ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, SURAT V. M/S. HARSHIT GEMS LTD., , SURAT

MA 68/SRT/2023

AI Insights

The case involves two Miscellaneous Applications (MA) filed by the revenue seeking rectification of a Tribunal order dated 13/06/2023, which had declared the assessment orders for the Assessment Years 2012-13 and 2014-15 as time-barred. The revenue contended that the assessments were not time-barred due to a reference made to the Foreign Tax and Research Division (FT & TR) for verification of transactions outside India, which extended the deadline for passing the assessment orders. The assessee opposed the revenue's claims, arguing that the revenue was attempting to introduce new evidence and facts that were not part of the original record. The Tribunal dismissed the applications, stating that the revenue's request amounted to a review of the Tribunal's earlier decision, which is not permissible under Section 254(2).

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 33948 (ITAT-SURAT)
• Duration Of Justice: 9 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Next Hearing Date: 30-08-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 20-12-2023
• Other Referred Cases: ITO Vs. Iraissa Hotels Pvt. Ltd., Sesa Goa Ltd. Vs ACIT, ACIT Vs Nayna P Dedhia, Vrundavan Ginning and Oil Mill Vs Asst. Registrar/President, CIT (Exemption) Vs Gujarat Institute of Housing & Este Developers, CIT Vs Reliance Telecom Ltd., Sambhubhai Vs Income Tax Appellate Tribunal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Rectification of order; Bogus
• Section: 148; 254(2); 153; 13

