ACIT, Circle-2(1), Cuttack V. Radhagobindo Roy & Co., Cuttack

MA 16/CTK/2023

AI Insights

The case involves a Miscellaneous Application filed by the revenue against the order of the Income Tax Appellate Tribunal (ITAT) in ITA No.232/CTK/2016, which pertained to the assessment year 2011-12. The original ITA decision, along with subsequent M.A. No.37/CTK/2021, had addressed issues related to the valuation of closing stock by the assessee, M/s. Radhagovinda Roy & Co. The revenue's M.A. challenged the recall of the Tribunal's earlier order, arguing that the Tribunal exceeded its jurisdiction by revisiting the entire appeal rather than correcting a specific mistake. The Tribunal dismissed the revenue's application, emphasizing that it could not review its earlier decisions under the guise of rectification.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300229 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-03-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 30-01-2023
• Other Referred Cases: Laxmi Electronic Corporation Ltd. [1991] 188 ITR 398, Maruti Insurance Distribution Services Ltd. [2012] 26 taxmann.com 68 (Delhi), Prajatantra Prachar Samity [2003] 264 ITR 160 (Ori), K.K. Ravindran [2011] 332 ITR 569 (Ori), Reliance Telecom Ltd. [2022] 440 ITR 1 (SC), Parbati Das vs ITO [2015] ITA No.287/CTK/2015, Bhogilal & Co. ITA no.407/CTK/2011, Khimji Dayabhai Jewellers ITA no., 501/CTK/2012, CIT Vs. Singhal Industries - 395 ITR 264 (Raj.), Pr. CIT Vs. Navjivan Roller Flour & Pulse - 398 IT 62 (Guj.), Income Tax Officer, Bargarh Vs. Aditya Agarwal -- MA NO.02/CTK/2023 dt.17.02.23, Commissioner of Income Tax vs. ITAT (196 ITR 838)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 260A; 264; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND ARUN KHODPIA, ACCOUNTANT MEMBER ( In M.A. No.37/CTK/2021) ( DCIT, Circle Cuttack PAN/GIR No. (Appellant Per Arun Khopdia, AM This is an M.A. filed by the r 15.7.2022 of the 2011-12 arising out of ITA No.232/CTK 2. Shri S.C.Mohanty, ld intern of ‘The Law College, Cuttack’ Mohit Sheth, ld Law College, Cuttack’ IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI GEORGE MATHAN, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER M.A.No.16/CTK/2023 M.A. No.37/CTK/2021) (arising out of No.232/CTK/2016) Assessment Year : 2011-12 DCIT, Circle -1(1), Vs. M/s. Radhagovinda Roy & Co., Nimachouri, Cuttack PAN/GIR No. (Appellant) .. ( Respondent Assessee by : Shri Mohit Sheth, AR Revenue by : Shri S.C.Mohanty, Sr Date of Hearing : 24/0 Date of Pronouncement : 24/0 O R D E R Per Arun Khopdia, AM This is an M.A. filed by the revenue against the order dated .7.2022 of the Tribunal in M.A. No.37/CTK/2021 for the assessment year 12 arising out of ITA No.232/CTK/2016 order dated 18.10.2022 S.C.Mohanty, ld Sr DR, assisted by Shri Chandrasekhar Panda, intern of ‘The Law College, Cuttack’ appeared for the revenue and Shri Mohit Sheth, ld AR, assisted by Ms Ipsita Priyadarshani Dhala, intern of ‘The Law College, Cuttack’ appeared for the assessee. Page1 | 11 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER arising out of ITA M/s. Radhagovinda Roy & Co., Nimachouri, Cuttack Respondent) Mohit Sheth, AR S.C.Mohanty, Sr DR 03/2023 /03/2023 evenue against the order dated for the assessment year /2016 order dated 18.10.2022. , assisted by Shri Chandrasekhar Panda, appeared for the revenue and Shri , assisted by Ms Ipsita Priyadarshani Dhala, intern of ‘The M.A.No.16/CTK/2023 ( In M.A. No.37/CTK/2021) (ITA No.232/CTK/2016) Assessment Year : 2011-12 Page2 | 11 3. At the time of hearing, ld Sr DR has filed written submission, as follows: “1. This MA is with reference not simply to an MAbut also an ITA. 2. The earlier MA was not of the same party, i.e., the Revenue but of the assessee. 3. '... We are not persuaded to agree that the expression 'record' in the phrase 'mistake apparent from the record' in section 254(2) of the Act means only the judgment. ...' Laxmi Electronic Corpn. Ltd. [1991] 188 ITR 398 4. "The amendment of an order ... does not mean obliteration of the order originally passed and its substitution by a new order which is not permissible, under the provisions of Section 254(2): Maruti Insurance Distribution Services Ltd. [2012] 26 taxmann.com 68 (Delhi) 5. '...in exercise of that power the Tribunal can only make changes in the original order consequent on the rectification and it cannot go further and deal with the entire appeal afresh. A perusal of the aforesaid substantive order dated May 10, 1991, would clearly show that in the garb of rectification/amendment, the Tribunal has substituted a fresh order which, in our opinion, is in excess of its jurisdiction.' Prajatantra Prachar Samity [2003] 264 ITR 160 (Ori) 6. 