M/s. Hycons Infrastructure (India) Limited, Hyderabad V. Dy.CIT, Circle-2(2), Hyderabad

MA 147/HYD/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0578 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 25-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Rectification of order; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B : MUMBAI BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER M.A NO.147/HYD/2013 ARISING OUT OF M.A.NO.124/HYD/2012 IN ITA NO.01/HYD/2012 - ASSESSMENT YEAR 2006-2007 M/S. HYCONS INFRASTRUCTURE (INDIA) LTD. HYDERABAD PAN AACCA8494R VS. DCIT, CIRCLE 2 (2) HYDERABAD (APPLICANT) (RESPONDENT) FOR APPLICANT : SHRI K.L.RATHI (A.R.) FOR RESPONDENT : SMT. AMISHA S. GUPT (D.R.) DATE OF HEARING : 21.06.2013 DATE OF PRONOUNCEMENT : 04.07.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. FACTS OF THE CASE ARE THAT IN M.A.NO.124/HYD/2012 ARISING OUT OF I.T.A.NO. 01/HYD/2010, THE ENTIRE ORDER IN ITA.NO.0 1/HYD/2010 WAS RECALLED AND DECIDED BY ORDER DATED 14 TH SEPTEMBER, 2012. THE RELEVANT PARAS OF THE DECISION IS AS FOLLOWS : 7. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESS EE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOW. WE FIND THAT THE ISSUE HAS ALREADY BEEN DEALT WITH BY THE ITA, HYDERABAD BENCH IN THE CASE OF TEJA CONSTRUCTIONS IN ITA NO. 1191/HYD/2011 DATE D 17/02/2012 WHEREIN ITAT HAS HELD AS UNDER:- 2 10. THE FIRST TWO GROUNDS ARE AGAINST THE ORDER OF THE CIT(A) (A) DIRECTING THE ASSESSING OFFICER TO ESTIMATE THE INCOME OF THE ASS ESSEE @ 9% ON OWN CONTRACT WORKS, 8% ON CONTRACTS TAKEN BY ASSESSEE O N SUBCONTRACTS AND @ 5% ON CONTRACTS GIVEN BY THE ASSESSEE TO 3RD PARTY ON SUBCONTRACTS AND (B) DIRECTING THE ASSESSING OFFICER TO ALLOW REMUNERATI ON, INTEREST ON PITAL AND DEPRECIATION OUT OF ESTIMATED INCOME. THE REVENUE S UBMITS THAT WHEN NET INCOME IS ESTIMATED ALL OTHER EXPENDITURE AND DEDUC TIONS SUCH AS REMUNERATION TO PARTNERS AND DEPRECIATION IS DEEMED TO HAVE BE TAKEN CARE OF IN VIEW OF THE CASE LAW IN THE CASE OF M/S INDWELL CONSTRUCTIONS 232 ITR 776 (AP) AS DECIDED BY THE JURISDICTIONAL AP HIGH COURT AND ALSO DECISION IN THE CASE OF M/S AYYAPPA INFRA PROJECTS P. LTD IN ITA NO.608/H/2009. HOWEVER THE ISSUE IS COVERED BY THE ORDER OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE EARLIER YEAR. FOR THAT YEAR THE ITAT HAS ESTIMATED THE PROFITS OF THE ASSESSEE @ 9% ON OWN C ONTRACT WORKS, 8% ON CONTRACTS TAKEN BY ASSESSEE ON SUBCONTRACTS AND @ 5 % ON CONTRACTS GIVEN BY THE ASSESSEE TO 3RD PARTY ON SUBCONTRACTS. THIS ESTIMATE ACCORDING TO ITAT IS BEFORE ALLOWING REMUNERATION, INTEREST ON CAPITA L AND DEPRECIATION AND HENCE ITAT DIRECTED THAT THESE AMOUNTS SHOULD BE RE DUCED OUT OF THE ESTIMATED INCOME. THE RELIANCE OF THE REVENUE ON OT HER CASES WHERE THE ESTIMATED INCOME INCLUDES DEDUCTION OF REMUNERATION, INTEREST ON CAPITAL AND