DEPUTY COMMISSIONER OF INCOME TAX-1(1), RAIPUR, RAIPUR V. SHRI ARUN AGRAWAL, RAIPUR, RAIPUR

MA 4/RPR/2024

AI Insights

The case involves the Deputy Commissioner of Income Tax-1(1), Raipur, as the appellant, and Shri Arun Agrawal, the respondent, concerning the assessment year 2010-11. The revenue filed a miscellaneous application under Section 254(2) of the Income Tax Act, 1961, challenging the ITAT's earlier decision which quashed the assessment order against Shri Agrawal. The revenue argued that the ITAT had not considered a relevant Supreme Court judgment and that the ITAT had erred in admitting an additional ground of appeal. The Tribunal, however, found that the application sought a review of its decision, which is beyond its jurisdiction under the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360918 (ITAT-RAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2010-2011
• Other Referred Cases: DCIT(Exemption) Vs. Kalinga Institute of Industrial Technology, Durga Manikanta Traders Vs. ITO, ACIT vs. Saurashtra Kutch Stock Exchange Ltd., Checkmate Services Pvt. Ltd. Vs Commissioner of Income Tax-1, T.S. Balaram, ITO v. Volkart Bros., Commissioner of Income Tax (IT-4) Vs. Reliance Telecom Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Keywords: Question of law; Deemed to accrue or arise in india
• Section: 142(1); 11

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी पाथ[ सारथी चौधरȣ, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER M.A. No.04/RPR/2024 (Arising out of ITA No.214/RPR/2023) Ǔनधा[रण वष[/Assessment Year : 2010-11 The Deputy Commissioner of Income Tax-1(1), Raipur (C.G.) .......अपीलाथȸ / Appellant बनाम / V/s. Shri Arun Agrawal 85, Pandri Textile Market, Raipur-492 001 (C.G.) PAN: ACJPA2323D ……Ĥ×यथȸ / Respondent Assessee by : None (Adjournment Petition) Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 09.05.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 19.05.2025 2 MA No.04/RPR/2024 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The captioned Miscellaneous Application has been filed by the revenue arising out of ITA No.214/RPR/2023 for assessment years 2010- 11 u/s.254(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. The revenue by filing the captioned miscellaneous application has raised following grounds: “1. In this case of DCIT(Exemption) Vs. Kalinga Institute of Industrial Technology assessee filed a Writ Petition before Hon'ble High Court of Odisha thereby challenging Notice u/s 143(2) of the Act issue by ACIT (Corporate Circle)-1(2), Bhubaneshwar as without jurisdiction. Hon'ble High Court allowed the said Writ Petition and Set-Aside the assessment on the ground that jurisdictional officer had not adjudicated upon return as jurisdiction had been changed after returns were filed. However, records reveal that the assessee had participated pursuant to notice issued u/s.142(1) of the Act had not questioned jurisdiction of AO. Hon'ble Supreme Court on filing of SLP by the department vide SLP Appeal (C) No(S) 29304 of 2019 allowed the same in the following terms: (a) The jurisdiction had been changed after the returns were filed. However, the records also reveals that the assessee had participated pursuant to the notice issued under section 142(1) and had not questioned the jurisdiction of the Assessing Officer. Section 124(3)(a) precludes the assessee from questioning the jurisdiction of the Assessing Officer, if he does not do so within 30 days of receipt of notice under section 142(1). (b) in the present case, the facts did not warrant the order made by the High Court. At the same time, this Court notices 3 MA No.04/RPR/2024 that the High Court had granted liberty to the concerned authority to issue appropriate notice. It is clarified, therefore, that the Assessing Officer is free to complete the assessment (in case the assessment order has not been issued) within the next 60 days. In such event, the question of limitation shall not be raised by the assessee. (c) The special leave petition is allowed in the above terms.\" The facts of the case of Shri Arun Agrawal - PAN - ACJPA2323D-AY-2010-11 being similar to that of DCIT(Exemption) Vs. Kalinga Institute of Industrial Technology, the judgement pronounced by Hon'ble Supreme Court is squarely applicable in the case of the assessee Shri Arun Agrawal - PAN - ACJPA2323D - AY-2010-11 also. 2. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in quashing the assessment order for want of valid assumption of jurisdiction on the part of AO holding that Notice u/s 143(2) was initially issued by ITO-1(3), Raipur without having pecuniary jurisdiction and final assessment order was passed by ACIT- 4(1), Raipur without having issued notice u/s. 143(2) of the IT Act in the case. 3. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in quashing the assessment order by admitting the additional ground of appeal by the assessee for the first time before ITAT and not considered other grounds of on merit which are based on facts of the case. The adjudication of the additional ground raised involves purely a question of law. 4. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in quashing the assessment order where additional ground of grievance against Assessing Officer's order was not raised before Commissioner (Appeals) thus raise of additional ground before Tribunal was not sustainable. 5. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in quashing the assessment order where in second round of appeal, issue before Ld. CIT(A) was only with regard to addition on account of unexplained deposit in bank account and claim of cost of improvement, assessee could not be allowed to raise addition ground before Tribunal regarding non-compliance of section 4 MA No.04/RPR/2024 143(2) and valid assumption of jurisdiction in contravention to the provisions of Sec.124(3)(a) of the IT Act. 6. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT ha erred in quashing the assessment order as conduct of assessee by not raising the issue or jurisdiction before Commissioner (Appeals) clearly showed that assessee agreed to assumption of jurisdiction by Assessing Officer under section 143(2), additional ground raised by assessee before Tribunal on issue of jurisdiction under section 143(2) could not be admitted. 7. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in quashing the assessment order by holding that Sec. 124 was only about territorial jurisdiction and not about the pecuniary jurisdiction, whereas Sec.124(1) clearly refers to Sec.120(1) and Sec.120(2) of the Act which, in turn, specify about the jurisdiction based or both territorial area as well as the income or classes of income, thus, causing a grave miscarriage of justice. 8. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in quashing the assessment order as notice issued under section 143(2) did not suffer from any legal infirmity as it satisfied all ingredients under that provisions of the IT Act. 9. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in quashing the assessment order where on the basis of return of income filed by assessee himself, jurisdiction over the case gets vested with Assessing Officer [ACIT-3(1), Raipur] who completed assessment; and notice issued under section 143(2) by ACIT-3(1), Raipur only having original territorial jurisdiction and assessee did not raise objection to jurisdiction of said Assessing Officer within time allowed under section 124(3)(a) of the Act; and no fault could be found with said Assessing Officer in assuming jurisdiction and completing assessment. 10. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in quashing the assessment order since Assessing Officer [ACIT-3(1), Raipur] was having territorial jurisdiction over assessee, pecuniary limit fixed for the purpose of distribution of work between officers, would not mean that there shall be inherent lack of 5 MA No.04/RPR/2024 jurisdiction of Assessing Officer in issuing Notice u/s 143(2) of the It Act, although final assessment was completed by the AO who had pecuniary jurisdiction over the case. 11. Any other ground which may be adduced at the time of hearing.” 3. At the time hearing, none appeared on behalf of the assessee. However, adjournment application has been filed by the assessee which is rejected and the matter is heard after recording the submissions of the Ld. Sr. DR. 4. At the time of hearing, the Ld. Sr. DR referred to Para 13 and Para 14 of the impugned order of the Tribunal dated 16.10.2023 submitting mistake apparent from record in the said order. For the sake of clarity, Para 13 and 14 of the said order are culled out as follows: “13. At the very threshold, I am unable to comprehend on what basis the case of the assessee de-hors any order as per the mandate of Section 127 of the Act was initially transferred by the ITO, Ward-1(2), Raipur on 05/02/2014 to the DCIT, Circle-1(1), Raipur. At this stage, it would be relevant to observe that as per sub-section (3) of Section 127 of the Act, even in case there is a transfer of any case from any A.O or AOs (whether with or without concurrent jurisdiction) to any other A.O or AOs (whether with or without concurrent jurisdiction), the requirement of passing an order of transfer under the aforesaid statutory provision is required and the same cannot be dispensed with. I may further observe that the order of transfer of the assessee’s case by the ITO-Ward 1(2), Raipur to DCIT- Circle 1(1), Raipur on 05.02.104 was much prior to Notifications No. 1/2014-15, dated 15.11.2014 and Notification No. 1/2014-15, dated 15.11.2014, based on which jurisdiction over the case of the assessee was vested with the DCIT/ACIT-3(1), Raipur, as brought to our notice by the A.O. 6 MA No.04/RPR/2024 14. Be that as it may, I am of the view that as the assessment in the case of the assessee had been framed by the ACIT, Circle-3(1), Raipur, who in light of the CBDT Instruction No.1/2011 (supra) r.w. CBDT Instruction No.6/2011 (supra )was not vested with any jurisdiction for framing of assessment in the case of the assessee who had declared Nil income; therefore, the order so passed by him cannot be sustained and is liable to be struck down on the said count itself. Thus, the Ground of Appeal No.1 raised by the assessee is allowed in terms of my aforesaid observations.” 