ITO, NON-COPORATE WARD-19(6), CHENNAI V. SHRI.GOMATHINAYAGAM RATHINASABAPATHY, EKKADUTHANGAL CHENNAI

MA 53/CHNY/2025

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The case revolves around a dispute concerning the denial of deduction under section 54F of the Income Tax Act, 1961, for the assessment year 2014-15. The assessee, Shri Gomathinayagam Rathinasabapathy, initially had his deduction claim denied by the Assessing Officer, which was later allowed by the CIT(A). The department's appeal to the ITAT was dismissed, leading to the filing of a miscellaneous application by the revenue to rectify what it claimed were mistakes in the ITAT's earlier order. The Tribunal, after reviewing the application and the relevant legal provisions, concluded that the issues raised by the revenue did not constitute mistakes apparent from the record, thus dismissing the application.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 824801 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-12-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 17-04-2025
• Other Referred Cases: Commissioner of Income-tax (IT-4), Mumbai v. Reliance Telecom Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N. ARJUN RAJ
• Keywords: Set aside; Rectification of order
• Section: 147

Judgement Text

"आयकर अपील य अ धकरण, ‘सी’ \u000eयायपीठ, चे\u000eनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI \u0015ी जॉज\u0018 जॉज\u0018 क े, उपा\u001aय\u001b एवं \u0015ी एस.आर.रघुनाथा, लेखा सद$य क े सम\u001b BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER M.A. No.53/Chny/2025 [In I.T.A. No.: 508/Chny/2023] &नधा\u0018रण वष\u0018/Assessment Year: 2014-15 Income Tax officer, Non-Corporate Ward -19(6), Chennai -34. Vs. Shri. Gomathinayagam Rathinasabapathy, 42/2, Kalaimagal Nagar, Ekkaduthangal, Chennai – 600 097. ((ाथ\u0018क /Petitioner) [PAN: AAGPG-9969-A] (()यथ*/Respondent) (ाथ\u0018क क+ ओरसे/ Petitioner by : Ms. Pryati Sharma, J.C.I.T. ()यथ* क+ ओर से/Respondent by : Shri. N. Arjunraj, Advocate (through Virtual Hearing) सुनवाई क+ तार ख/Date of Hearing : 06.06.2025 घोषणा क+ तार ख/Date of Pronouncement : 31.12.2025 आदेश /O R D E R PER S.R. RAGHUNATHA, AM: The Assessing Officer being aggrieved by the order of this Tribunal in ITA No.508/CHNY/2023 dated 11.11.2024 for the A.Y. 2014-15 has filed the present miscellaneous application u/s.254(2) of the Act with a prayer to rectify the mistake apparent from record. 2. The said miscellaneous application was filed with the following prayer: Printed from counselvise.com :-2-: MA No:53/Chny/2025 The assessee, Shri Gomathinayagam Rathinasabapathy, (PAN: AAGPG9969A) filed his return of income for the A.Y.2014-15 on 28.07.2014 admitting a total income of Rs 5,26,670/-. The case was selected for scrutiny and the assessment was completed u/s 147 r.w.s.143(3) of the Act, vide order dt.16.12.2019 by denying the deduction u/s.54F claimed by the assessee. The total income was assessed at Rs.3,15,74,875/-. Particulars Amount (Rs.) Disallowance u/s.54F 3,10,00,000 Addition of Interest income 48,205 Total income assessed 3,15,74,875 2. DECISION of the Ld. CIT(A): Aggrieved by the denial of deduction u/s 54F, the assessee filed an appeal before the CIT(A), NFAC and vide DIN & ORDER No. ITBA/NFAC/S/250/2022- 23/1049811514(1) dated 16.02.2023, the CIT(A), NFAC allowed the appeal of the assessee. Particulars Amount Rs Decision of the CIT(A) Deduction u/s.54F 3,10,00,000/- Allowed 3. DECISION OF THE HON'BLE ITAT: Against the order of the Ld. CIT(A), NFAC, the department filed an appeal before the Hon'ble ITAT on 24.04.2023. The Hon'ble ITAT vide order in ITA No.508/Chny/2023 dated 11.11. 