7. '...Exercise of power under section 254(2) of the Act by the Tribunal in recalling the entire order amounted to passing afresh order in appeal which is not permissible.' K.K. Ravindran-[2011] 332 ITR 569 (Ori) 7. 3.2 '...the order passed by the ITAT... recalling its earlier order ... is beyond the scope and ambit of the powers under M.A.No.16/CTK/2023 ( In M.A. No.37/CTK/2021) (ITA No.232/CTK/2016) Assessment Year : 2011-12 Page3 | 11 section 254(2) of the Act. ... 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... 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 merit. ... 6. 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..: Reliance Telecom Ltd. [2022] 440 ITR 1 (SC) Replying on the above SC decision, the M.A. filed by the revenue was dismissed by this bench in the following case: Nidan M.A. 54-59, 49/CTK/2018. 9. Reliance on the decision in the case of Parbati Das, ITA no. 287/CTK/2015 in the recalled order dtd. 10/07/2017 is only one of as many as four independent legs of it including the following three delineated from the reason paragraph 9 of it: i. ''the assessee has not produced any material either before the Assessing Officer or before the CIT(A) and even before us to show that the item of jewellery contains in the opening stock was still lying in stock with the assessee as at the end of the year... ii. ...the Id. AR of the assessee miserably failed to show any good reason as to why the CIT(A) was not justified in following the order of this Bench of the Tribunal in the case of M/a Ashok Jewellery (sic) (Supra). [Bhogilal & Co., ITA no.407/CTK/2011 and Khimji Dayabhai Jewellers... ITA no., 501/CTK/2012 used by CIT(A) in the case of Ashok Jewellers.] M.A.No.16/CTK/2023 ( In M.A. No.37/CTK/2021) (ITA No.232/CTK/2016) Assessment Year : 2011-12 Page4 | 11 iii. CIT(A) has distinguished the order of this bench of the Tribunal relied on in the case of Bhogilal and co. (Supra). The A.R. of the assessee also could not point out any mistake in the findings of the CIT(A). Reversal of the decision of the ITAT in the case of Parbati Das (Supra) would have made no difference to the recalled order. 10. Amendment of the order u/s 254(2) of Income Tax Act would have entailed deletion of the fourth leg of the recalled order - Reliance on the decision in the case of Parbati Das (Supra). 11. So the mistake apparent from record is recalling the order, rehearing, revisiting the case, obliterating the entire order and substituting it with a fresh order.” 4. It was specifically put to ld Sr DR as to which is the order on which the Revenue has filed the Miscellaneous application u/s.254(2) of the Act. Ld Sr DR specifically submitted that “I refuse to point out any mistake in any of the orders”. His allegation is that there is a mistake in the record of the Tribunal, meaning the record as interpreted in the case of Laxmi Electronic Corporation Ltd., reported in 188 ITR 398 (All). He drew our attention to the decision of Hon’ble Allahabad High Court in the case of Laxmi Electronics Corporation Ltd., (supra), wherein, it has been held as follows: “3. The contention of Sri Mandhyan, learned counsel for the assessee, is that the Tribunal had no jurisdiction under Section 254(2) to reopen and rehear the appeals on the ground aforesaid. He relied upon the proposition that where a contention is urged by a party but is not dealt with by the Tribunal, the contention must be deemed to have been negatived. He submitted that, in such a situation, the Tribunal has no jurisdiction to reopen the appeals since it cannot be said that its order suffers from any M.A.No.16/CTK/2023 ( In M.A. No.37/CTK/2021) (ITA No.232/CTK/2016) Assessment Year : 2011-12 Page5 | 11 error apparent on the face of the record. It is not possible to agree. It may be that a contention urged