DCIT 2(3)(1), MUMBAI V. .REFRIGERATED DISTRIBUTORS P.LTD, MUMBAI

MA 753/MUM/2017

AI Insights

The case involves the Income Tax Appellate Tribunal in Mumbai, which addressed a Miscellaneous Application by the Revenue concerning a previous order that differed in its treatment of un-proved purchases for the Assessment Year 2011-12 compared to other years. Initially, the Tribunal had reduced the disallowance of un-proved purchases from 25% to 10% for AYs 2007-08 to 2010-11 and 2012-13 but had not applied the same reduction for AY 2011-12, where the CIT(A) had deleted the entire disallowance. The Revenue contended that this inconsistency constituted a mistake apparent from the record under section 254(2) of the Income-tax Act, 1961. The Tribunal agreed with the Revenue, acknowledging the mistake and rectifying it by applying the same 10% disallowance for AY 2011-12 as in the other years.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 32051 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 2 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-12-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 28-09-2017
• Other Referred Cases: Honda Siel Power Products Ltd vs CIT [295 ITR 466]
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R.R. MAKWANA
• Assessee Lawyers: RAJIV WAGLE
• Section: 254(2)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D”, MUMBAI BEFORE JUSTICE (RETD.) SHRI C.V. BHADANG, PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER M.A. No. 753/Mum/2017 (Arising out of ITA No. 781/Mum/2015) Assessment Year : 2011-12 Asst. Commissioner of Income Tax, Circle-2(3)(1), Aayakar Bhavan, M.K. Road, Mumbai. vs. M/s. Refrigerated Distributors Pvt. Ltd., 410, Emca House, Shahid Bhagat Singh Rd., Mumbai PAN : AABCR1479A (Applicant) (Respondent) ITA No. 781/Mum/2015 Assessment Year : 2011-12 Asst. Commissioner of Income Tax, Circle-2(3)(1), Aayakar Bhavan, M.K. Road, Mumbai. vs. M/s. Refrigerated Distributors Pvt. Ltd., 410, Emca House, Shahid Bhagat Singh Rd., Mumbai PAN : AABCR1479A (Appellant) (Respondent) For Assessee : Shri Rajiv Wagle For Revenue : Shri R.R. Makwana, Sr.DR Date of Hearing : 11-12-2024 Date of Pronouncement : 11-12-2024 O R D E R PER B.R. BASKARAN, A.M : The Revenue has filed this Miscellaneous Application submitting that there is a mistake apparent from record in the order dated 2 M.A. No. 753/Mum/2017 ITA No. 781/Mum/2015 13-01-2017 passed by the Tribunal in the hands of the assessee for the Assessment Year (AY.) 2011-12. 2. The Ld.DR submitted that the Tribunal has passed a common order in respect of the appeals filed by the assessee for AYs. 2007-08 to 2010-11 and 2012-13 and in the appeal filed by the Revenue for AY 2011-12. The issue contested by both the parties was related to the addition of un-proved purchases made by the AO in all the years under consideration. In all these years, the AO had disallowed 25% of the value of un-proved purchases. The Ld.CIT(A) first disposed of the appeals relating AYs. 2007- 08 to 2010-11 and 2012-13, wherein he dismissed the appeals of the assessee confirming the addition of 25% of the value of un-proved purchases made by the AO. Hence the assessee challenged the orders passed by Ld CIT(A) for the above said years by filing appeals before the Tribunal seeking relief. However, in A.Y 2011-12, the Ld.CIT(A) deleted the entire disallowance made by the AO. Hence, Revenue filed appeal for the AY. 2011-12, challenging the relief granted by the Ld.CIT(A). 3. The Ld.DR submitted that all the appeals of the assessee and the appeal of the Revenue were disposed of by the Tribunal by a common order dated 13-01-2017. In respect of appeals filed by the assessee for AY 2007- 08 to 2010-11 & 2012-13, the Tribunal granted partial relief restricting the addition to 10% of the value of un-proved purchases. However, in respect of appeal filed by the Revenue for AY 2011-12, the Tribunal confirmed the order passed by Ld.CIT(A), wherein he had deleted entire addition. The Ld D.R submitted that the facts surrounding the addition of un-proved purchases are identical in all the years. Accordingly, he contended that the Tribunal should not have taken a different view in AY 2011-12 without 3 M.A. No. 753/Mum/2017 ITA No. 781/Mum/2015 following its decision rendered for other years in the very same order. He submitted that non-following its own order passed on an identical issue has resulted in a mistake apparent from record within the meaning of sec.254(2) of the Act. Hence, the Revenue has filed this Miscellaneous Application seeking recall of the order passed by the Tribunal in AY 2011- 12. 