2024 dismissed the appeal of the Revenue. It is seen that the Hon'ble ITAT has not adjudicated on the following grounds of appeal filed by the Department: Ground No.3 The Ld. CIT(A) erred in coming to conclusion that in response to the Notice u/s.133(6), the director of M/s Omplas Systems gave a reply mail confirming the construction, instead M/s Omplas Systems did not give any reply mail but assessee in his own mail gave affidavit of M/s. Omplas System During the proceedings before the Hon'ble ITAT, when a specific question was raised in the grounds of appeal (GOA) filed by the revenue (Ground No. 3) that M/s. Omplas System did not give any reply mail to AO's letter dt.16.12.2022 u/s.133(6) of the Act, but only the assessee in his own mail gave the affidavit of M/s. Omplas System, the Hon'ble ITAT has not adjudicated the same. Rather the Tribunal has accepted the assessee's version that the mail was given by M/s. Omplas system. Printed from counselvise.com :-3-: MA No:53/Chny/2025 Ground No.4 The Ld. CIT(A) failed to appreciate that during the assessment proceedings or appeal proceedings, the assessee failed to submit any electricity bill, water, sewage tax paid after completion of the house. Hence it is very clear there is no existence of house. In the above ground, issue raised was that no electricity bill, water & sewage tax payment receipts were produced by the assessee. In the order, the Hon'ble ITAT has not considered this issue. Ground No.6 The Ld.CIT(A) failed to appreciate that as per DTPC guidelines, any kind of construction for residential, commercial and institutional and formation of layouts require planning permission. Under Sec.47(A) of the Town and country Planning Act 1971, planning permission is required in both plan and non-plan areas. In the absence of the same, the assessee's argument is not acceptable, as there is no Panchayat approval, OTCP approval and no property, water, sewage taxes are paid and no electricity bill has been paid. In the above ground, it was stated that the Ld. CIT(A) failed to appreciate that as per DTPC guidelines any kind of construction for residential, commercial and institutional and formation of layouts require planning permission. Under Sec 47(A) of the Town and country Planning act in 1971, Planning permission is required in both plan and non-plan areas. In the order, the Hon'ble ITAT has not considered this issue. 4. Therefore, the above mistakes which are apparent from record in the order passed by the Hon'ble ITAT which need to be rectified u/s 254(2) of the Act. 5. The order of the Hon'ble ITAT was received in the O/o the PCIT on 27.11.2024. Hence, this miscellaneous application filed on 17.04.2025 is well within the prescribed timelines of the Act. 3. The ld.DR argued that the non-consideration of the issues captured in the miscellaneous application would constitute mistake apparent from record, amendable u/s.254(2) of the Act and accordingly pleaded for recalling the order of the Income Tax Appellate Tribunal rendered on 11.11.2024 by allowing said miscellaneous application. 4. Per contra, the Ld. AR for the assessee submitted that there is no mistake apparent from record and hence prayed for dismissing the miscellaneous application of the revenue. Printed from counselvise.com :-4-: MA No:53/Chny/2025 5. We have heard both the parties and perused the impugned order passed by this Tribunal on 11.11.2024 for the assessment year 2014-15. Before we examine the miscellaneous application filed by the Income Tax Department, we find it necessary to examine the scope of this Tribunal u/s.254(2) of the Act. The said section reads as follows: “(2) The Appellate Tribunal may, at any time within [six months from the end of the month in which the order was passed], with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub- section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [Assessing] Officer” 6. Thus, we find that the power of the Income Tax Appellate Tribunal u/s.254(2) of the Act is to rectify a mistake that is apparent from record which has crept into the order passed by the Income Tax Appellate Tribunal u/s.254(1) of the Act. 7. In the present case, the Bench had adjudicated the issues raised by the Revenue in the order passed on 11.11.2024 by rendering factual findings and the Bench had concurred with the findings of the ld.CIT(A) that the new asset was created and the Assessee is entitled to exemption u/s.54F of the Act. The arguments raised by the Revenue were already considered both by the ld.CIT(A) and in the order passed on 11.11.2024. The attempt made by the Revenue is only to review the decision rendered by the Bench in the original order dated 11.11.2024 which is not permitted u/s.254(1) of the Act. 8. The Hon’ble Supreme Court in the case of Commissioner of Income- tax (IT-4), Mumbai v. Reliance Telecom Ltd., reported in 440 ITR 1, while examining the scope of the Income Tax Appellate Tribunal u/s.254(2) of the Act, had held as follows: “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 Printed from counselvise.com :-5-: MA No:53/Chny/2025 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. 