but not dealt with by the Tribunal can be taken as having been negatived. This proposition is, however, not inconsistent with the power of the Tribunal to reopen the appeal where it is brought to its notice that an important contention raised by the party was not dealt with by the Tribunal in its order. By way of illustration, take a case where an assessee files an appeal raising four grounds, which he urges at the hearing of the appeal. The Tribunal, however, dismisses the appeal only on ground No. 4. Would it not be open to the assessee in such a case to as,k for reopening and rehearing of the appeal on the ground that the first three contentions urged by him have not been noticed or discussed by the Tribunal ? We think that such power must be held to be inherent in the Tribunal, since it would be a case where the party has suffered prejudice for no fault of his but on account of a mistake or error on the part of the Tribunal. It is a well-settled proposition that an act of court (which, in the context, means and includes a Tribunal of the nature of the Income-tax Appellate Tribunal) should not prejudice a party. In such a case, it would not be just to drive the party to a reference under Section 256. It must be left to the Tribunal to reopen the appeal if it finds that it has omitted to deal with an important ground urged by the party. We are not persuaded to agree that the expression "record" in the phrase "mistake apparent from the record" in Section 254(2) means only the judgment. The record means the record before the Tribunal. Failure to deal with a preliminary objection of the nature concerned herein certainly amounts to a mistake apparent from the record. We must hasten to make it clear that the expression "error apparent on the face of the record" is not easy to define ; see the decision of the Supreme Court in Hari Vishnu Kamath v. Ahmed Ishaque, AIR 1955 SC 233. Suffice it to say that failure to deal with a preliminary objection relating to maintainability of the appeal on the ground of limitation does amount to an error apparent on the face of the record. It is neither possible nor desirable to try to define the said expression or to lay down the several situations attracting, the same.” 5. Ld Sr DR further drew our attention to the decision of Hon’ble Delhi High Court in the case of Maruti Insurance Distribution Services Ltd., (2012) 26 taxmann.com 68(Del) to submit that the amendment of an order u/s.254(2) of the Act does not mean entire obliteration of order originally passed. He has also relied upon other decisions as referred to in his written submission. Ld Sr DR also drew our attention to the order of the Co-ordinate Bench of this Tribunal in ITA M.A.No.16/CTK/2023 ( In M.A. No.37/CTK/2021) (ITA No.232/CTK/2016) Assessment Year : 2011-12 Page6 | 11 No.232/CTK/2016 dated 10.7.2017 at para 9. It was the submission that the issue in the appeal had been held against the assessee on four reasons:- (i) the assessee has not produced any material either before the Assessing Officer or before the CIT(A) and even before the Tribunal to show that the item of jewellery contains in the opening stock was still lying in stock with the assessee as at the end of the year as on 31.3.2011. In the absence of the same, the Tribunal did not find good reason to interfere with the order of the ld CIT(A). ii. The Tribunal also found that the assessee miserably failed to show any good reason as to why the CIT(A) was not justified in following the order of this Bench of the Tribunal in the case of M/a Ashok Jewellery(sic) (Supra). iii. The Tribunal found that the ld CIT(A) had distinghished the order of the Tribunal relied on in the case of Bhogilal & Co., in ITA no.407/CTK/2011 etc, and the assessee could not point out any mistake in the findings of the ld CIT(A). iv. On similar facts and circumstances, the Co-ordinate Bench in the case of Parbati Das vs ITO in ITA No.287/CTK/2015 vide order dated 7.3.2017 had upheld the order of the ld CIT(A) confirming the addition on account of under valuation of closing stock by following the weighted average method. 