AHIR SLAT AND ALLIED PRODUCTS PVT LTD,GANDHIDHAM V. ACIT, CENTRAL CIRCLE-1, RAJKOT, RAJKOT

MA 22/RJT/2024

AI Insights

The case involves M/s. Ahir Salt & Allied Products Pvt. Ltd., which filed two Miscellaneous Applications against the order of the Income Tax Appellate Tribunal, Rajkot, concerning the assessment years 2016-17 and 2017-18. The applications sought to rectify the Tribunal's earlier decision, which did not allow the set-off of brought forward business losses against the alleged unaccounted business profits for the years in question. The Tribunal initially denied the set-off on the grounds that the losses were not returned in the income tax returns filed in response to the notice under section 153A of the Income-tax Act, 1961. However, upon re-examination, the Tribunal acknowledged the oversight and allowed the set-off, emphasizing the need for equity and justice in tax assessments.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 40480 (ITAT-RAJKOT)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 09-09-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 22-07-2024
• Other Referred Cases: CIT vs. Shelly Products, ACIT vs. Saurashtra Kutch Stock Ltd., S.R. Koshti vs. CIT, Simon Carves vs. CIT, Hiralal Bhagwati vs. ITAT, Saurashtra Cement & Chemical Industries Ltd. vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAMDEEP SINHA
• Assessee Lawyers: S.N. SOPARKAR; WAY OF ADVANCE TAX OR SELF
• Keywords: Set aside; Revised return; Retrospective amendment; Search and seizure
• Section: 143(3); 254(2); 48; 153A; 139(1); 22; 13

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER MA Nos.22 & 23/RJT/2024 [Arising out of IT(SS)A Nos.6 & 7/RJT/2022] Assessment Years: (2016-17 & 2017-18) (Hybrid Hearing) M/s. Ahir Salt & Allied Products Pvt. Ltd., BBZ-S-60, Zanda Chowk, Gandhidham Vs. The DCIT, Central Circle - 1, Rajkot èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AABCA8202E (Appellant) (Respondent) Appellant by : Shri S. N. Soparkar, AR Respondent by : Shri Shramdeep Sinha, CIT-DR Date of Hearing : 09/09/2024 Date of Pronouncement : 11 /11/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: By way of these two Miscellaneous Applications, the assessee has sought to point out that mistake apparent from record within the meaning of Section 254(2) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) has crept in the order of Tribunal, dated 12.06.2024, vide order of Tribunal in IT(SS)A Nos. 6 & 7/Rjt/2022, for assessment years 2016- 17 and 2017-18. 2. Since the subject matter and contents of both the Miscellaneous Applications are identical and similar, therefore, we have clubbed these two Miscellaneous Applications and heard together and a consolidated order is being passed for the sake of convenience and brevity. The facts as well as contention raised in Miscellaneous Application No.22/Rjt/2024, for Page | 2 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. assessment year (AY).2016-17, have been taken into consideration for deciding these two Miscellaneous Applications en masse. 3. The contention raised by the assessee, in the sample Miscellaneous Application,(‘lead case’) in MA No. 22/Rjt/2024, for assessment year (AY) 2016-17, are reproduced below: “The applicant (being an appellant in the above matters) most respectfully begs to submit the following for the kind and sympathetic consideration of the Honourable Members: 1.0 The applicant had filed appeals in ITA No. 06/Rjt/2022 against the order passed by the Ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad. 2.0 The appellant raised following additional ground of appeal and requested the Hon'ble Tribunal to admit the same and decide on merits: “1.0 Alternatively and without prejudice to grounds of appeals mentioned in Form 36, Ld. CIT(A) erred in law and on facts of case in not allowing set off of brought forward business loss determined by him for AY 2015-16 against the alleged unaccounted business profit for the year under consideration. The AO may kindly be directed to allow set off of brought forward business loss for AY 2015-16 as determined by Id. CIT(A).” 3.0 Hon'ble members have vide para 69.0 of the decision given finding in respect of claim of set off of brought forwarded business loss that: “As for the other decisions relied upon by the ld. counsel for the assessee, they only lay down the proposition that the claim of set off of losses is to be examined in the year in which the set off is claimed. How these decisions are of any assistance to the assessee's claim in the impugned year, we fail to understand, considering the fact that even as per the provision of law, the assessee is not eligible to claim the set off of losses since the losses were not returned in the return of income filed in response to the notice under section 153A of the Act. We, therefore, are in complete agreement with the ld. CIT(A) that the assessee is not entitled to any set off of loss brought forward from the preceding years and these contentions of the Id. counsel for the assessee is accordingly dismissed.” 4.0 In this connection, it is submitted that the issue in appellant's case is squarely covered by the decision of Hon'ble Supreme Court in the case of CIT vs. Shelly Products [(2003) 129 Taxman 271 (SC)] which was referred to during the hearing. Since, the decision of Hon'ble Supreme Court is binding for all high courts and tribunals, the same is also binding in appellant's case. However, above decision of Hon'ble Apex Court has not been followed /considered in applicant's case by Hon'ble ITAT. Page | 3 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. 