DEPRECIATION DOES NOT REALL Y HELP THE REVENUES CASE. ESTIMATE OF INCOME MAY VARY FROM CASE TO CASE. THE ESTIMATE MAY BE GROSS PROFITS AFTER WHICH OTHER EXPENDITURE MAY BE ALLOWE D OR THE ESTIMATE MAY OF THE NET INCOME AFTER ALL THE EXPENDITURE. THE ITAT HAS HELD IN THE ASSESSEES OWN CASE THAT THEIR ESTIMATE OF INCOME AS A PERCENT AGE OF GROSS RECEIPTS IS PRIOR TO ALLOWANCE OF DEPRECIATION, INTEREST ON CAP ITAL AND REMUNERATION. THE CIRCUMSTANCES THIS YEAR BEING IDENTICAL AS THE EARL IER YEAR AND AS DEPARTMENT HAS NOT BROUGHT ANYTHING ON RECORD TO PERSUADE US T O TAKE A DIFFERENT VIEW, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH, WE UPHOLD THE ORDER OF THE CIT(A) REGARDING THE RATE OF PROFITS T O BE ADOPTED ON THE GROSS RECEIPTS AND A FURTHER ALLOWANCE OF REMUNERATION, I NTEREST ON CAPITAL AND DEPRECIATION. THE REVENUES APPEAL ON THESE ISSUES IS DISMISSED. 2. HENCE, THE M.A.NO.124/HYD/2012 FILED BY THE ASSE SSEE WAS ALLOWED. 3. THE APPLICANT HAS NOW FILED PRESENT M.A.NO.147/H YD/2013 AGAINST THE ORDER IN M.A.NO.124/HYD/2012 AND SUBMITS AS FOL LOWS : THE HONBLE TRIBUNAL HAS ALTHOUGH ALLOWED THE M.A. , BUT THE ASSESSING OFFICER IS NOT GIVING EFFECT TO THE M.A. ORDER OF T HE TRIBUNAL FOR THE 3 REASON THAT TRIBUNAL HAS NOT MADE ANY SPECIFIC MENT ION THAT INCOME SHOULD BE ESTIMATED AT 5% AS CLAIMED BY THE ASSESSE E IN HIS M.A. PETITION IN M.,A.NO.124/HYD/2012. THUS, IN THE ABSENCE OF SPECIFIC MENTIONING THAT IN CASE OF A SUB- CONTRACTOR THE TRIBUNAL IS ESTIMATING THE PROFIT AT 5% OF THE CONTRACT TURNOVER AND WHICH WAS BONE OF CONTENTION IN THE MI SCELLANEOUS PETITION IN MA.NO.124/HYD/2012, AS IS EVIDENT FROM PARA 1 AN D 2 OF THAT PETITION, THE ASSESSING OFFICER IS NOT ABLE TO GIVE EFFECT TO THE ORDER OF THE TRIBUNAL. THEREFORE, THE APPLICANT VERY HUMBLY BEGS THE HONB LE TRIBUNAL TO AMEND THE ORDER IN M.A. REFERRED ABOVE AND PRAYS FO R DIRECTION TO INCORPORATE THE SPECIFIC PERCENTAGE OF PROFIT ON CO NTRACT TURNOVER, WHICH HAS BEEN STIPULATED AT 5%. 4. WE HAVE GONE THROUGH THE MISCELLANEOUS APPLICATI ON AND THE SUBMISSIONS OF BOTH THE PARTIES. WE HAVE GIVEN SPEC IFIC FINDING AT PARA 8 THAT THE ISSUE HAS ALREADY BEEN DECIDED BY THE HYDE RABAD BENCH OF THE TRIBUNAL IN THE CASE OF TEJA CONSTRUCTION IN ITA.NO .1191/HYD/2011 DATED 7.2.2012 AND DIRECTED THE ASSESSING OFFICER TO ESTI MATE THE INCOME OF THE ASSESSEE FOLLOWING THE DECISION OF TEJA CONSTRUCTIO NS I.E., DIRECTING THE ASSESSING OFFICER TO ESTIMATE THE INCOME OF THE ASS ESSEE @ 9% ON OWN CONTRACT WORKS, 8% ON CONTRACTS TAKEN BY ASSESSEE O N SUBCONTRACTS AND @ 5% ON CONTRACTS GIVEN BY THE ASSESSEE TO 3RD PARTY ON SUBCONTRACTS AND DIRECTING THE ASSESSING OFFICER TO ALLOW REMUNERATI ON, INTEREST ON PITAL AND DEPRECIATION OUT OF ESTIMATED INCOME. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE TRIBUNAL AND THE MISCELLANEOUS APPLICA TION FAILS. 