6. It was the submission that the Tribunal having held the issue against the assessee on four counts, the order passed by the Co- ordinate Bench of this Tribunal in M.A. No.37/CTK/2021 dated 15.7.2022 recalling the entire order was not permissible. It was the further submission that adjudicating the issue again and granting relief to the assessee in ITA No.232/CTK/2016 vide order dated M.A.No.16/CTK/2023 ( In M.A. No.37/CTK/2021) (ITA No.232/CTK/2016) Assessment Year : 2011-12 Page7 | 11 18.10.2022 was not permissible. It was the prayer that the present M.A. filed by the revenue is liable to be allowed. Again, ld Sr DR was requested to specify which was the order in respect of which the error has crept in and it was replied by ld Sr DR that he is only to articulate the mistake in the record and he did not point out the mistake in the order. 7. In reply, ld AR has filed written submission as follows: “The Assessee filed Misc. Application vide MA No.37/CTK/2021 and the same was adjudicated on 15/07/2022. There was not argument by Ld. DR and only supported the order of the Tribunal. Now when the appeal has been decided by the Hon'ble ITAT, Cuttack Bench, Cuttack ( ITA 232/CTK/2016) , the I. T. Department has came up by filling Misc. Application against MA NO.37/CTK/2021. Here it is submitted that as per the decision of Supreme Court as held that if the assessee believe that the order passed by the ITAT was erroneous, either on the facts or in law, the only remedy available was to prefer the appeal before the High Court. In view of the above decision by the Hon'ble Supreme Court the assessee preferred an appeal before the Hon'ble High Court & the Hon'ble High Court held that it was open to assessee to approach the Tribunal for filling an M.A. This because was decided by the Hon'ble High Court as on similar reasons as the order in the case of Parabati Das vs. ITO ( ITA No.287/CTK/2015) has been recalled, the order in case of the assessee may be recalled. Since the order passed by the ITAT or the foundation of the order on basis of which the case has been decided has been recalled and re-adjudicated, consequently such order suffers mistake apparent from record. As the decision in the order of the ITAT is based on the order of Parabati Das (Supra) which itself varied, then the assessee order is liable to recalled. The assessee hereby begs to submit that Second Review application is not maintainable. Hence the appeal filed by the department u/s.254(2) should be rejected by giving justice in the eye of law. The assessee relies on : M.A.No.16/CTK/2023 ( In M.A. No.37/CTK/2021) (ITA No.232/CTK/2016) Assessment Year : 2011-12 Page8 | 11 (i) CIT Vs. Singhal Industries - 395 ITR 264 (Raj.) (ii) Pr. CIT Vs. Navjivan Roller Flour & Pulse - 398 IT 62 (Guj.) And (iii) Hon'ble Jurisdictional ITAT in case of - Income Tax Officer, Bargarh Vs. Aditya Agarwal -- MA NO.02/CTK/2023 dt.17.02.23 (iv) Hon'ble Jurisdictional High Court in case of - Commissioner of Income Tax vs. ITAT (196 ITR 838)” 8. He has also relied upon various citations to support his proposition that on an M.A. order u/s.254(2), another M.A. cannot be filed. It was the submission that the M.A. filed by the revenue is liable to be dismissed. 9. We have considered the rival submissions. To adjudicate the issue by the Tribunal in this M.A., it would be worthwhile to mention the facts that have given rise to this interesting conundrum. ITA No.232/CTK/2016 was disposed of by the Co-ordinate Bench of this Tribunal by an order dated 10.7.2017 and the issues were held against the assessee. In regard to issue of the under valuation of closing stock by following weighted average method of stock, the Tribunal had relied upon the decision of the Co- ordinate Bench of this Tribunal in the case of Parbati Das in ITA No.287/CTK.2015 order dated 7.3.2017. The assessee had filed appeal in ITA No.71/2017 before the Hon’ble Jurisdictional High Court of Orissa and vide order dated 10.12.2019, the Hon’ble Jurisdictional High Court of Orissa after considering the fact that the decision of this Co-ordinate Bench in the case of Parbati Das (supra) had been recalled by the Co-ordinate Bench of this Tribunal vide order dated 24.9.2019 in M.A. No.14/CTK/2017, had permitted the assessee to file an M.A. before the Tribunal and had directed M.A.No.16/CTK/2023 ( In M.A. No.37/CTK/2021) (ITA No.232/CTK/2016) Assessment Year : 2011-12 Page9 | 11 that