4. In the present case, a detailed order was passed by the ITAT when it passed an order on 6-9-2013, by which the ITAT held in favour of the Revenue. Therefore, the said order could not have been recalled by the Appellate Tribunal in exercise of powers under section 254(2) of the Act. If the Assessee was of the opinion that the order passed by the ITAT was erroneous, either on facts or in law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court, which as such was already filed by the Assessee before the High Court, which the Assessee withdrew after the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 6-9-2013 which has been passed in exercise of powers under section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under section 254(2) of the Act. Therefore, the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is unsustainable, which ought to have been set aside by the High Court. 5. 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. Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case”. 9. Thus, it is clear that the power of the Income Tax Appellate Tribunal is to only correct and/or rectify the mistake apparent from the record and it is not permissible for the Tribunal to travel beyond that. A simple cursory Printed from counselvise.com :-6-: MA No:53/Chny/2025 reading Order XLVII Rule 1 CPC, which provision was reckoned as pari materia to Section 254(2) of the Income Tax Act, 1961 by the Hon’ble Supreme Court reads as follows: “(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 of the Court which passed the decree or made the order.” 10. Thus, in order to invoke the powers of this Tribunal u/s.254(2) of the Act, there should exist a mistake that is apparent on the face of it on account of mistake, manifest error or omission attributable to the Tribunal, causing prejudice to the parties to the said appeal. The said mistake apparent from record should be self-evident, should not be a debatable issue. 11. The said error must be in the nature of a patent, manifest and self- evident error, which does not require elaborate discussion of evidence or argument to establish it. If such error does truly exist, then it can be said to be an error apparent on the face of the record and can be corrected under section 254(2). An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the record means an error which strikes one on mere looking and does not need a long drawn-out process of reasoning on points on which there may be conceivably two opinions. The error should not require any extraneous matter to show its incorrectness. Under the garb of rectification of mistake, it is not possible for a party to take further chance of re-arguing the appeal already decided. Printed from counselvise.com :-7-: MA No:53/Chny/2025 12. This tribunal upon careful consideration of the miscellaneous application filed u/s.254(2) of the Act is unable to find any mistake that is apparent from record, amendable u/s.254(2) of the Act. As stated earlier, the Income Tax Department, under the disguise of the miscellaneous application, is seeking to re-argue the appeal once again and the same is not permissible in law. The ld.DR was unable to demonstrate what would constitute mistake apparent from record forming part of the order rendered by this Tribunal on 11.11.2024. Hence, we dismiss the present miscellaneous application filed u/s.254(2) of the Act. 13. In the result the miscellaneous application filed by the revenue is dismissed. Order pronounced in the open court on 31st December, 2025 at Chennai. Sd/- Sd/- (जॉज\u0018 जॉज\u0018 क े) (GEORGE GEORGE K) उपा\u001aय\u001b /VICE PRESIDENT (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद$य/ACCOUNTANT MEMBER चे\u000eनई Chennai: /दनांक Dated : 31st December, 2025 sp आदेश क+ (&त1ल2प अ3े2षत /Copy to: 1. अपीलाथ*/Appellant 2. ()यथ*/Respondent 3. आयकरआयु4त/CIT, Chennai/Coimbatore/Madurai/Salem. 4. 2वभागीय(&त&न ध/DR 5. गाड\u0018फाईल/GF Printed from counselvise.com "