5. The only limited contention in the miscellaneous application filed by the department is that though the Tribunal has referred to the decision in the case of Durga Manikanta Traders Vs. ITO, ITA No.59/RPR/2019, dated 12.12.2022, however, the Tribunal has not considered the judgment of the Hon’ble Supreme Court in the case of DCIT Vs. Kalinga Institute of Industrial Technology (KIIT), Special Leave to Appeal (C)…………….No(s).29304/2019, dated 01.05.2023. The Ld. Sr. DR referring to the judgment of the Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC) submitted that non-consideration of a decision of Jurisdictional High Court or of Supreme Court can be a 'mistake apparent from record', rectifiable u/s.254(2) of the Act. 6. Having heard the Ld. Sr. DR, I find that the Tribunal in its own wisdom after relying on its own order in the case of Durga Manikanta Traders Vs. ITO, ITA No.59/RPR/2019, dated 12.12.2022 had decided 7 MA No.04/RPR/2024 the appeal in favour of the assessee and that it may be correct or it may be incorrect but that question of correctness of the order can only be decided in the appellate forum before the Hon’ble High Court. The contention of the department that a particular decision should have been only referred to and considered by the Tribunal by filing this miscellaneous application amounts only to review of order passed by the Tribunal which is not permissible within the powers vested u/s. 254(2) of the Act. 7. I am of the considered view that the Tribunal as the highest fact finding authority after analyzing the facts and circumstances in each case comes to a certain conclusion. The said decision is then substantiated by judicial decisions in order to fortify the findings of the Tribunal which are applicable on facts of the case. Now if the arguments of the Ld. Sr. DR are to be accepted then in every case, the facts have to be reviewed once again in order to determine whether a particular decision which otherwise in the impugned order was not considered by the Tribunal whether such decision has to be considered or not, this would be clear case of review of my own decision which is not within the jurisdiction of the Tribunal u/s. 254(2) of the Act. Such powers of review are before the constitutional authority i.e. the Hon’ble Apex Court and Hon’ble High Courts to determine such issues which are not specifically provided in a particular 8 MA No.04/RPR/2024 statute. The Tribunal as a statutory authority and highest fact finding body determines facts in each case vis-à-vis provisions of the Act. The fiscal statute by the Tribunal has to be interpreted in the strictest form and there cannot be any circumstantial or liberal interpretation. The orders of the Tribunal are definitely subject to appeal proceedings but so far as the mandate of the provisions of the Act are concerned, I am strictly bound by it. In this regard, the decision arrived at by ITAT are always on the facts of each case and to substantiate such facts, the legal principles are resorted to through judicial pronouncements applicable to such facts only. It is not other way round that Tribunal only refers to judicial decision and then combines it with the facts of the case. Therefore, when the Tribunal have quashed the assessment proceedings, it had analyzed and determined the facts involved relating to the subject matter in the case and therefore, it had referred to its own decision in the case of Durga Manikanta Traders Vs. ITO, ITA No.59/RPR/2019, dated 12.12.2022. The department through this miscellaneous application is seeking review of the decision of the Tribunal which is not permissible within the provisions of Section 254(2) of the Act. The Tribunal can only rectify the mistake which is apparent from record. There are series of decisions by the Hon'ble Supreme Court as well as Hon'ble High Courts expounding scope of exercising powers under section 254(2) of the Act. I do not deem it necessary to recite and recapitulate all of them, but suffice to say that 9 MA No.04/RPR/2024 core of all these authoritative pronouncements is that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. 8. The judgment relied by the Ld. Sr. DR on ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (supra) wherein it was held that non-consideration of a decision of Hon’ble Supreme Court or Hon’ble Jurisdictional High Court can be a 'mistake apparent from record', rectifiable u/s.254(2) of the Act. The Article 141 of Constitution of India provides that the law declared by the Hon’ble Supreme Court shall be binding on all courts within the territory of India and such law shall apply retrospectively also unless declared by the Hon’ble Supreme Court regarding its applicability prospectively. In other word laws currently applicable if not have been considered by the Tribunal, it shall constitute mistake apparent from record u/s. 254(2) of the Act. The key word here is “applicability” and such “applicability” of law is always on facts of each case. The facts involved in the case decided by the Hon’ble Supreme Court or Hon’ble High Court shall have to be “absolutely similar” or “substantially identical” with the facts of the case before the Tribunal (ITAT). The word “absolutely 10 MA No.04/RPR/2024 similar” or “substantially identical” signifies that through a bare reading of the facts one can understand they are same without any verification, without any counter argument or without any examination on records. For instance, the fact on late payment of employee’s contribution by an employer to PF & ESIC etc. That on the said fact, the Tribunal had earlier allowed the appeal of the assessee even on delayed payment of such employee’s contribution if the said payments were made within “due date” on filing return of income u/s. 139(1) of the Act by holding that such disallowance u/s. 36(1)(va) of the Act was not justified. However, in the recent past, the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. Vs Commissioner of Income Tax-1, Civil Appeal No.2833 of 2016, dated 12.10.2022 has held that the employee’s contribution to PF & ESIC have to be deposited by the employer within “due date” as prescribed in the relevant statute itself i.e. as per relevant provision within such labour laws itself. This is for the reason that the employer holds employee’s contribution with him on trust basis and if the said amount is not deposited as per “due date” of relevant statute itself then it had to be charged as deemed income in the hands of the employer. That post this judgment of the Hon’ble Supreme Court, whenever facts are such that there is admittedly delayed payment of employee’s contribution to PF & ESIC etc. by the employer as per “due date” mentioned in the relevant statute of labour laws, the ITAT applied the judgment of 11 MA No.04/RPR/2024 Checkmate Services Pvt. Ltd. Vs Commissioner of Income Tax-1 (supra) and had held that such disallowance u/s.36(1)(va) of the Act was justified. Therefore, in these facts and situation, I can definitely term them as “absolutely similar” or “substantially identical” since the issue emanating does not require any further verification and examination on facts and thus, following the mandate of Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (supra), the present law applicable of Checkmate Services Pvt. Ltd. Vs Commissioner of Income Tax-1 (supra) is applied and the mandate of Article 141 of the Constitution of India is complied with. 9. However, the miscellaneous application, the Ld. Sr. DR had submitted that since the Tribunal had not applied the decision of the Hon’ble Supreme Court in the case of DCIT Vs. Kalinga Institute of Industrial Technology (supra), the same constitutes mistake apparent from record within the jurisdiction of Section 254(2) of the Act. I am of the considered view that the facts in the referred decision of the Hon’ble Supreme Court and the facts emanating from the impugned order of Tribunal are neither “absolutely similar” nor “substantially identical”, and therefore, its non-applicability cannot be termed as mistake apparent from record u/s.254(2) of the Act as contemplated by the Revenue. The Tribunal had carefully considered the facts and circumstances as 12 MA No.04/RPR/2024 explained in its order and thereafter, quashed the assessment order and in its own wisdom relying on its decision viz. (i) Durga Manikanta Traders Vs. ITO, ITA No.59/RPR/2019, dated 12.12.2022. Now if the contentions of the Ld. Sr. DR are to be upheld then the Tribunal must review the facts of the case, call for examination of records, hear arguments counter arguments and then shall have decide the applicability of the case law. But this exercise again is not envisaged by the Legislature as per its intent in terms with Section 254(2) of the Act since only mistake apparent from record can be rectified u/s. 254(2) of the Act and the Tribunal has no power to review its decision. 10. I am of the view that the revenue in the garb of the aforesaid miscellaneous application is seeking a review of the order passed by the Tribunal in ITA No.214/RPR/2023, dated 16.10.2023, which is beyond the scope of the powers of the Tribunal as envisaged u/s. 254(2) of the Act. My aforesaid view is supported by the judgment of the Hon'ble Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50 (SC), wherein the Hon'ble Apex Court had held as under: \" ....A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in 13 MA No.04/RPR/2024 going into that question.......an error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on debatable point of law is not a mistake apparent from the record........\" Also, a similar view had been taken by the Hon'ble Supreme Court in the case of Commissioner of Income Tax (IT-4) Vs. Reliance Telecom Ltd., (2021) 133 taxmann.com 41 (SC), wherein it was held as under: \"From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by Section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT. 6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under Section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that.” 11. Accordingly, the miscellaneous application filed by the revenue being devoid and bereft of any merit is dismissed. 14 MA No.04/RPR/2024 12. In the result, the miscellaneous application filed by the revenue is dismissed. Order pronounced in open court on 19th day of May, 2025. Sd/- (PARTHA SARATHI CHAUDHURY) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर / Raipur; Ǒदनांक / Dated : 19th May, 2025. SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. CIT-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, “एक-सदèय” बɅच, रायपुर / DR, ITAT, “SMC” Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur "