The Depty Commissioner of Income Tax, Pathankot V. Sh. Raghunath Sahai Puri(Decd), Pathankot

MA 13/ASR/2020

AI Insights

The case involves the Deputy Commissioner of Income Tax, Pathankot, as the appellant, and Sh. Raghunath Sahai Puri (deceased), represented by Sh. Naresh Puri, as the respondent. The dispute arose from the assessment year 2007-08, concerning the capital gains tax on the sale of land prior to the cancellation of a Joint Development Agreement (JDA). The Revenue's Miscellaneous Application challenged the ITAT's earlier decision, arguing that the facts were not properly appreciated, particularly regarding the tax liabilities incurred before the JDA's cancellation. The Tribunal, referencing the Supreme Court's judgment in Reliance Telecom Ltd. v. Commissioner of Income Tax, clarified that its role under section 254(2) is not to revisit the merits of the case but to correct any apparent mistakes in the record.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114445 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-07-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 29-06-2020
• Other Referred Cases: Reliance Telecom Ltd. v. Commissioner of Income Tax (IT-4), Mumbai
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Capital Gains
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (VIRTUAL COURT) BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER M. A. No. 13/Asr/2020 (Arising out of ITA No. 633/Asr/2014) Assessment Year: 2007-08 The Deputy Commissioner of Income Tax, Pathankot Vs. Sh. Raghunath Sahai Puri (Deceased) through L/H Sh. Naresh Puri, Purian Mohalla, Sujanpur, Pathankot [PAN: AIFPP 5367A] (Appellant) (Respondent) Appellant by : Sh. J. S. Bhasin, Adv. Respondent by: Sh. S. M. Surendranath, Sr. DR Date of Hearing: 17.07.2023 Date of Pronouncement: 18.07.2023 ORDER Per Dr. M. L. Meena, AM: The captioned Miscellaneous Application has been filed by the Revenue against the order of the ITAT dated 19.12.2019 in ITA No. MA No. 13/Asr/2020 Dy. CIT v. Raghunath Sahai Puri (decd.) 2 633/Asr/2014 in respect of Assessment Year 2007-08 wherein the department has raised objection vide para 8, as under: “8. It is apparent that the Hon’ble Tribunal has taken a stand that all the related parties in the matter have already paid capital gain taxes on the income earned by them prior to cancellation of JDA. As submitted above, in the instant case, the assessee had failed to declare the capital gain on sale of land prior to cancellation of JDA. Hence the same was added back to the income of the assessee and penalty for concealment was imposed upon him. However the facts of the case have not been appreciated by the Hon’ble ITAT. It is reiterated that the Hon’ble High Court has not granted any relief to the assessees on the amount received by them on account of sale of land made prior to cancellation of JDA. 2. Having heard both the sides and perusal of the Miscellaneous Application and the Tribunal order, we find that the department grievance is that the facts of the case have not been appreciated by the Hon’ble ITAT. Admittedly, the order has been passed on the merits of the case by the Tribunal addressing the facts as per record and submission made by both the side, and therefore, at this stage, any interference in the finding of the Tribunal would amount to review of its comprehensive order being adjudicated appreciating the facts even regarding the capital gains tax paid on the income earned prior to cancellation of JDA. The Tribunal has limited power under the Act u/s 254(2) of the Income Tax Act, to rectifify apparent mistake from the record, in view of the latest judgment of Reliance Telecom MA No. 13/Asr/2020 Dy. CIT v. Raghunath Sahai Puri (decd.) 3 Ltd. v. Commissioner of Income Tax (IT-4), Mumbai wherein the Hon’ble Apex Court has observed as under: “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. 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 MA No. 13/Asr/2020 Dy. CIT v. Raghunath Sahai Puri (decd.) 4 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. 7. In view of the above and for the reasons stated above, the impugned common judgment and order passed by the High Court as well as the common order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9- 2013 deserve to be quashed and set aside and are accordingly quashed and set aside. The original orders passed by the ITAT dated 6-9-2013 passed in the respective appeals preferred by the Revenue are hereby restored.” 3. Thus, the powers under section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record. Without prejudice to the above, even if 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 MA No. 13/Asr/2020 Dy. CIT v. Raghunath Sahai Puri (decd.) 5 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. 4. In the above view, we find no merit in the Miscellaneous Application of the Department and as such it is rejected. Order pronounced in the open court on 18.07.2023 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order