Madireddy Venkat Reddy, R.R.Dist V. Addl. CIT, Range-11, Hyderabad

MA 157/HYD/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0844 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 17-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R LAKSHMAN
• Assessee Lawyers: P MURALIKRISHNA
• Keywords: Rectification of order; 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. 157/HYD/2013 (IN ITA NO. 305/HYD/2011 A.Y. 2005-06 SRI MADIREDDY VENKAT REDDY, NAGARAM, RR DT. (PAN AHXPM8826A) VS . ADDL. COMMISSIONER OF INCOME-TAX, RANGE 11, HYDERABAD. APPELLANT RESPONDENT APPELLANT BY: SHRI P. MURALI KRISHNA RESPONDENT BY: SHRI R. LAKSHMAN DATE OF HEARING: 23/08/2013 DATE OF PRONOUNCEMENT: 23/08/2013 O R D E R PER CHANDRA POOJARI, A.M.: THE ABOVE MISCELLANEOUS APPLICATION (MA) FILED BY ASSESSEE IS SEEKING RECALL OF THE TRIBUNAL ORDER IN ITA NO. 305/HYD/2011 DATED 19/10/2012. 2. THE LEARNED AR SUBMITTED THAT THE DEPARTMENT CAME IN APPEAL BEFORE THIS TRIBUNAL CHALLENGING THE DELETION OF PENALTY OF RS. 10,54,000/- LEVIED U/S 2 71D R.W.S. 274 OF THE ACT AND THE APPEAL WAS DECIDED IN FAVOUR OF THE DEPARTMENT BY REVERSING THE ORDER OF THE CIT(A). 3. ACCORDING TO THE LEARNED AR, THE TRIBUNAL IN PAR A 8 AND AT PAGE 5 RECORDED THE FACTUAL SUBMISSIONS OF T HE AR MA NO. 157/ HYD/2013 MADIREDDY VENKAT REDDY 2 OF THE ASSESSEE THAT THE ASSESSING OFFICER NEVER CONSIDERED THE AMOUNTS DEPOSITED IN THE BANK ACCOUN T OF THE ASSESSEE FOR THE PURPOSE OF TAKING THE DEMAND D RAFTS IN CONNECTION WITH PARTICIPATION IN TENDER CALLED B Y THE PROHIBITION AND EXCISE DEPARTMENT, GOVERNMENT OF ANDHRA PRADESH AND NO FINDING WAS RECORDED IN THE O RDER OF THE TRIBUNAL. 4. THE LEARNED AR SUBMITTED THAT THE TRIBUNAL ARRIV ED AT THE CONCLUSION IN PARA 14 THAT NO COGENT MATERI AL WAS PRODUCED AND IN PARA 15 THE CIT(A) IS NOT JUSTIFI ED IN ACCEPTING THE ORAL EXPLANATION OFFERED BY THE ASSES SEE WITHOUT ANY COGENT MATERIAL BROUGHT ON RECORD TO DE LETE THE PENALTY UNDER THE ERRONEOUS IMPRESSION THAT NO EVIDENCE WAS PRODUCED DURING THE COURSE OF THE PENA LTY PROCEEDINGS. THE LEARNED FURTHER SUBMITTED THAT THE FOLLOWING INFORMATION/EVIDENCE IS PART OF THE RECOR D OF THE DEPARTMENT WHICH WAS DULY CONSIDERED BY THE CIT (A) FOR ARRIVING AT THE DECISION TO DELETE THE PENALTY: I) THE LETTER DATED 26/09/2007 SUBMITTED TO IT)- 11(1) ON THE SAME DATE TOGETHER WITH THE CONFIRMATION LETTER OBTAINED FROM EACH AND EVERY PARTY, GIVING FULL PARTICULARS OF THE EXTENT OF LAN D OWNED BY THEM AND THE SOURCES AND ALSO EXPLAINING THE REASONS FOR APPROACHING THE ASSESSEE FOR THE PURPOSE OF OBTAINING THE DEMAND DRAFTS. II) THE LETTER BEARING GIR NO. V-7044, DATED 04/09/2007 TOGETHER WITH NOTICE U/S 142 OF THE IT ACT, 1961 ISSUED BY THE ITO, WARD-11(1), HYDERABAD. III) THE LETTER DATED 24/12/2007 OF THE ASSESSEE TO THE ASSESSING