M/s. Greenko Energies Pvt Ltd., Hyderabad V. DCIT, Circle-1(1), Hyderabad

MA 14/HYD/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1626 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 15-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S O LGY JOSE T KOTTARAM
• Assessee Lawyers: S RAMA RAO
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER MA NO. 14/HYD/2014 IN ITA NO. 3/HYD/2013 AY 2006-07 MA NO. 15/HYD/2014 ITA NO. 5/HYD/2013 A.Y. 2007-08 MA NO. 16/HYD/2014 ITA NO. 6/HYD/2013 A.Y. 2008-09 MA NO. 17/HYD/2014 ITA NO. 7/HYD/2013 A.Y. 2009-10 M/S. GREENKO ENERGIES PVT. LTD.(FORMERLY M/S. SRI BALAJI BIOMASS POWER PLANT PVT. LTD.), HYDERABAD PAN: AACS7123L VS. THE DEPUTY CIT CIRCLE-2(3) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI S. RAMA RAO RESPONDENT BY: SRI SOLGY JOSE T. KOTTARAM DATE OF HEARING: 2 1 .0 3 .201 4 DATE OF PRONOUNCEMENT: 28.03.2014 O R D E R PER CHANDRA POOJARI, AM: BY THESE THREE MISCELLANEOUS APPLICATIONS (MAS), T HE ASSESSEE SEEKS RECTIFICATION OF TRIBUNAL ORDER DATE D 10.5.2013 IN ITA NOS. 3, 5, 6 AND 7/HYD/2013 FOR A.YS. 2006-07 T O 2009-10. 2. THE GRIEVANCE OF THE ASSESSEE IN THESE MAS IS THAT THE TRIBUNAL COMMITTED AN ERROR BY GIVING DIRECTION IN PARA 10 OF ITS ORDER AS FOLLOWS: MA NOS. 14-17/HYD/2014 M/S. GREENKO ENERGIES PVT. LTD. ========================= 2 IN OUR OPINION, IRRESPECTIVE OF THE METHOD OF ACCOU NTING EMPLOYED BY THE ASSESSEE, THE FINAL SETTLEMENTS PREPARED ON THE BASIS OF THE METHOD OF ACCOUNTING MUST BE READ TRUE AND FAIR VIE W OF THE STATE OF THE AFFAIRS OF THE BUSINESS OF THE ASSESSEE BASE D ON THE POLICY OF PRUDENCE. THOUGH, THE ASSESSEE IS FOLLOWING MERCANT ILE SYSTEM OF ACCOUNTING, INCOME RECOGNITION TO BE DONE ONLY WHEN THE SAME ARE ACTUALLY RECEIVED BY THE ASSESSEE. IF THE ASSESSEE IS ABLE TO DEMONSTRATE THAT EVEN UNDER THE MERCANTILE SYSTEM O F ACCOUNTING, THERE ARE GOOD REASONS FOR NOT RECOGNIZING THE REVE NUE IN QUESTION ON ACCRUAL BASIS AND THAT FACTS AND CIRCUMSTANCES O F THE CASE, WARRANT SUCH REVENUE RECOGNITION ONLY WHEN THE SAME ARE ACTUALLY RECEIVED TO THE EXTENT IT IS STILL POSSIBLE FOR REV ENUE AUTHORITIES TO TAX THE SAME. AS THE PECULIAR NATURE OF THE TRANSAC TION IS CONCERNED, IT IS OBSERVED THAT THE ISSUE WAS SUBJEC T MATTER OF VARIOUS JUDICIAL FORUMS AND SINCE INCOME TO BE RECO GNIZED HAS DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2005-06 (SUPRA), WE MAKE IT CLEAR THAT IN THE EVENT OF TARI FF RATE REACHED ITS FINALITY BY THE JUDGMENT OF HIGHER JUDICIAL FORUM, THE AO IS DIRECTED TO BRING THE SAME FOR TAXATION IN THE PREV IOUS YEAR RELEVANT TO AY TO WHICH THE INCOME RELATES. IN OTHE R WORDS, AS AND WHEN THE INCOME IS ACTUALLY RECEIVED BY THE ASSESSE E, THE SAME IS TO BE TAXED IN THE CONCERNED ASSESSMENT YEAR FOR WH ICH IT RELATES. SAME VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN THE CAS E OF M/S KAKATIYA CEMENTS, SUGARS & INDUSTRIES LTD. IN ITA N OS. 931 & 1051/HYD/2011 VIDE ORDER DATED 10 TH FEBRUARY, 2012 WHEREIN THE TRIBUNAL HELD AS FOLLOWS: 30. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, WE ARE INCLINED TO HOLD THAT THE POWER TARIFF RATE SHOULD BE CONSIDERE D AT RS. 2.67 PER UNIT INSTEAD OF RS. 3.48 PER UNIT AS DECIDED BY THE TRIBUNAL IN THE CASE OF SHRI BALAJI BIOMASS POWER PROJECT LTD. (SUP RA). ACCORDINGLY, WE ALLOW THE GROUND TAKEN BY THE REVEN UE. HOWEVER, IN THE EVENT OF TARIFF RATE REACHED FINALI TY BY THE JUDGEMENT OF THE HIGHER JUDICIAL FORUM, THE AO IS D IRECTED TO CONSIDER THE SAME AND DECIDE ACCORDINGLY.' 3. THE LEARNED AR SUBMITTED THAT THE TRIBUNAL CANNOT G IVE SUCH A DIRECTION AFTER HAVING HELD THAT THE INCOME DID NOT ACCRUE DURING THE FINANCIAL YEAR RELEVANT TO THIS ASSESSME NT YEAR AND IT IS NOT OPEN FOR THE TRIBUNAL TO DIRECT THE AO TO TAX T HE INCOME IN THE SAME ASSESSMENT YEAR FOR WHICH IT RELATES. HE SUBM ITTED THAT ACCORDING TO THE TRIBUNAL THE INCOME DOES NOT ACCRU E WHEN THE MA NOS. 14-17/HYD/2014 M/S. GREENKO ENERGIES PVT. LTD. ========================= 3 INVOICE IS RAISED BUT ACCRUES WHEN THE DISPUTE IS S ETTLED FINALLY. THEREFORE, HE SUBMITTED THAT THERE IS AN ERROR IN T HE DIRECTION GIVEN BY THE TRIBUNAL IN ITS ORDER IN PARA 10. 4. THE LEARNED DR RELIED ON THE ORDER OF THE TRIBUNAL. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE CONSIDERATION OF ARGUMENT OF THE ASSESSEE'S COUNSEL IN THE PROCEEDINGS U/S. 254(2) OF INCOME-TA X ACT, 1961 AMOUNTS TO REVIEW OF ITS OWN ORDER OF THE TRIBUNAL. THE TRIBUNAL BEING A STATUTORY AUTHORITY, CANNOT EXERCISE POWER OF REVIEW UNLESS SUCH POWER IS EXPRESSLY CONFERRED ON IT. THERE IS NO EXPRESS POWER OF REVIEW CONFERRED ON THIS TRIBUNAL. 6. THE SCOPE AND AMBIT OF APPLICATION OF SECTION 254(2 ) IS VERY LIMITED. THE SAME IS RESTRICTED TO RECTIFICATION O F MISTAKES APPARENT FROM THE RECORD. WE SHALL FIRST DEAL WITH THE QUESTION OF THE POWER OF THE TRIBUNAL TO RECALL AN ORDER IN ITS ENTIRETY. RECALLING THE ENTIRE ORDER OBVIOUSLY WOULD MEAN PAS SING OF A FRESH ORDER. THAT DOES NOT APPEAR TO BE THE LEGISLATIVE INTENT. THE ORDER PASSED BY THE TRIBUNAL UNDER S. 254(1) IS THE EFFEC TIVE ORDER SO FAR AS THE APPEAL IS CONCERNED. ANY ORDER PASSED UNDER S. 254(2) EITHER ALLOWING THE AMENDMENT OR REFUSING TO AMEND GETS MERGED WITH THE ORIGINAL ORDER PASSED. THE ORDER AS AMEND ED OR REMAINING UN-AMENDED IS THE EFFECTIVE ORDER FOR ALL PRACTICAL MA NOS. 14-17/HYD/2014 M/S. GREENKO ENERGIES PVT. LTD. ========================= 4 PURPOSES. AN ORDER UNDER S. 254(2) DOES NOT HAVE E XISTENCE DE HORS THE ORDER UNDER S. 254(1). RECALLING OF THE ORDER IS NOT PERMISSIBLE UNDER S. 254(2). RECALLING OF AN ORDER AUTOMATICALLY NECESSITATES REHEARING AND RE-ADJUDICATION OF THE E NTIRE SUBJECT- MATTER OF APPEAL. THE DISPUTE NO LONGER REMAINS RE STRICTED TO ANY MISTAKE SOUGHT TO BE RECTIFIED. POWER TO RECALL AN ORDER IS PRESCRIBED IN TERMS OF RULE 24 OF THE ITAT RULES, 1 963, AND THAT TOO ONLY IN CASE WHERE THE ASSESSEE SHOWS THAT IT H AD A REASONABLE CAUSE FOR BEING ABSENT AT A TIME WHEN THE APPEAL WA S TAKEN UP AND WAS DECIDED EX-PARTE. JUDGED IN THE ABOVE BACK GROUND THE ORDER PASSED BY THE TRIBUNAL IS INDEFENSIBLE. 7. THE WORDS USED IN S. 254(2) ARE SHALL MAKE SUCH AMENDMENT, IF THE MISTAKE IS BROUGHT TO ITS NOTICE . CLEARLY, IF THERE IS A MISTAKE, THEN AN AMENDMENT IS REQUIRED T O BE CARRIED OUT IN THE ORIGINAL ORDER TO CORRECT THAT PARTICULA R MISTAKE. THE PROVISION DOES NOT INDICATE THAT THE TRIBUNAL CAN R ECALL THE ENTIRE ORDER AND PASS A FRESH DECISION. THAT WOULD AMOUNT TO A REVIEW OF THE ENTIRE ORDER AND THAT IS NOT PERMISSIBLE UNDER THE IT ACT. THE POWER TO RECTIFY A MISTAKE UNDER S. 254(2) CANNOT B E USED FOR RECALLING THE ENTIRE ORDER. NO POWER OF REVIEW HAS BEEN GIVEN TO THE TRIBUNAL UNDER THE IT ACT. THUS, WHAT IT COULD NOT DO DIRECTLY COULD NOT BE ALLOWED TO BE DONE INDIRECTLY. MA NOS. 14-17/HYD/2014 M/S. GREENKO ENERGIES PVT. LTD. ========================= 5 8. IN THE CASE OF CIT VS. HINDUSTAN COCA COLA BEVERAGE S (P) LTD. (2007) 207 CTR (DEL) 119; (2007) 293 ITR 163 ( DEL), THEIR LORDSHIPS WHILE CONSIDERING THE POWERS OF THE TRIBU NAL UNDER S. 254(2) OF THE IT ACT, 1961 OBSERVED AS UNDER: UNDER S. 254(2) OF THE IT ACT, 1961, THE TRIBUNAL HAS THE POWER TO RECTIFY MISTAKES IN ITS ORDER. HOWEVER, IT IS P LAIN THAT THE POWER TO RECTIFY A MISTAKE IS NOT EQUIVALENT TO A POWER T O REVIEW OR RECALL THE ORDER SOUGHT TO BE RECTIFIED. RECTIFICATION IS A SPECIES OF THE LARGER CONCEPT OF REVIEW. ALTHOUGH IT IS POSSIBLE THAT THE PRE- REQUISITE FOR EXERCISE OF EITHER POWER MAY BE SIMIL AR (A MISTAKE APPARENT FROM THE RECORD), BY ITS VERY NATURE THE P OWER TO RECTIFY A MISTAKE CANNOT RESULT IN THE RECALL AND REVIEW OF T HE ORDER SOUGHT TO BE RECTIFIED. 9. THUS THE SCOPE AND AMBIT OF APPLICATION U/S. 254(2) IS AS FOLLOWS: (A) FIRSTLY, THE SCOPE AND AMBIT OF APPLICATION OF S. 2 54(2) OF IT ACT IS RESTRICTED TO RECTIFICATION OF THE MIS TAKES APPARENT FROM THE RECORD. (B) SECONDLY, THAT NO PARTY APPEARING BEFORE THE TRIBUN AL SHOULD SUFFER ON ACCOUNT OF ANY MISTAKE COMMITTED B Y THE TRIBUNAL AND IF THE PREJUDICE HAS RESULTED TO T HE PARTY, WHICH PREJUDICE IS ATTRIBUTABLE TO THE TRIBU NALS MISTAKE/ERROR OR OMISSION, AND WHICH AN ERROR IS A MANIFEST ERROR, THEN THE TRIBUNAL WOULD BE JUSTIFIE D IN RECTIFYING ITS MISTAKE. THE RULE