INCOME TAX OFFICER, WARD - 3 (5), SONEBHADRA V. LAWKUSH SHARMA, SONEBHADRA

MA 5/VNS/2023

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The case involves a Miscellaneous Application filed by the Revenue seeking recall of a Tribunal order that had deleted an addition made by the assessing officer regarding belated deposit of employees' contributions to Provident Fund and ESI. The Tribunal had initially deleted the addition based on prevailing High Court decisions at the time, which allowed such deductions if payments were made before the due date for filing income tax returns. However, a subsequent Supreme Court decision reversed this interpretation, stating that such contributions must be made within the due dates prescribed by the respective Acts. The Revenue argued that this Supreme Court decision should lead to a recall of the Tribunal's earlier order, citing a mistake apparent from the record. However, the Tribunal, referencing a Mumbai bench decision and the principles of section 254(2) of the Income Tax Act, rejected the Revenue's application, stating that the Tribunal cannot revisit its decisions based on subsequent changes in law or judicial interpretation.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23338 (ITAT-VARANASI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-09-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 28-02-2023
• Other Referred Cases: Checkmate Services P Ltd vs. CIT, DCIT vs. ANI Integrated Services Ltd, CIT vs. Reliance Telecom Ltd, Beghar Foundation vs. Justice K.S. Puttaswamy, CIT vs. Gracemac Corporation
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA MEENA
• Keywords: Question of law
• Section: 254(2); 139(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH, VARANASI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER MA No. 5/VNS/2023 (Arising out of ITA No. 23/VNS/2021) Assessment Year 2018-19 The Income Tax Officer, Ward-3(5), Varanasi vs. Lawkush Sharma, 14-495, V.V. Colony, Shakti Nagar, Sonebhadra-231222 PAN : ARTPS9822Q (Applicant) (Respondent) For Assessee : NONE For Revenue : Smt. Kavita Meena, Sr.DR Date of Hearing : 13-09-2024 Date of Pronouncement : 22-10-2024 O R D E R PER B.R. BASKARAN, A.M : The Revenue has filed this Miscellaneous Application, seeking recall of the order passed by the Tribunal in the appeal mentioned in the caption. None appeared on behalf of the assessee. Since identical miscellaneous applications have been filed by the revenue in some other cases also involving identical facts, we proceed to dispose of this 2 M.A. No. 5/VNS/2023 Miscellaneous Application ex-parte, without the presence of the assessee. 2. The Ld. D.R submitted that the assessee had filed the impugned appeal against the addition made u/s 36(i)(va) read with sec.2(24)(x) of the Act in respect of belated deposit of employees’ contribution to Provident fund & ESI. The addition made by the assessing officer has been deleted by the Tribunal in the above said order on the ground that the payments have been made before the due date prescribed u/s 139(1) of the Act for filing return of income. The Ld D.R further submitted that the law relating to sec.36(1)(va) has since been settled by Hon’ble Supreme Court in the case of Checkmate services P Ltd vs. CIT (Civil Appeal No.2830 to 2833 of 2016 and 159 of 2019 dated 12th October, 2022), as per which the deduction u/s 36(1)(va) in respect of employees contribution to PF/ESI will be available only if the payments were made to the respective funds before the date prescribed under the respective Acts. The Ld D.R submitted that the decision rendered by Hon’ble Supreme Court will apply from the date of inception of the relevant provisions of the Act, since the Hon’ble Supreme Court only interprets the provisions. Accordingly, the Ld D.R submitted that the decision rendered by the Tribunal results in a mistake apparent from record, since it is contrary to the decision rendered by the Hon’ble Supreme Court. Accordingly, he prayed for recall of the impugned order on the issue discussed above. 