5.0 The appellant therefore, prays to the Hon'ble ITAT that the order under consideration may kindly be amended suitably by recalling the matter and oblige.” 4. At the outset, Shri S. N. Soparkar, (Sr. Advocate), Learned Counsel for the assessee, pleaded that in assessee’s case, under consideration, order was passed by the Co-ordinate Bench of ITAT, Rajkot in IT(SS)A Nos. 6 &7/RJT/2022 for assessment years (AYs).2016-17 & 2017-18, (along with stay petition No.01 and 02/RJT/2023), dated 12.06.2024. In the said order of the Tribunal, there is a mistake apparent from record in not considering the judgment of the Hon’ble Supreme Court. The Ld. Counsel submitted that during the search and seizure, the documents were seized by the Department and as per the assessing officer, the documents so seized, by the Department, state that there is undisclosed loss in the hands of the assessee and there is undisclosed income in the hands of the assessee. In the return of income filed by the assessee, in response to notice under section 153A of the Act, the assessee, has neither shown and undisclosed income nor and undisclosed loss. That is, undisclosed income, as per seized material, and undisclosed loss, as per seized material, both were not shown by the assessee, in the return of income, filed by the assessee, in response to notice under section 153A of the Act. The assessee, was in the view that if the Revenue, takes undisclosed income, and tax the undiscovered income, as per seized material, then the Revenue should also take into consideration the undisclosed loss, as per seized material. However, the assessing officer, took only undisclosed income, to tax, in the hands of the assessee, as seized material, but did not take into account, the undisclosed loss, as per seized material. 5. The principle of equity demands that if the assessing officer, takes into account the undisclosed income, to tax, in the hands of the assessee, as per seized material, then undisclosed loss, as per seized material, should be Page | 4 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. considered and benefit of set -off of losses, should be given to the assessee, however, the assessing officer, failed to do so and ld CIT(A), has also confirmed the action of the assessing officer, which is bad in law. By following the principle of equity and justice, the assessing officer, should have given the benefit of set- off of losses, suo-moto, as both, the undisclosed income, as well as, undisclosed losses, were not claimed/shown by the assessee, in response to the notice issued by the assessing officer, under section 153A of the Act. 6. When the assessee filed the return of income after search and seizure, in response to notice u/s 153A of the Act and the seized material clearly stated that there is a loss in the hands of the assessee and other losses, in fact, has been allowed by the AO, while passing the assessment order u/s 143(3) r.w.s. 153A of the Act. Therefore, the loss which mentioned in the seized documents itself, has to be entertained by the AO while framing assessment order u/s 143(3) r.w.s. 153A of the Act, however, he failed to do so. On appeal by the assessee, the ld. CIT(A) also confirmed, the action of the assessing officer without considering the fact that addition of income in the hands of the assessee, was made based on seized material, therefore, loss should also be allowed based on seized material. However, the assessing officer taxed the undisclosed income based on seized material, but did not allow the loss based on seized material, which is not acceptable. 7. The Ld. Counsel for the assessee also took us through the judgment of Hon’ble Supreme Court in the case of CIT vs. Shelly Products, 129 Taxman 271 (SC) wherein the Hon’ble Supreme Court held that excess tax deposited by an assessee, is liable to be refunded to assessee, since its retention by revenue would result in breach of article 265 of Constitution which prohibits levy or collection of any tax except by authority of law. Page | 5 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. The ld.Counsel stated that above judgement of Hon`ble Supreme Court has not been followed by the Tribunal, for giving the benefit to the assessee, to set- off, of undisclosed losses, against undisclosed income. The findings of the Hon’ble Supreme Court are reproduced below: “28. Having considered the authorities on the subject we find ourselves in agreement with the view of the Gujarat High Court in Saurashtra Cement & Chemical Industries Ltd.'s case (supra ). The question that falls for our consideration in these appeals is whether on the failure or inability of the authorities to frame a regular assessment after the earlier assessment is set aside or nullified, the tax deposited by an assessee by way of advance tax or self- assessment tax, or tax deducted at source is liable to be refunded to the assessee, since its retention by the revenue would result in breach of Article 265 of the Constitution which prohibits the levy or collection of any tax except by authority of law. The revenue does not dispute the position that if an assessment is framed, which is later nullified in appeal or revision or other proceedings any amount paid by way of income-tax pursuant to the order of assessment, over and above the advance tax and self-assessment tax is undoubtedly refundable under section 