OFFICER SUBMITTING THAT HE HAD NOT RECEIVED ANY LOANS ATTRACTING THE PROVISIONS OF SECTION 269SS OF THE IT ACT, 1961 TOGETHER WITH EVIDENCE EXPLAINING THE NATURE OF THE TRANSACTIONS MA NO. 157/ HYD/2013 MADIREDDY VENKAT REDDY 3 APPEARING IN HIS BANK ACCOUNT. THIS LETTER WAS SUBMITTED TO THE ITO, WARD 11(1), RANGE 11, IT TOWERS, HYDERABAD ON 07/01/2008. IV) LETTER DATED 14/02/2008 OF THE ASSESSEE ADDRESSED TO THE ACIT, RANGE 11, HYDERABAD TOGETHER WITH THE LETTER DATED 26/04/2007 ADDRESSED TO THE ASSESSING OFFICER BY VARIOUS DEPOSITORS FROM WHOM THE AMOUNTS WERE RECEIVED FOR TAKING THE DEMAND DRAFTS AND FOR WHOSE PURPOSE THE AMOUNTS WERE DEPOSITED. V) THE LETTER DATED 17/04/2008 FILED BEFORE THE ADDITIONAL CIT, RANGE 11, HYDERABAD ON THE SAME DATE. 5. IN VIEW OF THE ABOVE SUBMISSIONS, THE LEARNED AR SUBMITTED THAT THE ENTIRE ORDER OF THE TRIBUNAL MAY BE RECALLED. 6. THE DR SUBMITTED THAT THERE IS NO MISTAKE APPARE NT ON RECORD WHICH WARRANTS RECALL OF TRIBUNAL ORDER A ND RELIED ON THE IMPUGNED ORDER OF THE TRIBUNAL. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. IN THE PRESENT CASE, THE TRIBUNAL REVERSED THE ORDER OF THE CIT(A) IN DELETING PENALTY LEVIED U/S 271D OF THE ACT. THE GRIEVANCE OF THE ASSESSEE IS THAT THE TRIBUNAL NOT PROPERLY CONSIDERING THE DOCUMENTS ON RECORD AND ALSO ASSUMING THE FACTS WRONGLY, REVERSE D THE ORDER OF THE CIT(A). IN OUR OPINION, THIS ARGUMENT OF THE ASSESSEE DEVOID OF MERITS AS THE TRIBUNAL WHILE PAS SING THE ORDER METICULOUSLY CONSIDERED THE FACTS OF THE CASE AND OBSERVED THAT THE CIT(A) WAS NOT JUSTIFIED IN D ELETING THE PENALTY. NOW, THE ASSESSEE'S COUNSEL WANTS TO R E- ARGUE THE CASE WHICH AMOUNTS REVIEW OF THE ORDER OF THE MA NO. 157/ HYD/2013 MADIREDDY VENKAT REDDY 4 TRIBUNAL, FOR WHICH THE TRIBUNAL HAS NO POWER TO RE VIEW ITS OWN ORDER. 8. IT IS WELL SETTLED THAT STATUTORY AUTHORITY CANN OT EXERCISE POWER OF REVIEW UNLESS SUCH POWER IS EXPRE SSLY CONFERRED. THERE IS NO EXPRESS POWER OF REVIEW CON FERRED ON THIS TRIBUNAL. EVEN OTHERWISE, THE SCOPE OF REV IEW DOES NOT EXTENT TO RE-HEARING OF THE CASE ON MERIT. IT IS HELD IN THE CASE OF CIT VS. PEARL WOOLLEN MILLS (33 0 ITR 164): HELD, THAT THE TRIBUNAL COULD NOT READJUDICATE THE MATTER UNDER SECTION 254(2). IT IS WELL SETTLED THAT A STATUTORY AUTHORITY CANNOT EXERCISE POWER OF REVIEW UNLESS SUCH 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 REHEARING A CASE ON THE MERITS. NEITHER BY INVOKING INHERENT POWER NOR THE PRINCIPLE OF MISTAKE OF COURT NOT PREJUDICING A LITIGANT NOR BY INVOLVING DOCTRINE OF INCIDENTAL POWER, COULD THE TRIBUNAL REVERSE A DECISION ON THE MERITS. THE TRIBUNAL WAS NOT JUSTIFIED IN RECALLING ITS PREVIOUS FINDING RESTORING THE ADDITION, MORE SO WHEN AN APPLICATION FOR THE SAME RELIEF HAD BEEN EARLIER DISMISSED. 