3. The arguments advanced by the assessees in other cases are that the Tribunal has rendered its decision on the basis of law pronounced by the Hon’ble High Courts on sec. 36(1)(va) of the Act,, which were prevailing at that point of time. It was submitted that the provisions of sec.254(2) do not permit review of the order passed by the Tribunal on the basis of subsequent decisions rendered by a superior court. In this regard, reference was made to the provisions of Order XLVII Rule 1CPC. It was further submitted that the Mumbai bench of Tribunal has taken 3 M.A. No. 5/VNS/2023 a view as contended by him in the case of DCIT vs. ANI Integrated Services Ltd (M A No.167/Mum/2023 dated 29-05-2024). Accordingly, the miscellaneous application filed by the Revenue was objected to by other assessees. In other cases, this Bench has decided as under:- “4. We heard rival contentions and perused the record. We notice that the Tribunal has rendered its decision following the basis of decisions rendered by the Hon’ble High Courts and co-ordinate benches. There is no dispute that those decisions were prevailing at that point of time, wherein it was held that the disallowance u/s 36(1)(va) of the Act could not be made if the employees contribution to PF/ESI was remitted before the due date prescribed for filing return of income u/s 139(1) of the Act for filing return of income. Subsequently, the Hon’ble the Supreme Court reversed the decisions so rendered by the Hon’ble High Courts and held that the employees’ contribution to PF/ESI should be remitted before the due dates prescribed in the respective Acts. In view of the subsequent decision rendered by the Hon’ble Supreme Court, the Revenue seeks recall of the order passed by the Tribunal. 5. The question as to whether the Tribunal is permitted to review its order on the basis of subsequent decision of a Superior Court was examined by the co-ordinate bench of Mumbai in the case of ANI Integrated Services Ltd (supra) and following the decisions rendered by Hon’ble Supreme Court, it was held that the Tribunal is not entitled to recall its order on the basis of subsequent decision of a superior Court. The relevant observations made by the Mumbai Bench of Tribunal in the above said case are extracted below:- “11. Thus, the scope is of rectifying the mistake which is apparent from the record on the date of passing the order. On the scope of section 254(2) of the Act, it would be relevant to refer to the judgment of the Hon'ble Supreme Court in the case of CIT vs. Reliance Telecom Ltd, reported in (2022) 440 ITR 1 (SC) wherein Hon'ble Court has defined the scope of powers u/s.254(2). The Hon'ble Supreme Court held that the powers u/s.254(2) of the Act are akin to Order XLVII Rule 1 CPC and while considering the application u/s.254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into details on merits. The powers u/s. 254(2) are that they are only to rectify or correct any mistake apparent from the record. The relevant Observation of the Court reads as under:- 4 M.A. No. 5/VNS/2023 ―3.2 Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18-11- 2016 recalling its earlier order dated 6-9-2013 is beyond the scope and ambit of the powers under section 254(2) of the Act. While allowing the application under section 254(2) of the Act and recalling its earlier order dated 6-9-2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub- section (1) of section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record.‖ 12. At this point it is relevant to quote the provisions of Order XLVII Rule 1 CPC. 1. Application for review of judgment-(1) Any person considering himself aggrieved- (a) by a decree or order from which an appeal is allowed, but, from which no appeal has been preferred, (b) by a decree or order from which no appeal is allowed, or (c) by a decision on a reference from a Court of Small Causes, and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the Court which passed the decree or made the order. (2) A party who is not appealing from a decree or order may apply for a review of judgment notwithstanding the pendency of an appeal by some other party except where the ground of such appeal is common to the applicant and the 5 M.A. No. 5/VNS/2023 appellant, or when, being respondent, he can present to the Appellate Court the case on which he applies for the review. [Explanation. The fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for the review of such judgment.] 13. Ergo, the Explanation clearly envisages that the decision on a question of law on which judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any of the case shall not be the ground for review of said judgment. Thus, there is a clear prohibition to review or revive the order simply based on the subsequent decision of a superior Court. This dictum has to be followed especially in the cases where lis has attained finality and qua both the parties the matter has been settled by the Court. 