240 of the Act. The only dispute is with regard to the refund of the advance tax and self- assessment tax which is paid by the assessee on his own assessment of his liability and is based on the return of income filed by him. According to the revenue, the tax so paid represents the admitted liability of the assessee, and failure or inability to frame another assessment after the earlier assessment is set aside or nullified in appropriate proceedings, does not entitle the assessee to claim refund because to this extent the assessee has admitted his liability to pay tax in accordance with law. The tax liability is computed on the basis of the relevant Finance Act laying down the rate or rates at which the tax is payable and provides for other matters relevant to the computation of tax. Thus the tax is required to be paid in advance by the assessee, even before assessment is made, and he himself is required to compute his liability having regard to the rates and exemptions applicable. Thus, both the levy and collection of tax is in accordance with law. 29. We find considerable force in the submissions of the revenue and it must be upheld. We have earlier noticed the scheme of the Act. Section 4 of the Act creates the charge and provides inter alia for payment of tax in advance or deduction of tax at source. The Act provides for the manner in which advance tax is to be paid and penalises any assessee who makes a default or delays payment thereof. Similarly the deduction of tax at source is also provided for in the Act and failure to comply with the provisions attracts the penal provisions against the person responsible for making the payment. It is, therefore, quite apparent that the Act itself provides for payment of tax in this manner by the assessee. The Act also enjoins upon the assessee the duty to file a return of income disclosing his true income. On the basis of the income so disclosed, the assessee is required to make a self-assessment and to compute the tax payable on such income and to pay the same in the manner provided by the Act. Thus the filing of return and the payment of tax thereon computed at the prescribed rates amounts to an admission of tax liability which the assessee admits to have incurred in accordance with the provisions of the Finance Act and the Income-tax Act. Both the quantum of tax payable and its mode of recovery are authorized by law. The liability to pay Page | 6 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. income-tax chargeable under section 4(1) of the Act thus, does not depend on the assessment being made. As soon as the Finance Act prescribes the rate or rates for any assessment year, the liability to pay the tax arises. The assessee is himself required to compute his total income and pay the income-tax thereon which involves a process of self-assessment. Since all this is done under authority of law, there is no scope for contending that Article 265 is violated. 30. What then is the effect of the failure to make an order of assessment after the earlier assessment made is set aside or nullified in appropriate proceedings? If the assessing authority cannot make a fresh assessment in accordance with the provisions of the Act it amounts to deemed acceptance of the return of income furnished by the assessee. In such a case the assessing authority is denuded of its authority to verify the correctness and completeness of the return, which authority it has while framing a regular assessment. It must accept the return as furnished and shall not in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must refund to the assessee any tax paid in excess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. In other words, the tax paid by the assessee must be accepted as it is, and in the event of the tax paid being in excess of the tax liability duly computed on the basis of return furnished and the rates applicable, the excess shall be refunded to the assessee, since its retention may offend Article 265 of the Constitution. 31. We cannot lose sight of the fact that the failure or inability of the revenue to frame a fresh assessment should not place the assessee in a more disadvantageous position than in what he would have been if a fresh assessment was made. In a case where an assessee chooses to deposit by way of abundant caution advance tax or self-assessment tax which is in excess of his liability on the basis of return furnished or there is any arithmetical error or inaccuracy, it is open to him to claim refund of the excess tax paid in the course of assessment proceeding. He can certainly make such a claim also before the concerned authority calculating the refund. Similarly, if he has by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax, or is not income within the contemplation of law, he may likewise bring this to the notice of the assessing authority, which if satisfied, may grant him relief and refund the tax paid in excess, if any. Such matters can be brought to the notice of the concerned authority in a case when refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief. In cases governed by section 240 of the Act, an obligation is cast upon the revenue to refund the amount to the assessee without his having to make any claim in that behalf. In appropriate cases therefore it is open to the assessee to bring facts to the notice of the concerned authority on the basis of the return furnished which may have a bearing on the quantum of the refund, such as those the assessee could have urged under section 237 of the Act. The concerned authority, for the limited purpose of calculating the amount to be refunded under section 240 of the Act, may take all such facts into consideration and calculate the amount to be refunded. So viewed an assessee will not be placed in a more disadvantages position than what he would have been, had an assessment been made in accordance with law. Page | 7 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. 