5. BY THIS MA, THE LEARNED COUNSEL FOR THE ASSESSEE WISHES THE TRIBUNAL TO REVIEW ITS EARLIER ORDER, WHICH THE TRI BUNAL CANNOT DO IT IN VIEW OF THE PROVISIONS OF SECTION 254(2), AS PER WH ICH, THE POWERS OF THE TRIBUNAL ARE LIMITED. FURTHER IT IS WELL SETTLED THAT STATUTORY AUTHORITY CANNOT EXERCISE POWER OF REVIEW UNLESS SUCH POWER I S EXPRESSLY CONFERRED. THERE IS NO EXPRESS POWER OF REVIEW CON FERRED ON THIS 4 TRIBUNAL. EVEN OTHERWISE, THE SCOPE OF REVIEW DOES NOT EXTENT TO RE- HEARING OF THE CASE ON MERIT. IT IS HELD IN THE CA SE OF CIT VS. PEARL WOOLLEN MILLS (330 ITR 164): HELD, THAT THE TRIBUNAL COULD NOT READJUDICATE THE MATTER UNDER SECTION 254(2). IT IS WELL SETTLED THAT A ST ATUTORY AUTHORITY CANNOT EXERCISE POWER OF REVIEW UNLESS SU CH POWER IS EXPRESSLY CONFERRED. THERE WAS NO EXPRESS POWER OF REVIEW CONFERRED ON THE TRIBUNAL. EVEN OTHERWISE, THE SCOPE OF REVIEW DID NOT EXTENT TO RE HEARING A CASE ON THE MERITS. NEITHER BY INVOKING INHERENT POWER NOR THE PRINCIPLE OF MISTAKE OF COURT NOT PREJUDICI NG A LITIGANT NOR BY INVOLVING DOCTRINE OF INCIDENTAL PO WER, COULD THE TRIBUNAL REVERSE A DECISION ON THE MERITS . THE TRIBUNAL WAS NOT JUSTIFIED IN RECALLING ITS PREVIOU S FINDING RESTORING THE ADDITION, MORE SO WHEN AN APPLICATION FOR THE SAME RELIEF HAD BEEN EARLIER DISMISSED. 6. THE SCOPE AND AMBIT OF APPLICATION OF SECTION 25 4(2) IS VERY LIMITED. THE SAME IS RESTRICTED TO RECTIFICATION OF MISTAKES APPARENT FROM THE RECORD. WE SHALL FIRST DEAL WITH THE QUESTION OF T HE POWER OF THE TRIBUNAL TO RECALL AN ORDER IN ITS ENTIRETY. RECALLING THE E NTIRE ORDER OBVIOUSLY WOULD MEAN PASSING OF A FRESH ORDER. THAT DOES NOT APPEAR TO BE THE LEGISLATIVE INTENT. THE ORDER PASSED BY THE TRIBUN AL UNDER S. 254(1) IS THE EFFECTIVE ORDER SO FAR AS THE APPEAL IS CONCERN ED. ANY ORDER PASSED UNDER S. 254(2) EITHER ALLOWING THE AMENDMENT OR RE FUSING TO AMEND GETS MERGED WITH THE ORIGINAL ORDER PASSED. THE ORDER A S AMENDED OR REMAINING UN-AMENDED IS THE EFFECTIVE ORDER FOR ALL PRACTICAL PURPOSES. AN ORDER UNDER S. 254(2) DOES NOT HAVE EXISTENCE DE HORS THE ORDER UNDER S. 254(1). RECALLING OF THE ORDER IS NOT PERMISSIB LE UNDER S. 254(2). RECALLING OF AN ORDER AUTOMATICALLY NECESSITATES RE HEARING AND RE- ADJUDICATION OF THE ENTIRE SUBJECT-MATTER OF APPEAL . THE DISPUTE NO LONGER REMAINS RESTRICTED TO ANY MISTAKE SOUGHT TO BE RECTIFIED. POWER TO RECALL AN ORDER IS PRESCRIBED IN TERMS OF RULE 24 O F THE ITAT RULES, 1963, AND THAT TOO ONLY IN CASE WHERE THE ASSESSEE SHOWS THAT IT HAD A REASONABLE CAUSE FOR BEING ABSENT AT A TIME WHEN TH E APPEAL WAS TAKEN UP AND WAS DECIDED EX-PARTE. JUDGED IN THE ABOVE B ACKGROUND THE ORDER PASSED BY THE TRIBUNAL IS INDEFENSIBLE. 