14 The Constitution Bench of the Hon'ble Supreme Court in the case of Beghar Foundation vs. Justice K.S. Puttaswamy reported in (2021) 123 taxmann.com 344 (SC) wherein the Hon'ble Supreme Court made following observations:- ―4. The present review petitions have been filed against the final judgment and order dated 26-9-2018. We have perused the review petitions as well as the grounds in support thereof. In our opinion, no case for review of judgment and order dated 26-9-2018 is made out. We hasten to add that change in the law or subsequent decision/judgment of a co- ordinate or larger Bench by itself cannot be regarded as a ground for review. The review petitions are accordingly dismissed.‖ 15. Thus, when the Constitutional Bench of the Hon'ble Supreme Court has clearly opined that the change in law or subsequent decision / judgment of a Co-ordinate Bench or a larger Bench by itself cannot be regarded as a ground of review, then where is the scope of recalling the order within the power and ambit of Section 254(2). Admittedly, when the judgment of the Tribunal was passed, it was based on the law binding on the Tribunal and authorities below by series of judgments of the Hon'ble Jurisdictional High Court and other High Courts as noted above. Thus the decision of the Tribunal was rendered, prior to the judgment of the Hon'ble Supreme Court in the case of Checkmate Services P Ltd (supra), and before this judgment, the law as was prevalent was that no prima facie disallowance can be made in case of payment towards employees' contribution to PF and ESIC if the same has been paid on or before the due date of filing of return 6 M.A. No. 5/VNS/2023 of income. If the ld. AO or CPC has made the disallowance u/s. 143(1), contrary to the judgment of Jurisdictional High Court, then at that point of time such a disallowance was ostensibly unsustainable. 16. Be that as may be now that the Hon'ble Supreme Court has held that payment of employees' contribution of PF and ESIC should be made before the due date in respective Act for reduction, but that does not lead to an inference that where the matter had already attained finality and there is no appeal pending, then the subsequent judgment of the Hon'ble Supreme Court cannot be the ground for recalling of the matter as held by the Constitutional Bench of the Hon'ble Supreme Court. If the Revenue was aggrieved, then appeal should have been filed before the Hon'ble High Court. The judgment of the Hon'ble Supreme Court will apply in all the cases where the lis or cases are pending before any Court or forum. But once the issue in the appeal has attained finality following the earlier binding precedence of Jurisdictional High Court and there is no lis pending, and then based on subsequent judgment of a superior Court do not alter the finality of the judgment. If the Revenue's contention is to be accepted, then whenever a judgment is reversed by a higher Court or by any Constitutional Court subsequently in some different case, then all the appeals and matters which have been decided following the earlier order of the Constitutional Courts / High Court or Supreme Court does not mean that all such orders should be recalled even when there is no lis pending and to disturb the finality. 17. This principle has been reiterated by the Hon'ble Supreme Court again in the case of CIT vs. Gracemac Corporation reported in (2023) 456 ITR 135 vide order dated 03/07/2023, wherein the Hon'ble Supreme Court had made the following observations:- ―5. Apart from this, it has also been brought to our notice by the learned ASG that in CIT (International Taxation) v. Microsoft Corporation (MS Corp.) [2023] 151 taxmann.com 372/453 ITR 746 (SC) bearing SLP (C) Dy. No. 7076/2023, a coordinate Bench of this Court by an order dated 20-3-2023 dismissed the special leave petition and liberty has been reserved to reopen and/or revive the special leave petition in the event the review petition in Engineering Analysis Centre of Excellence (P.) Ltd. (supra) is allowed.” 6. Following the above said decision of the Co-Ordinate Bench of Mumbai ITAT, wherein the law laid down by Hon’ble Supreme Court has been followed, we hold that the present miscellaneous application of the Revenue is liable to be rejected. We order accordingly.” 7 M.A. No. 5/VNS/2023 4. Following the above said decision, we hold that this Miscellaneous Application filed by the Revenue is liable to be rejected. 5. In the result, the Miscellaneous Application filed by the Revenue is dismissed. Order pronounced on 22-10-2024 by way of proper mentioning in the Notice Board. Sd/- Sd/- [AMIT SHUKLA] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Varanasi, Dated: 22-10-2024 TNMM Copy to : 1. The Applicant 2. The Respondent 3. The Pr. CIT, concerned 4. D.R. ITAT, Varanasi 5. Guard File. //By Order// //True Copy // Dy./Asst. Registrar, ITAT, Varanasi "