9. THE SCOPE AND AMBIT OF APPLICATION OF SECTION 254(2) IS VERY LIMITED. THE SAME IS RESTRICTED TO RECTIFICATION OF 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. RECALL ING THE ENTIRE ORDER OBVIOUSLY WOULD MEAN PASSING OF A FRES H ORDER. THAT DOES NOT APPEAR TO BE THE LEGISLATIVE INTENT. THE ORDER PASSED BY THE TRIBUNAL UNDER S. 254(1) IS THE EFFECTIVE ORDER SO FAR AS THE APPEAL IS CONCERNED. ANY ORDER PASSED UNDER S. 254(2) EITHER ALLOWING THE MA NO. 157/ HYD/2013 MADIREDDY VENKAT REDDY 5 AMENDMENT OR REFUSING TO AMEND GETS MERGED WITH THE ORIGINAL ORDER PASSED. THE ORDER AS 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 PERMISSIBLE 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 T O ANY MISTAKE SOUGHT TO BE RECTIFIED. POWER TO RECALL AN ORDER IS PRESCRIBED IN TERMS OF RULE 24 OF 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 TIM E WHEN THE APPEAL WAS TAKEN UP AND WAS DECIDED EX-PAR TE. JUDGED IN THE ABOVE BACKGROUND THE ORDER PASSED BY THE TRIBUNAL IS INDEFENSIBLE. 10. THE WORDS USED IN S. 254(2) ARE SHALL MAKE SUC H AMENDMENT, IF THE MISTAKE IS BROUGHT TO ITS NOTICE . CLEARLY, IF THERE IS A MISTAKE, THEN AN AMENDMENT I S REQUIRED TO BE CARRIED OUT IN THE ORIGINAL ORDER TO CORRECT THAT PARTICULAR MISTAKE. THE PROVISION DOES NOT IN DICATE THAT THE TRIBUNAL CAN RECALL THE ENTIRE ORDER AND P ASS A FRESH DECISION. THAT WOULD AMOUNT TO A REVIEW OF T HE ENTIRE ORDER AND THAT IS NOT PERMISSIBLE UNDER THE IT ACT. THE POWER TO RECTIFY A MISTAKE UNDER S. 254(2) CANN OT BE USED FOR RECALLING THE ENTIRE ORDER. NO POWER OF R EVIEW HAS BEEN GIVEN TO THE TRIBUNAL UNDER THE IT ACT. T HUS, WHAT IT COULD NOT DO DIRECTLY COULD NOT BE ALLOWED TO BE DONE INDIRECTLY. MA NO. 157/ HYD/2013 MADIREDDY VENKAT REDDY 6 11. IN THE CASE OF CIT VS. HINDUSTAN COCA COLA BEVERAGES (P) LTD. (2007) 207 CTR (DEL) 119; (2007) 293 ITR 163 (DEL), THEIR LORDSHIPS WHILE CONSIDERIN G THE POWERS OF THE TRIBUNAL UNDER S. 254(2) OF THE IT AC T, 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 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. ALTHOUGH IT IS POSSIBLE THAT THE PRE-REQUISITE FOR EXERCISE OF EITHER 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 RECTIFIED. 12. THUS THE SCOPE AND AMBIT OF APPLICATION U/S. 25 4(2) IS AS FOLLOWS: (A) FIRSTLY, THE SCOPE AND AMBIT OF APPLICATION OF S. 254(2) OF IT ACT IS RESTRICTED TO RECTIFICATION OF THE MISTAKES APPARENT FROM THE RECORD. (B) SECONDLY, THAT NO PARTY APPEARING BEFORE THE TRIBUNAL SHOULD SUFFER ON ACCOUNT OF ANY MISTAKE COMMITTED BY THE TRIBUNAL AND IF THE PREJUDICE HAS RESULTED TO THE PARTY, WHICH PREJUDICE IS ATTRIBUTABLE TO THE TRIBUNALS MISTAKE/ERROR OR OMISSION, AND WHICH AN ERROR IS A MANIFEST ERROR, THEN THE TRIBUNAL WOULD BE JUSTIFIED IN RECTIFYING ITS MISTAKE. THE RULE OF PRECEDENT IS AN IMPORTANT ASPECT OF LEGAL CERTAINTY IN THE RULE OF