5 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 TO BE CARRIED OUT IN THE O RIGINAL ORDER TO CORRECT THAT PARTICULAR MISTAKE. THE PROVISION DOE S NOT INDICATE THAT THE TRIBUNAL CAN RECALL THE ENTIRE ORDER AND PASS A FRE SH DECISION. THAT WOULD AMOUNT TO A REVIEW OF THE ENTIRE ORDER AND TH AT IS NOT PERMISSIBLE UNDER THE IT ACT. THE POWER TO RECTIFY A MISTAKE U NDER S. 254(2) CANNOT BE USED FOR RECALLING THE ENTIRE ORDER. NO POWER O F REVIEW HAS BEEN GIVEN TO THE TRIBUNAL UNDER THE IT ACT. THUS, WHAT IT CO ULD NOT DO DIRECTLY COULD NOT BE ALLOWED TO BE DONE INDIRECTLY. 8. IN THE CASE OF CIT VS. HINDUSTAN COCA COLA BEVER AGES (P) LTD. (2007) 207 CTR (DEL) 119; (2007) 293 ITR 163 (DEL), THEIR LORDSHIPS WHILE CONSIDERING THE POWERS OF THE TRIBUNAL 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, I T IS PLAIN THAT THE POWER TO RECTIFY A MISTAKE IS NOT EQUIVALENT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RECTIFIED. RECTIFICATION IS A SPECIES OF THE LARGER CONCEPT OF REVIEW. ALTH OUGH IT IS POSSIBLE THAT THE PRE-REQUISITE FOR EXERCISE OF EIT HER POWER MAY BE SIMILAR (A MISTAKE APPARENT FROM THE RECORD), BY ITS VERY NATURE THE POWER TO RECTIFY A MISTAKE CANNOT RESULT IN THE RECALL AND REVIEW OF THE ORDER SOUGHT TO BE RECTIFI ED. 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 MISTAKES APPAREN T FROM THE RECORD. (B) SECONDLY, THAT NO PARTY APPEARING BEFORE THE TRIBUN AL SHOULD SUFFER ON ACCOUNT OF ANY MISTAKE COMMITTED BY THE T RIBUNAL AND IF THE PREJUDICE HAS RESULTED TO THE PARTY, WHICH PREJ UDICE IS ATTRIBUTABLE TO THE TRIBUNALS MISTAKE/ERROR OR OMI SSION, AND WHICH AN ERROR IS A MANIFEST ERROR, THEN THE TRIBUN AL WOULD BE JUSTIFIED 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 AC T AND NON- 6 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. (D) FOURTHLY, UNDER S. 254(2) AN OVERSIGHT OF A FACT CA NNOT CONSTITUTE AN APPARENT MISTAKE RECTIFIABLE UNDER THE SECTION. (E) FIFTHLY, FAILURE ON THE PART OF THE TRIBUNAL TO CON SIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSI ON IS NOT AN ERROR APPARENT ON RECORD, ALTHOUGH IT MAY BE AN ERR OR OF JUDGEMENT. (F) SIXTHLY, EVEN IF ON THE BASIS OF A WRONG CONCLUSION THE TRIBUNAL HAS NOT ALLOWED A CLAIM OF THE PARTY IT WILL 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 A ND REARGUE THE WHOLE MATTER AS THE SAME IS BEYOND THE SCOPE OF S. 254(2) OF THE IT ACT. 10. IN VIEW OF THE ABOVE DISCUSSION, WE CANNOT REVI EW EARLIER ORDER OF THE TRIBUNAL AS SOUGHT BY THE LEARNED COUNSEL FOR T HE ASSESSEE. THEREFORE, WE DISMISS THE M.A. FILED BY THE ASSESSE E. 11. IN THE RESULT, MISCELLANEOUS APPLICATIONS OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH JULY, 2013 SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATE 04 TH JULY, 2013. VBP/- 7 COPY TO:- 1) M/S HYCONS INFRASTRUCTURE(INDIA) LTD. C/O K.L. RATHI, ADVOCATE, 3-5-144/5, EDEN GARDEN, HYDERABAD 500 001. 2) DCIT, CIRCLE 2(2), HYDERABAD. 3) THE CIT (A)-III, HYDERABAD 4) THE CIT-II, HYDERABAD 5) THE D. R., B BENCH I.T.A.T., HYDERABAD.