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER M.A. No. 68 & 69/Srt/2023 (Arising out of ITA No. 313 & 314/Srt/2022 & CO No. 09 & 10/Srt/2022) (A.Y. 2012-13 & 2014-15) (Physical hearing) A.C.I.T., Central Circle-3, Surat, 507, 5th Floor, Aayakar Bhawan, Majura Gate, Surat. Vs. M/s Harshit Gems Ltd. Pvt. Ltd., 106, Santok Diamond Apartment, Hatfalia, Haripura, Surat-395003 PAN No. AACCH 2246 L Appellant/ Revenue Respondent/ Assessee Department represented by Shri Vinod Kumar, Sr. DR Assessee represented by Shri Prakash Jhunjhunwala, C.A. with Shri Pawan Jagetia, C.A. Date of hearing 30/08/2024 Date of pronouncement 10/10/2024 Order under section 254(2) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two Miscellaneous Applications (MA) are filed by the revenue for seeking rectification in the order of Tribunal dated 13/06/2023 passed in ITA No. 313 & 314/Srt/2022 & C.O. No. 09 & 10/Srt/2022 for the Assessment Year (AY) 2012-13 & 2014-15 respectively. In both the MA’s the revenue has raised similar contentions, thus, both the applications were clubbed, heard together and are decided by common order. 2. In these Misc. applications, the Assessing officer/revenue inter alia intended that there is a mistake in the order of Tribunal, wherein it has been held that the assessment order passed in both the assessment years are time barred. It is further contended that during the assessment, the Assessing Officer made a reference to Foreign Tax and Research Division, New Delhi (FT & TR) for verification of transaction carried out by the assessee company outside India, MA No. 68 & 69/Srt/2023 ACIT Vs Harshit Gems Ltd. P Ltd. 2 therefore, the assessment was covered by Explanation-1(x) of Section 153 of the Income Tax Act, 1961 (in short, the Act), thus, the date of passing the assessment order has extended to 31/12/2020. Thereafter, due to various notifications issued during Covid-19 pandemic, the time barring period was extended up to 30/09/201. The assessment orders were passed on 23/04/2021 in AY 2014-15 and on 21.06.201 in AY 2012-13, was well within time. The learned Senior Departmental Representative (ld. Sr. DR) for the revenue submits that while adjudicating the appeal, the Tribunal held that time limit for passing assessment order has expired on 23/12/2019. The ld. Sr. DR for the revenue submits that the notice under Section 148 dated 29/03/2019 was served upon the assessee and in ordinary circumstances, the time limit for completion of assessment was nine months from the end of relevant financial year in which notice under Section 148 of the Act was served. Since the reference to FT & TR was made by Assessing Officer, thus as per provisions of Explanation-1(x) of Section 153, the time period for passing of assessment order was automatically extended up to 31/12/2020. In the meantime, the time period was extended due to Covid-19 pandemic by the CBDT notification from time to time up to 30/09/2021. The assessment order in A.Y. 2012-13 was passed on 21/06/2021 and in A.Y. 2014-15, it was passed on 23/04/2021. The assessment order was not time barred in case of assessee, thus, there is a mistake in the order of Tribunal, which require rectification and/or the order dated 13/06/2023 may be recalled for adjudicating the issue afresh. 3. On the other hand, the learned Authorised Representative (ld AR) of the assessee strongly opposed the contention of ld. Sr. DR for the revenue on facts MA No. 68 & 69/Srt/2023 ACIT Vs Harshit Gems Ltd. P Ltd. 3 as well as on law. The ld. AR of the assessee submits that the assessee is seeking review of the order on the basis of such fact which was nowhere available on record either in the form of fact or by way of legal implication at the time of hearing/adjudicating both the appeal vide order dated 13/06/2023. The provisions of Section 254(2) of the Act does not empower Tribunal to review the order if there is no mistake apparent from the record. The ld. AR of the assessee submits that as per Sub-Rule (6) of Rule 18 of Income Tax (Appellate) Tribunal Rules, 1963, the documents that are referred and relied upon by the parties during the hearing/argument shall alone be treated as a part of record of the Tribunal, thus the document/evidence which are filed during the course of hearing of Misc. Application cannot be considered as a part of document during the original hearing of the case. The revenue cannot submit fresh/new evidence before the Tribunal during the course of hearing of Misc. application which were not available during the course of original hearing. If such type of practice is allowed at the time of hearing of Misc. Application then the circumstances would be a never ending process. Section 254(2) of the Act only speak about mistake apparent from record which can be rectified, thus a debatable issue or legal issue cannot be raised under the garb of application under Section 254(2) of the Act. The order was passed by the Bench on merit after considering all the material available on record. The ld. AR of the assessee while referring the contents of assessment order, would submit that in the entire assessment order, there is no reference to FT & TR. And now the revenue has pleaded new and fresh facts and intended to insert fresh evidence which was never case of Assessing Officer or ld. CIT(A). The MA No. 68 & 69/Srt/2023 ACIT Vs Harshit Gems Ltd. P Ltd. 4 ld. Sr. DR has no authority or power to improve the case of Assessing Officer when entire exercise carried out by Assessing officer has been brought on record in black and white by passing assessment order. the assessee was never communicated about the issuance of such FT & TR reference. The ld. AR of the assessee submits that against the order of Tribunal dated 13/06/2023, the revenue has already filed appeal before the Hon'ble Jurisdictional High Court, therefore, the revenue is now precluded from raising the same issue which is the subject matter of appeal before the Hon'ble High Court. Similar application of revenue has already been dismissed by the Surat Bench vide order dated 30/10/2023 in M.A. No. 50 to 53/Srt/2023 in case of ACIT Vs M/s Saffrom Gems Pvt. Ltd., copy of which is placed on record. 4. The ld. AR of the assessee in his without prejudice submissions by referring Circular of CBDT dated 24/10/2019, submits CBDT in this particular Circular mentioned that in a large number of Exchange of Information (EOI) requests in time barring assessment cases are received in the EOI cell FT & TR Division just the time barring date. And as a result, it becomes difficult to process and forward such requests after due scrutiny to the Foreign Competent Authorities in time. In many cases the EOI requests are not properly drafted by the filed officers to meet the international standard on exchange of information. Thus, directed that such EOI requests in time barring cases should be made one month before time barring date and where time available is less than one month, requests should only be sent with the approval of the concerned CCIT/DGIT(Inv.) and such instruction was directed to adhere as per Central Action Plan. Particularly for time barring period on 31/12/2019 it was directed MA No. 68 & 69/Srt/2023 ACIT Vs Harshit Gems Ltd. P Ltd. 5 to send information latest by 30th November, 2019 and in cases where the time available is less than one month, the approval of the concerned CCIT/DGIT(Inv.) may be expressly indicated in the EOI request being sent to the EOI cell, FT & TR Division. The ld. AR of the assessee by referring