the appellant could approach the Tribunal to request it to hear both the matters together. Thus, the Hon’ble Jurisdictional High Court has in its order in ITA No.71/2917 given a tacit direction in the form of obiter dicta to the Tribunal to consider recalling order of the Tribunal in assessee’s case subject to assessee’s filing an M.A.. This is because it was already before the Hon’ble Jurisdictional High Court that the Tribunal had already recalled its original order in the case of Parbati Das (supra). It is under these circumstances, the Tribunal had vide its order dated 15.7.2022 in M.A. No.37/CTK/2021 recalled its order in ITA No.232/CTK/2016 dated 10.7.2017. It must also be mentioned here that the issue in the appeal in ITA No.232/CTK/2016 is a single issue in regard to valuation of closing stock. After recalling of the order, the appeal came to be reheard and the Co-ordinate Bench of this Tribunal had while disposing of the appeal vide order dated 18.10.2022 adjudicated the issue by considering the fact of the consistent method of valuation of closing stock followed by the assessee as also the decision of the Co-ordinate Bench in assessee’s own case for earlier assessment years. It must also be mentioned here that ld Sr DR was unable to confirm whether any writ petition against order in M.A. No.37/CTK/2021 dated 15.7.2022 has been filed under section 260A of the Act before the Hon’ble Jurisdictional High Court or any appeal has been filed against the order in ITA No.232/CTK/2016 dated 18.10.2022. With these facts in perspective, if one is to see the provisions of section 254(2) of the M.A.No.16/CTK/2023 ( In M.A. No.37/CTK/2021) (ITA No.232/CTK/2016) Assessment Year : 2011-12 Page10 | 11 Act, it becomes clear that the said provision is for amending any order passed u/s.254(1) of the Act with a view for rectifying any mistake apparent from the record. Here, the M.A. has been filed by the revenue without specifying as to which is the order it desires to be amended. However, considering the fact that the provisions of section 254(2) of the Act applies to an order passed u/s.254(1), we will take the presumption that the revenue has filed the application for the purpose of amendment to the order passed in ITA No.232/CTK/2016 dated 18.10.2022. Here, it must be mentioned that Sr DR has specifically refused to point out any mistake in any of the orders. Even otherwise, the M.A. does not contain any averments that there is any recording of mistake of facts or mistake of application of law in the order passed in ITA No.232/CTK/2016 dated 18.10.2022. 10. If we are to consider that the order to be amended is the order in M.A.No.37/CTK/2021 dated 13.7.2022 the said order is passed u/s.254(2) and consequently, the M.A. filed by the revenue cannot challenge the said order in M.A. No.37/CTK/20231 dated 13.7.2022 as it would be an M.A. on M.A., which is not permissible. 11. Coming to the alleged deficiency in the order of the Tribunal in ITA No.232/CTK/2016 dated 18.10.2022 insofar as the four independent points mentioned by the Tribunal in its order dated 10.7.2017, the main issue is the fourth point which is on account of valuation of the closing stock of the M.A.No.16/CTK/2023 ( In M.A. No.37/CTK/2021) (ITA No.232/CTK/2016) Assessment Year : 2011-12 Page11 | 11 jewellery by following weighted average method and when this issue itself went in favour of the assessee, the addition per se itself automatically stood vacated. Thus, clearly, no mistake apparent from the record has been pointed out much less to specify the order which the Revenue desires the Tribunal to amend and this M.A. is nothing to attempt to review the order which is not permissible under the provisions of section 254(2) of the Act. In these circumstances, the M.A. filed by the revenue stands dismissed. 12. In the result, M.A. filed by the revenue stands dismissed. Order dictated and pronounced in the open court on 24/03/2023. Sd/- sd/- (George Mathan) (Arun Khodpia) JUDICIAL MEMBER ACCOUNTANT MEMBER Cuttack; Dated 24/03/2023 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The appellant: DCIT, Circle 1(1), Cuttack 2. The Respondent: Radhagobindo Roy & Co. 3. The CIT(A)-, Cuttack 4. Pr.CIT-, Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//