32. It was contended before us that proviso to section 240 was inserted by an amendment which came into effect from April, 1 1989. Proviso (b) is applicable to the facts of the case under consideration. Section 240 reads as under: \"240. Refund on appeal, etc.—Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf: Provided that where, by the order of aforesaid,— (a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee.\" It was submitted that after April 1, 1989, in case the assessment is annulled the assessee is entitled to refund only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee. But before the amendment came into effect the position in law was quite different and that is why the legislature thought it proper to amend the section and insert the proviso. On the other hand learned counsel for the revenue submitted that the proviso is merely declaratory and does not change the legal position as it existed before the amendment. It was submitted that this Court in Chittor Electric Supply Corpn.'s case (supra) has held that proviso (a) to section 240 is declaratory and, therefore, proviso (b) should also be held to be declaratory. In our view that is not the correct position in law. Where the proviso consists of two parts, one part may be declaratory but the other part may not be so. Therefore, merely because one part of the proviso has been held to be declaratory it does not follow that the second part of the proviso is also declaratory. However, the view that we have taken supports the stand of the revenue that proviso (b) to section 240 is also declaratory. We have held that even under the unamended section 240 of the Act, the assessee was only entitled to the refund of tax paid in excess of the tax chargeable on the total income returned by the assessee. We have held so without taking the aid of the amended provision. It, therefore, follows that proviso (b) to section 240 is also declaratory. It seeks to clarify the law so as to remove doubts leading to the courts giving conflicting decisions, and in several cases directing the revenue to refund the entire amount of income-tax paid by the assessee where the revenue was not in a position to frame a fresh assessment. Being clarificatory in nature it must be held to be retrospective, in the facts and circumstances of the case. It is well- settled that the legislature may pass a declaratory Act to set aside what the legislature deems to have been a judicial error in the interpretation of statute. It only seeks to clear a meaning of a provision of the principal Act and make explicit that which was already implicit. 33. Learned counsel for the respondents then relied upon the Circular No. 551, dated 23-1-1990 issued by the Central Board of Direct Taxes - (See Taxmann's Page | 8 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. Direct Taxes Circulars Vol. 4 2000 edn., page 2.1353). The relevant part of Circular contained in paragraph 13.2 thereof is as follows:— \"13.2. Further, where the assessment had been annulled in appeal, say for want of jurisdiction or for any other technical reason, and such annulment became final, the judicial pronouncement did not permit retention of even the tax due on the basis of the returned income. Several High Courts had held that in such a case even the tax paid by way of tax deducted at source or advance tax and the tax which was due on the basis of the returned income had to be refunded to the assessee. Equity demanded that even where an assessment was annulled for any reason, the liability of the assessee, at least to the extent of tax payable on the basis of the income declared in the return, should remain. To overcome this difficulty and to make the position clear, the proviso to section 240, inserted by the Amending Act, 1987, provides that where the assessment is annulled, the refund shall become due only in respect of the amount, if any, paid in excess of the tax chargeable on the total income returned by the assessee.\" [Emphasis supplied] The respondents contend that the Circular of the Board is binding upon the authorities of the Income-tax Department and, therefore, so far as the Income-tax authorities are concerned, they must give to the amendment brought about in section 240 only prospective operation. 34. We find that paragraph 13.2 of the Circular does not advance the case of the respondents. The Circular only states that some of the judicial pronouncements did not permit a retention of even the tax due on the basis of the returned income and directed the refund of tax deducted at source or advance tax. To overcome this difficulty and to make the position clear, the proviso to section 40 was inserted. A plain reading of the Circular also indicates that the Board also took the view that the amendment was clarificatory and that it has become necessary to get over the difficulties posed by the judicial pronouncements directing refund of the entire tax including the advance tax and tax deducted at source, which were payable on the basis of income declared in the return by the assessee himself. It is, therefore, not necessary for us to consider the larger question as to the extent to which such circulars are binding upon the department. In any event, as submitted by counsel for the appellant, the relevant part of the Circular contains only a statement of fact. There is no instruction, direction or order to the authorities to act in a particular manner. As rightly submitted by him, the statutory provision has to be examined for its true effect and the Circular, in the instant case is not relevant. 