the various correspondences between the Pr.CIT, Majura Gate at FT&TR Division would submit that still the copy of original reference order, if any is not placed on record, showing approval of concerned CCIT/DGIT(Inv.). The ld. AR of the assessee submits that he is still reiterate that such additional material filed alongwith Misc. application cannot be considered as a record of the case. The ld. AR of the assessee on the ratio of raising his submission that documents relied during the course of hearing are only to be treated as part of record, and on the basis of subsequent reliance on some other evidence, order is not rectifiable under Section 254 of the Act, relied upon the decision of Mumbai Tribunal in ITO Vs. Iraissa Hotels Pvt. Ltd. 97 taxmann.com 623 (Mum Trib), Panji Bench in Sesa Goa Ltd. Vs ACIT 55 taxmann.com 28 (ITAT-Panji), Hyderabad Tribunal in ACIT Vs Nayna P Dedhia 13 SOT 496 (ITAT-Hyd). On the ratio that the matters involving elaborate discussions would not comprise as a mistake apparent from the record relied on the decision of Hon'ble Gujarat High Court in Vrundavan Ginning and Oil Mill Vs Asst. Registrar/President (2021) 126 taxmann.com 227 (Guj), CIT (Exemption) Vs Gujarat Institute of Housing & Este Developers 84 taxmann.com 148 (Guj) and CIT Vs Reliance Telecom Ltd. (2021) 133 taxmann.com 41 (SC). 5. In short rejoinder submission, the ld. Sr. DR for the revenue submits that mere pendency of appeal against the order of Tribunal before the Hon'ble High Court MA No. 68 & 69/Srt/2023 ACIT Vs Harshit Gems Ltd. P Ltd. 6 is not barred for entertaining and adjudicating the application under Section 254(2) of the Act. In support of his submission, the ld. Sr. DR for the revenue relied upon the decision of Gujarat High Court in Sambhubhai Vs Income Tax Appellate Tribunal in R/Special Civil Application No. 6337 of 2018 dated 20/08/2018, copy of such decision is placed on record. The ld. Sr. DR for the revenue also filed correspondence of Assessing Officer about the reference of FT & TR of various dates of December, 2019. 6. We have considered the submissions of both the parties ad have gone through the orders of the lower authorities carefully. We have also deliberated on various case laws and material placed before us. We find that there is no averment about the reference of FT & TR in the entire assessment order in both the years. At the time of hearing of the appeal no such plea was raised or argued by the revenue that any reference to FT & TR was made by the Assessing Officer, nor it is the case of revenue that such fact was brought to the notice of bench that any reference to FT & TR was made in these two assessment years. Moreover, the case of assessee was reopened/ revised on the basis of information that assessee is beneficiary of the bogus purchase transaction made with well-known entry provider. There was no such reason of reopening that the assessee made as transaction with foreign entity or transaction of assessee with the foreign entity with under scrutiny. There is no material on record that the assessee was ever communicated during assessment that any reference to FT & TR was made by Assessing Officer. Now at this stage, the ld Sr DR for the revenue is seeking intervention of this bench on new evidences and to rewrite the decision again, which is not MA No. 68 & 69/Srt/2023 ACIT Vs Harshit Gems Ltd. P Ltd. 7 permissible. The jurisdiction of Tribunal while entertaining and deciding application under section 254(2) is confined to rectify the mistake apparent on record. 7. We find that coordinate bench of Mumbai Tribunal in ITO Vs Iraissa Hotels (P) Limited (supra) while considering the scope of application under section 254(2) on considering the contention of revenue that order of SEBI was available at the time of hearing but it could not be brought to the notice of the Tribunal, has held that whatever negligence or laches for not bringing the final order of SEBI to the notice of the Tribunal lies with the department and for negligence or laches of the department, the appeal order passed by the Tribunal cannot be termed as erroneous to bring it within the ambit of section 254(2). After disposal of the appeal by the Tribunal, if the department comes with the fresh evidence certainly it cannot be entertained, much less, by taking recourse of section 254(2). And the application under section 254(2) was held as not maintainable. It was also held that by filing such application, the department was seeking review of the earlier order of the Tribunal which is not permissible under section 254(2). The scope of application under section 254(2) is very limited and only apply to rectification of mistake apparent on the face of record. 8. Further, Panji Bench of Tribunal in Sesa Goa Limited Vs ACIT (supra) also held that where material and information relied by the revenue had been procured subsequent to the passing of order by Tribunal, there is no mistake rectifiable under section 254(2). As per Rule 18(6) only documents that were referred and relied upon by the parties during course of arguments shall alone be treated to be part of the record of Tribunal. It was also held that Rule 18(6) of MA No. 68 & 69/Srt/2023 ACIT Vs Harshit Gems Ltd. P Ltd. 8 Income Tax (Appellate Tribunal) Rule explicitly mentioned that only documents that are referred to and relied by the parties during course of arguments shall alone be treated to be part of the record of the Tribunal. 9. The Hon’ble Jurisdictional High Court in Vrundavan Ginning and Oil Mill Vs Assistant Registrar/ President ITAT (2021) 126 TAXMANN.COM 227 (Gujrat) also held that power to rectify an order under section 254(2) is extremely limited and it does not extend to correcting the error of low or re-appreciating the factual finding. If the parties are aggrieved with the findings of the Tribunal, it would be open to seek appellate remedies. Thus, in view of the aforesaid factual and legal discussion, we do not find any such mistake apparent on record which may require rectification, particularly the material available on record at the time of adjudication both the appeals vide order dated 13.06.2023. 10. The case law in Sambhubhai Mahadev Ahir Vs ITAT (supra), relied by ld Sr DR of the revenue is not helpful to the revenue, in this case, the Hon’ble High Court ultimately held that “it is well settled through series of judgement of this Court and Supreme Court that power of rectification are circumscribed with the condition that the same can be exercised for correcting error be of law or facts apparent on record. The jurisdiction to correct errors vested in the Tribunal is not akin to review Powers.” Hence, we do not find merit in the Application filed by the revenue. 11. Even if, we remotely consider that there was a valid reference made by Assessing Officer to FT & TR with the prior the approval of the concerned CCIT/DGIT(Inv.), copy of alleged reference dated 29.11.2019 is not placed on MA No. 68 & 69/Srt/2023 ACIT Vs Harshit Gems Ltd. P Ltd. 9 record. No evidence is still placed on record that there was a valid reference with approval of CCIT/DGIT(Inv.). Thus, the MA’s filed by the revenue in both the appeal are dismissed. 12. In the result, both these Miscellaneous Applications filed by the revenue are dismissed. Order was pronounced in the open court on 10th October, 2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 10/10/2024 *Ranjan Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard File By order Sr. Pvt. Secretary, ITAT, Surat "