OF PRECEDENT IS AN IMPORTANT ASPECT OF LEGAL CERTAINTY IN THE RULE OF LAW AND THAT PRINCIPLE IS NOT OBLITERATED BY S. 254(2) OF THE ACT AND NON-CONSIDERATION OF PRECEDENT BY THE TRIBUNAL CAUSES A PREJUDICE TO THE ASSESSEE. (C) THIRDLY, POWER TO RECTIFY A MISTAKE IS NOT EQUIVALE NT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RECTIFIED. MA NOS. 14-17/HYD/2014 M/S. GREENKO ENERGIES PVT. LTD. ========================= 6 (D) FOURTHLY, UNDER S. 254(2) AN OVERSIGHT OF A FACT CA NNOT CONSTITUTE AN APPARENT MISTAKE RECTIFIABLE UNDER TH E SECTION. (E) FIFTHLY, FAILURE ON THE PART OF THE TRIBUNAL TO CON SIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING A T A CONCLUSION IS NOT AN ERROR APPARENT ON RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGEMENT. (F) SIXTHLY, EVEN IF ON THE BASIS OF A WRONG CONCLUSION THE TRIBUNAL HAS NOT ALLOWED A CLAIM OF THE PARTY IT WI LL NOT BE A GROUND FOR MOVING AN APPLICATION UNDER S. 254(2) OF THE ACT. (G) LASTLY, IN THE GARB OF AN APPLICATION FOR RECTIFICA TION UNDER S. 254(2) THE ASSESSEE CANNOT BE PERMITTED TO REOPEN AND REARGUE THE WHOLE MATTER AS THE SAME IS BEYOND THE SCOPE OF S. 254(2) OF THE IT ACT. 10. IN THE LIGHT OF THE ABOVE, THE TRIBUNAL WHILE PASSI NG THE EARLIER ORDER CONSIDERED THE ARGUMENTS OF BOTH THE PARTIES AND ALSO TOOK INTO CONSIDERATION VARIOUS PRECEDENTS CITED BY THE PARTIES AND GIVEN FINDINGS IN ITS ORDER. THE TRIBUNAL AFTER ME TICULOUSLY CONSIDERING THE ARGUMENTS OF BOTH THE PARTIES HAD G IVEN FINDING IN PARA 10. THE FINDING IS IN CONSONANCE WITH VARIOUS JUDICIAL PRECEDENTS. THE FINDING MAY NOT BE IN FAVOUR OF TH E ASSESSEE BUT THAT CANNOT BE A REASON FOR RECTIFICATION OF EARLIE R ORDER OF THE TRIBUNAL. IN OUR OPINION, AT THIS STAGE THE TRIBUN AL CANNOT PASS ANY MODIFICATION IN THE ORDER AS THE EARLIER ORDER IS A CONSCIOUS DECISION OF THE TRIBUNAL AND IF THE ASSESSEE HAS AN Y GRIEVANCE, THE MA NOS. 14-17/HYD/2014 M/S. GREENKO ENERGIES PVT. LTD. ========================= 7 REMEDY LIES ELSEWHERE AND ACCORDINGLY, WE DECLINE T O ENTERTAIN THE ABOVE ARGUMENT OF THE AR. 11. FURTHER, THE AR MADE A PLEA BEFORE US FOR DEDUCTION U/S. 80IA OF THE ACT WHICH IS NOT AT ALL A GROUND OF APP EAL BEFORE US, HENCE WE DECLINE TO ENTERTAIN THE SAME. 12. IN THE RESULT, ALL THE MAS BY THE ASSESSEE ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH, 2014. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 28 TH MARCH, 2014 TPRAO COPY FORWARDED TO: 1. M/S. GREENKO ENERGIES PVT. LTD., PLOT NO. 1071, ROA D NO. 44, JUBILEE HILLS, HYDERABAD. 2. THE DEPUTY CIT, CIRCLE - 2(3), 8 TH FLOOR, 'B' BLOCK, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD. 3. THE CIT(A) - I II, HYDERABAD. 4. THE CIT - II , HYDERABAD. 5 . THE DR ' A ' BENCH, ITAT, HYDERABAD .