35. In the result these appeals are allowed. The judgment and order of the High Court is set aside and the question referred in M.C.C. Nos. 368-369 of 1993 is answered in the negative and in favour of the revenue. Misc. Petition Nos. 2750 of 1984 and 3773 of 1987 are dismissed. There shall be no order as to costs.” 8. The Ld. Counsel for the assessee, took us through the judgement of the Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Ltd., (2008) 173 Taxman 322 (SC) wherein it was held that non- Page | 9 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. consideration of a decision of jurisdictional High Court or of Supreme Court can be said to be a ‘mistake apparent from record’ which can be rectified u/s 254(2) of the Act. The relevant part of the judgment, are reproduced below: 38. Though the learned counsel for the assessee submitted that the phrase \"to rectify any mistake apparent from the record\" used in section 254(2) (as also in section 154) is wider in its content than the expression \"mistake or error apparent on the face of the record\" occurring in Rule 1 of Order 47 of the Code of Civil Procedure, 1908 [vide Kil Kotagiri Tea & Coffee Estates Co. Ltd. v. ITAT [1988] 174 ITR 579 (Ker.)], it is not necessary for us to enter into the said question in the present case. 39. 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's case (supra) was not brought to the notice of the Tribunal and thus there was a \"mistake apparent from record\" which required rectification. 40. 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 C1ourt 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 that such a mistake can be said to be a \"mistake apparent from the record\" which could be rectified under section 254(2). 41. A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Ltd.'s case (supra). It was held by the Division Bench of the High Court that if the point is covered by a decision of the Jurisdictional Court rendered prior or even subsequent to the order of rectification, it could be said to be \"mistake apparent from the record\" under section 254(2) of the Act and could be corrected by the Tribunal. 42. In our judgment, it is also well-settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a 'new rule' but to maintain and expound the 'old one'. In other words, Judges do not make law, they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite sometime, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. 43. Salmond in his well-known work states: \". . . (T)he theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule Page | 10 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicataor accounts that have been settled in the meantime.\" [Emphasis supplied] 44. It is no doubt true that after a historic decision in Golak Nath v. State of Punjab AIR 1967 SC 1643, this Court has accepted the doctrine of 'prospective overruling'. It is based on the philosophy: \"The past cannot always be erased by a new judicial declaration\". It may, however, be stated that this is an exception to the general rule of the doctrine of precedent. 45. Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and to disturb the finality. 46. In S. Nagaraj v. State of Karnataka 1993 Supp. (4) SCC 595, Sahai, J. stated : \"15. Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the Court should not be prejudicial to anyone. Rule of stare decisis is adhered for consistency but it is not as inflexible in Administrative Law as in Public Law. Even the law bends before justice. Entire concept of writ jurisdiction exercised by the higher courts is founded on equity and fairness. If the Court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of justice then it cannot on any principle be precluded from rectifying the error. Mistake is accepted as valid reason to recall an order. Difference lies in the nature of mistake and scope of rectification, depending on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustice. It is either statutory or inherent. The latter is available where the mistake is of the Court. In Administrative Law, the scope is still wider. Technicalities apart if the Court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order....\" (p. 618) 47. In the present case, according to the assessee, the Tribunal decided the matter on October 27, 2000. Hiralal Bhagwati was decided 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 jurisdiction in exercising power under sub-section (2) of section 254 of the Act and in rectifying \"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. 48. For the foregoing reasons, in our view, no case has been made out to interfere with the order passed by the Income-tax Appellate Tribunal, Ahmedabad and confirmed by the High Court of Gujarat. The appeal deserves to be dismissed and is accordingly dismissed. On the facts and in the circumstances of the case, however, the parties are ordered to bear their own costs.” Page | 11 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. 9. On the other hand, the Learned Commissioner of Income-tax – Departmental Representative (Ld. CIT-DR) for the revenue vehemently argued that as per section 254(2) of the Act, the assessee cannot re-argue the entire matter and only mistake apparent from record can be rectified. The Ld. CIT-DR also pointed out that there is a complete application of mind on the part of the Tribunal, while adjudicating the matter in assessee’s case in IT(SS)A Nos.6 & 7/RJT/2022, order dated 12.06.2024. There is no mistake apparent from record and decision delivered by the Tribunal in assessee’s case (supra) is a speaking order, hence, miscellaneous application (MA) filed by the assessee may be dismissed. 10. The Ld. CIT-DR for the Revenue also submitted that if the assessee going to file the appeal against the order of Tribunal in assessee’s case in IT(SS)A Nos.6 & 7/RJT/2022, vide order dated 12.06.2024, then miscellaneous application filed by the assessee, should be dismissed. 11. In rejoinder, Ld. Counsel for the assessee submitted that assessee has not filed any appeal, till date, that is, up to the present time, before the High Court against the order of Tribunal in assessee’s case in IT(SS)A Nos.6 & 7/RJT/2022, order dated 12.06.2024(supra). 12. The Ld. CIT-DR for the Revenue, in a rejoinder, again stated that on merit, the miscellaneous application, should not be allowed and for that he relied on the order of Co-ordinate Bench of ITAT, Rajkot in case of ACIT vs. Rajeshkumar Govindlal Patel, in MA Nos.20 & 49/Rjt/2023, dated 20.03.2024 and contended that Tribunal has passed a speaking order, hence there is no mistake apparent on record, therefore, both the miscellaneous applications filed by the assessee, may be dismissed. Page | 12 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. 13. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. For the sake of clarity and also being pertinent, we reproduce the relevant para No.69 of the order of the Tribunal in IT(SS)A Nos.6 & 7/RJT/2022, order dated 12.06.2024, which is the disputed issue in these two miscellaneous applications. The para No.69 of the order of the Tribunal, reads as follows: “69. We have heard both the parties. The assessee’s contention is that the assessed loss of immediately preceding year i.e. Asst.Year 2015-16 amounting to Rs.9,61,09,539/- be set off against the profits assessed for the impugned year amounting to Rs.12,69,69,992/- for Asst.Year 2016-17 and Rs.12,50,99,546/- for Asst.Year 2017-18. We are not agreeable with the same. It is an undisputed fact that the loss of the immediately preceding assessment year and the profits of the impugned assessment year were not returned to tax in the returns filed in response to the notice under section 153A of the Act. These losses/profits are assessed income of the assessee on the basis of incriminating material found during the search. The provision of law with regard to carry forward and set off of loss as contained in section 139(3) of the Act is that only loss which are returned within the time allowed as per section 139(1) of the Act are allowed to be carried forward and set off against the income of the succeeding years. There is no dispute with respect to the above provision of law. As far as reliance of the assessee to decisions laying down the proposition that the return filed in response to the notice under section 153A of the Act are to be treated as that filed under section 139(1) of the Act (Kirit Dahyabhai Patel(supra), there is no denial or dispute with regard to the same also. But the said decision is of no help to the assessee, because the assessee has not claimed the loss in the return filed in response to the notice under section 153A of the Act, as noted above before us. Thus, since the loss of the preceding year has not been returned to tax in the return filed in response to notice u/s 153A of the Act, the law does not allow benefit of set off of such losses against incomes of succeeding years. Such a proposition as canvassed by the Ld.Counsel for the assessee would result in honest assessees being placed in a disadvantageous position as compared to those who otherwise do not disclose correct incomes but it is discovered during search proceedings. As per the provisions of law it is only losses disclosed in returns filed within prescribed time which are allowed the benefit of being carried forward and set off against incomes of succeeding years. An honest assessee who otherwise discloses losses but not within prescribed time is therefore denied the benefit of carry forward and set off of the losses. If the proposition canvassed by the Ld.Counsel for the assessee is accepted then losses discovered during search, not otherwise disclosed in returns filed are to be allowed benefit of carry forward and set off. In short, an unscrupulous assesses Page | 13 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. whose undisclosed economic activities are discovered during search will be in a beneficial position with regards to set off and carry forward of losses as opposed to an honest assessee . This surely cannot be the intention of law. The decision of the ITAT Delhi Bench in the case of HBN Dairies (supra) does not help the case of the assessee since in the said case losses claimed to be set off against profits were disclosed in the return filed u/s 153A of the Act. As for the other decisions relied upon by the ld.counsel for the assessee, they only lay down the proposition that the claim of set off of losses is to be examined in the year in which the set off is claimed. How these decisions are of any assistance to the assessee’s claim in the impugned year, we fail to understand, considering the fact that even as per the provision of law, the assessee is not eligible to claim the set off of losses since the losses were not returned in the return of income filed in response to the notice under section 153A of the Act. We, therefore, are in complete agreement with the ld.CIT(A) that the assessee is not entitled to any set off of loss brought forward from the preceding years and these contentions of the ld.counsel for the assessee is accordingly dismissed.” 14. We note that assessee’s contention before the Tribunal was that the assessed undisclosed loss of immediately preceding year, that is, assessment year 2015-16, amounting to Rs.9,61,09,539/- should be set- off against the undisclosed income for the impugned year amounting to Rs.12,69,69,992/-, for assessment year 2016-17 and Rs.12,50,99,546/- for assessment year 2017-18. The Tribunal has denied the benefit of set- off of losses on the plea that only loss which are returned within the time allowed as per section 139(1) of the Act are allowed to be carried forward and set off against the income of the succeeding years. Besides, the assessee has not claimed the loss in the return filed in response to the notice under section 153A of the Act. 15. We find that a search and seizure operation was conducted under section 132(1) of the Act, on 10.11.2020. In this said search operation, the Revenue authorities, found certain documents and evidences, which the Revenue authorities considered them, as incrementing material. As per assessing officer, based on these incrementing material, there was undisclosed income in the hands of the assessee, as well as, there was Page | 14 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. undisclosed losses, as per these incrementing material. The assessing officer, during the assessment proceedings, under section 153A read with section 143(3) of the Act, considered only undisclosed income of the assessee, as per the incrementing material seized, however, did not consider undisclosed losses, as per the incrementing material seized. That is, assessing officer did not give the benefit of set- off of undisclosed losses, against the undisclosed income, fond during the search and seizure action. In para No.69 of the order of the Tribunal in IT(SS)A Nos.6 & 7/RJT/2022, order dated 12.06.2024 (supra), the Tribunal has also denied the benefit of set- off of losses, stating that assessee has not claimed the losses in the return of income filed under section 153A of the Act, as noted above. 16.We find that undisclosed income and undisclosed losses, both were not shown by the assessee, in the return of income, filed by the assessee, in response to notice under section 153A of the Act, therefore, either the assessing officer should ignore both the items or should consider both the items, to compute the tax liability of the assessee, as per seized material. The “Income” as well as “losses”, both were undisclosed, as seized material, however, the assessing officer has taken into account to tax the undisclosed income and ignored the undisclosed losses, which is not acceptable. It is a common knowledge that seized material must be read as a whole, that is, every part of the seized material must be constructed within the four corners of the Act. When the undisclosed income has been taken from seized material, then why not the undisclosed losses should not be taken from the seized material. Apple to Apple comparison is needed, which is required, as per the principle of equity and justice. No any seized material should be interpreted in isolation, if the assessing officer, takes the undisclosed income from seized material, then he has to take into account the undisclosed losses from the same seized material, and benefit of set-off Page | 15 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. of losses, should be given to the assessee, on account of undisclosed losses, which the assessing officer has failed to do so. 17. We are of the view that every part of the seized material, must be analyzed, within the four corners of the Act, when the undisclosed income is considered by the assessing officer, based on the seized material, then assessing officer ought to have considered, the undisclosed losses, based on the same seized material.In fact, even if an assessee inadvertently failed to claim any legitimate claim, the revenue has to correct it and due tax has to be collected. In this regard Hon'ble Gujarat High Court in the case of S.R. Koshti vs. CIT 276 ITR 165 (Guj) has held that \"the authorities under Income Tax Act, 1961 are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee under a mistake, misconception or not being properly instructed is over assessed, the authorities under the Act are required to assist him and assure that only legitimate taxes due are collected\" 18. In fact, in a situation like that of the assessee, number of appellate authorities have opined that the revenue is expected to collect the legitimate revenue and had placed on record the CBDT's Circular No. 114 XL-35 of 1955, dated 11-4-1955, which read as under: Administrative instructions for guidance of Income-tax Officers on matters pertaining to assessment 1. The Board has issued instructions from time to time in regard to the attitude which the Officers of the Department should adopt in dealing with assessee in matters affecting their interests and convenience. It appears that these instructions are not being uniformly followed, 2. Complaints are still being received that while Income-tax Officers are prompt in making assessments likely to result into demands and in effecting their recovery, they are lethargic and indifferent in granting refunds and giving reliefs due to assessee under the Act. Dilatoriness or indifference in dealing with refund claims (either under section 48 or due to appellate, revisional, etc., orders) must be completely avoided so that the public may feel that the Government are actually prompt Page | 16 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. and careful in the matter of collecting taxes and granting refunds and giving reliefs. (3) Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should—(a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. 4. Public Relation Officers have been appointed at important centres, but by the very nature of their duties, their field of activity is bound to be limited. 19. The Hon'ble Justice Khanna in the case of Simon Carves (105 ITR 12) (SC) has held that tax authorities would not be acting properly and judiciously, if they exercise their power in the manner most beneficial to the revenue and consequently most adverse to the assessee….” The various courts have held that if excess tax has been paid by the assessee, in advance, the Assessing Officer is bound to refund it under the general law and independently of Chapter XIX or any other provisions of the Act.[ OCM v/s CIT (138 ITR 689)]. A combined reading of the above decisions of the Hon'ble Courts leads to a conclusion that, if an assessee is entitled to the benefit or relief, then, he / she cannot be denied for the reasons that he /she failed to claim it. The Hon'ble High Court of Madras in the case of Abhinitha Foundation Pvt.Ltd. (99 CCH 37) (Mad) (HC) has held that failure to advert to claim in original return or revised return could not denude, appellate authorities of their power to consider the claim.The Page | 17 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. appellant authority including Commissioner of Income Tax (Appeals) is empowered to entertain any claim which, was not made by the appellant, in his /her/its return of income. 20. As we have noted that any document has to be taken as a whole and the Assessing Officer should not pick and choose those parts of the impounded/seized material which suits him and totally rejected those parts of the same document which are in support of the assessee. Therefore, either the Assessing Officer should not rely on such impounded/seized material, at all, or if he uses these documents as evidences against the assessee, then he should read it as a whole and also accept those parts of the documents which support the assessee. One Cannot be permitted to blow hot and cold in the same steam. ‘Head I win’ and ‘tail you lose’, approach is alien to the principles of justice. There cannot be approval and rejection in the same steam. To attempt to take advantage of one part and to reject the rest, is against the fine norms of jurisprudence. If the assessing officer places reliance on the part of seized material and ignores another part of seized material, then there would be certain breach in regard to this tenet of law. Considering these facts, we are of the view that there is a mistake apparent from record in non-consideration of these facts, and non- consideration of a decision of the Supreme Court, which can be said to be a \"mistake apparent from the record\". Therefore, we direct the assessing officer to allow undisclosed loss of immediately preceding year, that is, assessment year 2015-16, amounting to Rs.9,61,09,539/-, to be set- off against the undisclosed income for the impugned year amounting to Rs.12,69,69,992/-, for assessment year 2016-17 and Rs.12,50,99,546/- for assessment year 2017-18. 21. In the result, miscellaneous application No.22/RJT/2024, is allowed. Page | 18 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. 22. Since we have allowed the miscellaneous application No.22/RJT/2024, and facts and contents of miscellaneous application No.23/RJT/2024, are similar and identical as those of iscellaneous application No.22/RJT/2024.Accordingly, our observations made in miscellaneous application No.22/RJT/2024, shall apply mutatis mutandis to the aforesaid other miscellaneous application No.23/RJT/2024. For the parity of reasons, we allow the abovementioned miscellaneous application, in terms of directions noted in miscellaneous application No.22/RJT/2024. 23. In the result, miscellaneous application No.23/RJT/2024, is allowed. 24. In the combined result, both miscellaneous applications filed by the assessee are allowed. Order is pronounced in the open court on 11 /11/2024 Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot Ǒदनांक/ Date: 11 /11/2024 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By order Assistant Registrar/Sr. PS/PS ITAT, Rajkot Page | 19 MA Nos. 22 & 23/RJT/2024 M/s. Ahir Salt & Allied Products Pvt. Ltd. Date Initial 1. Draft dictated on (dictation sheet is enclosed with main file.) 09.09.2024 } PS 2. Draft placed before author 10.09.2024 PS 3. Draft proposed & placed before the second member 4. Draft discussed/approved by Second Member. 5. Approved Draft comes to the Sr.PS/PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Draft dictation sheets are attached PS "