LAW AND TH AT PRINCIPLE IS NOT OBLITERATED BY S. 254(2) OF THE AC T MA NO. 157/ HYD/2013 MADIREDDY VENKAT REDDY 7 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. (D) FOURTHLY, UNDER S. 254(2) AN OVERSIGHT OF A FACT CANNOT CONSTITUTE AN APPARENT MISTAKE RECTIFIABLE UNDER THE SECTION. (E) FIFTHLY, FAILURE ON THE PART OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT O N 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 I T 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 RECTIFICATION UNDER S. 254(2) THE ASSESSEE CANNOT B E PERMITTED TO REOPEN AND REARGUE THE WHOLE MATTER AS THE SAME IS BEYOND THE SCOPE OF S. 254(2) OF THE IT ACT. 13. FURTHER, THE ORDER OF THE TRIBUNAL IS TO BE REA D IN A WHOLE AND NOT IN A PIECEMEAL MANNER. FOR THIS PUR POSE, WE PLACE RELIANCE ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF CIT VS. KARAM CHAND THAPAR & BROS. PVT. LTD. (176 ITR 535) WHEREIN HELD THAT THE DECISION OF THE TRIBUNAL HAS NOT TO BE SCRUTINISED SENTENCE BY SENT ENCE MERELY TO FIND OUT WHETHER ALL FACTS HAVE BEEN SET OUT IN MA NO. 157/ HYD/2013 MADIREDDY VENKAT REDDY 8 DETAIL BY THE TRIBUNAL OR WHETHER SOME INCIDENTAL F ACT WHICH APPEARS ON THE RECORD HAS NOT BEEN NOTICED BY THE TRIBUNAL IN ITS JUDGMENT. IF THE COURT, ON A FAIR R EADING OF THE JUDGMENT OF THE TRIBUNAL, FINDS THAT IT HAS TAK EN INTO ACCOUNT ALL RELEVANT MATERIAL AND HAS NOT TAKEN INT O ACCOUNT ANY IRRELEVANT MATERIAL IN BASING ITS CONCL USIONS, THE DECISION OF THE TRIBUNAL IS NOT LIABLE TO BE IN TERFERED WITH, UNLESS, OF COURSE, THE CONCLUSIONS ARRIVED AT BY THE TRIBUNAL ARE PERVERSE. IT IS NOT NECESSARY FOR THE TRIBUNAL TO STATE IN ITS JUDGEMENT SPECIFICALLY OR IN EXPRES S WORDS THAT IT HAS TAKEN INTO ACCOUNT THE CUMULATIVE EFFEC T OF THE CIRCUMSTANCES OR HAS CONSIDERED THE TOTALITY OF THE FACTS, AS IF THAT WERE A MAGIC FORMULA; IF THE JUDGEMENT O F THE TRIBUNAL SHOWS THAT IT HAS, IN FACT, DONE SO, THERE IS NO REASON TO INTERFERE WITH THE DECISION OF THE TRIBUN AL. 14. IN VIEW OF THE ABOVE DISCUSSION, WE FIND NO MER IT IN THE ARGUMENT OF THE ASSESSEE'S COUNSEL. THE TRIBUN AL CANNOT REVIEW ITS OWN ORDER AND THE REMEDY LIES ELSEWHERE. WE DO NOT FIND ANY MISTAKE APPARENT ON RECORD WHICH WARRANTS RECTIFICATION OF TRIBUNAL'S O RDER. 15. IN THE RESULT, THE MA FILED BY ASSESSEES IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/08/2 013. SS SD/- ASHA VIJAYARAGHAVAN JUDICIAL MEMBER SD/- CHANDRA POOJARI ACCOUNTANT MEMBER SD/-SD/- HYDERABAD, DATED THE 23 RD AUGUST, 2013 MA NO. 157/ HYD/2013 MADIREDDY VENKAT REDDY 9 KV COPY TO:- 1) SHRI MADIREDDY VENKAT REDDY, H.NO. 4-112, NAGARAM, RAMPALLY X ROADS, RR DT. 2) ITO, WARD 11(4), ROOM NO. 547, D BLOCK, 5 TH FLOOR, IT TOWERS, AC GUARDS, HYDERABAD. 3) THE CIT(A)-VI, HYDERABAD 4) THE CIT-V, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.