4. We heard the parties and perused the record. We noticed earlier that the Tribunal has passed a common order in respect of appeals filed by the assessee and Revenue. The assessee had filed appeals for the AYs. 2007- 08 to 2010-11 & 2012-13 and Revenue had filed appeal for AY. 2011-12. There is no dispute between the parties that the facts relating to the addition of un-proved purchases made in all these years are identical. 5. We notice that the Tribunal has first disposed of the appeals filed by the assessee in the impugned order, wherein the Tribunal granted partial relief to the assessee by reducing the rate of disallowance from 25% to 10% of the value of unproved purchases. However, the said decision was not followed by the Tribunal in the appeal filed by the Revenue for the A.Y 2011-12 which was disposed of in the later part of the very same order, even though facts of unproved purchases were identical in all the years. Hence, we are of the view that there is merit in the contention of the Revenue that non-following of its own order would result in mistake apparent from record. The Revenue would get support for its contention from the decision rendered by Hon’ble Supreme Court in the case of Honda Siel Power Products Ltd vs CIT [295 ITR 466]. For the sake of completeness, we extract the relevant portion of the said order below:- 4 M.A. No. 753/Mum/2017 ITA No. 781/Mum/2015 “13. \"Rule of precedent\" is an important aspect of legal certainty in rule of law. That principle is not obliterated by section 254(2) of the Income-tax Act, 1961. When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. In the present case, the Tribunal was justified in exercising its powers under section 254(2) when it was pointed out to the Tribunal that the judgment of the coordinate bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material which was already on record. The Tribunal has acknowledged its mistake, it has accordingly rectified its order. In our view, the High Court was not justified in interfering with the said order. We are not going by the doctrine or concept of inherent power. We are simply proceeding on the basis that if prejudice had resulted to the party, which prejudice is attributable to the Tribunal's mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake, which had been done in the present case.” 5.1. Hence, we are of the view that the Tribunal has committed a mistake apparent from record in AY.2011-12 in not following the decision rendered in the very same order for other years. Accordingly, we recall the order passed by the Tribunal for the AY.2011-12. Accordingly, the Miscellaneous Application filed by the Revenue is allowed. 6. Since the appeal of the Revenue is recalled, with the concurrence of both the parities, the appeal of the Revenue filed for AY.2011-12 was taken up for hearing. We noticed earlier that the Tribunal has sustained the addition to the extent of 10% of un-proved purchases in AYs. 2007-08 to 2010-11 and 2012-13. Since the facts surrounding the issue of disallowance of unproved purchases are identical in all the years, following the decision rendered by the Tribunal in the assessee’s own case in AYs. 2007-08 to 2010-11 & 2012-13, we modify the order passed by the 5 M.A. No. 753/Mum/2017 ITA No. 781/Mum/2015 Ld.CIT(A) in AY.2011-12 and direct the AO to sustain the addition to the extent of 10% of the value of un-proved purchases. 7. In the result, the Miscellaneous Application filed by the Revenue is allowed and the appeal of the Revenue is partly allowed. Order pronounced in the open court on 11-12-2024 Sd/- Sd/- (JUSTICE (RETD.) C.V. BHADANG) PRESIDENT (B.R. BASKARAN) ACCOUNTANT MEMBER Mumbai, Date: 11-12-2024 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, “D” Bench, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "