the main issue in dispute, which in the instant case is all inclusive claim of the assessee for exemption of its income from tax. Assessee's entitlement to exemption under S.11 of the Act has to be considered keeping in view the issue of collection of capitation fee, as the Hon'ble Supreme Court as well as this Tribunal, in clear terms have held that charging of capitation fee disentitles an institution from availing exemption under S.11 of the Act. As such, the issue of collection of capitation fee by the assessee is intrinsically connected with the issue of claim for exemption from tax under S.11 of the Act, and consequently the issue of exemption cannot be viewed in isolation or de hors the issue of collection of capitation fee. When the assessment as a whole becomes the subject matter of the Revenue's appeal, it is obvious that discussion on the issue of depreciation on fixed assets also falls within the scope of adjudication by the Tribunal. That part, grounds No.9 & 10 of Revenue are specifically on this issue.
10. As for the findings of the Tribunal on the grounds raised in the Cross-objections, there is no dispute with regard to the fact noted by the Tribunal that the learned counsel for the assessee did not advance any serious arguments on the issues raised in the Cross-Objections. By finding fault with the approach of the Tribunal, in not deciding the issue of legality and validity of re-opening of the assessment raised in the cross- objection in the first place, before proceeding to adjudicate on the issues raised in the appeal of the Revenue, the assessee in the present application is merely seeking a review of the order of the Tribunal, by disputing the approach and findings of the Tribunal on various issues. Such a review is not permissible in these proceedings under S.254(2) of 7 M.A.No.181/Hyd/2012(in ITA No.2069/ Hyd/2011&CO) Al-Habeeb Charitable Trust, Hyderabad.
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the Act, the scope of which is confined to mere rectification of mistakes apparent from record.
11. Through the present elaborate application under S.254(2) of the Act, which runs into six pages, assessee merely seeks to reargue its case, discussing the case-law relied upon in support of the case of the assessee. A careful reading of the order of the Tribunal dated 30.3.2012 in its totality reveals no mistake apparent from record in the order of the Tribunal dated 30.3.2012, warranting any rectification/recall of the said order. As for the case-law relied upon by the learned counsel for the assessee, we find that they are mostly on the merits of the order of this Tribunal, disputing the conclusions arrived at by the Tribunal, and thereby seeking a review of the order by the Tribunal, which, as noted earlier, is not permissible in these proceedings for rectification under S.254(2) of the Act.
12. It is worthwhile no note at this stage that the provisions of S.254(2) of the Income-tax Act, 1961 empowers the Tribunal to rectify a mistake. However, the scope and ambit of the aforesaid provision is very limited. The power conferred on the Tribunal for rectification has to be exercised in terms of the provision. The rectification, as envisaged in the aforesaid provision, is confined to mistakes which are apparent from record and are patent and obvious, and are not such which could be established only by long-drawn arguments and debate or by a process of investigation and research. The scope of S.254(2) cannot be enlarged so as to empower the Tribunal to review its own order. If two views are possible on a point of law and one of the alternatives is adopted in its previous order, it cannot be held that there is a mistake apparent from record on account of non-adoption of the other possible view. Unless there are manifest errors which are obvious clear and self-evident, the Tribunal cannot recall its previous order, in an attempt to re-write the order. The Tribunal, being a creature of the statute, has to act within the 8 M.A.No.181/Hyd/2012(in ITA No.2069/ Hyd/2011&CO) Al-Habeeb Charitable Trust, Hyderabad.
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limits laid down by the statute. It has no inherent power of review. Hence, such power cannot be assumed in the guise of rectification envisaged under S.254(2) of the Act, for recalling its own order and hearing it afresh. We may draw support in this behalf by the ratio laid down by the jurisdictional High Court in the case of CIT V/s. Ved Prakash (209 ITR 448)(AP), wherein it has been held as follows-
"If two views are possible on a point of law, and one of the alternatives is accepted by the Tribunal, it cannot be held that the mistake is apparent from the record, unless there are manifest errors which are obvious, clear and self- evident, the Tribunal cannot recall its previous order in an attempt to rewrite the order. A change of opinion by the Tribunal consisting of the same members shall not justify rectification, nor can fresh thinking brought in by new Members of the Tribunal justify rewriting of the order under the guise of rectification. The only fact that had the second set of Members heard the appeal, they would have decided in favour of the assessee is not a reason for them to recall an order allegedly for the purpose of rectification of a mistake.
Similarly, in the case of CIT vs. ITAT & Anr. 206 ITR 126 the Andhra Pradesh High Court held as under:
"The Appellate Tribunal, being a creature of the statute, has to confine itself in the exercise of its jurisdiction to the enabling or empowering terms of the statute. It has no inherent power. Even otherwise, in cases where specific provision delineates the powers of the court or Tribunal, it cannot draw upon its assumed inherent jurisdiction and pass orders as it pleases. The power of rectification which is specifically conferred on the Tribunal has to be exercised in terms of that provision. It cannot be enlarged on any assumption that the Tribunal has got an inherent power of rectification or review or revision. It is axiomatic that such power of review or revision has to be specifically conferred; it cannot be inferred. Unless there is a mistake apparent from the record in the sense of patent, obvious and clear error or mistake, the Tribunal cannot recall its previous order. If the error or mistake is one which could be established only by long-drawn arguments or by a process of investigation and research, it is not a mistake apparent from the record. If two views are possible on a point of law, and one of the alternatives is accepted in its previous order, it cannot be held that the mistake is apparent from the record. Unless there are manifest errors which are obvious, clear and self- evident, the Tribunal cannot recall its previous order in an attempt to rewrite the order."
At the cost of repetition, we would like to reiterate that on going through the order passed by the Tribunal, we are convinced that the Tribunal passed the order, after marshalling all the facts and aspects, relevant to the issues arising out of the grounds raised by the appellant in the appeal 9 M.A.No.181/Hyd/2012(in ITA No.2069/ Hyd/2011&CO) Al-Habeeb Charitable Trust, Hyderabad.
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before it. We do not find any mistake in the order of the Tribunal of the nature as envisaged under S.254(2) of the Act.
13. In the light of the foregoing discussion, we find no merit in the present application of the assessee, which is accordingly rejected.
14. In the result, Miscellaneous Application of the assessee is rejected.
Order pronounced in the Court on 11.1.2013
Sd/- Sd/-
(Chandra Poojari) (Saktijit Dey)
Accountant Member Judicial Member
Dated/- 11th January, 2013
Copy forwarded to:
1. Al-Habeeb Charitable Trust, 10-4-1/A/12/C, Masab Tank, Hyderabad
2. Asst. Director of Income-tax(Exemption)-1, Hyderabad
3. Commissioner of Income-tax(Appeals) IV, Hyderabad
4. Commissioner of Income-tax III Hyderabad
5. Departmental Representative, ITAT, Hyderabad. B.V.S*