AI Insights
The case revolves around a Miscellaneous Application by Pragati Glass Pvt. Ltd., seeking to rectify what they claimed were typographical errors and misclassifications in the Tribunal's earlier order regarding their tax assessment for the year 2014-15. The Tribunal had previously directed the assessing officer to correct typographical errors in the assessment order but did not alter the substantive findings. The assessee argued that the Tribunal's order incorrectly classified certain expenditures and that the Tribunal overstepped by directing corrections that could enhance their tax liability. The Departmental Representative contended that the Tribunal's corrections were merely administrative to ensure accurate tax assessments and did not constitute an enhancement of the assessment. The Tribunal dismissed the application, emphasizing that corrections of typographical errors are within their jurisdiction and do not amount to a review or alteration of the substantive assessment.
Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 301705 (ITAT-SURAT)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
10-09-2023
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
15-06-2023
Assessment Year
2014-2015
Appeal Filed On
06-03-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM Miscellaneous Application No.16/SRT/2023 [Arising out of ITA No.36/SRT/2022] Assessment Year: (2014-15) (Physical Hearing) Pragati Glass Pvt. Ltd., Kharach, Kosamba (R.S.), Dist. Bharuch, Bharuch – 392001. Vs. The ACIT, Circle-1, Vadodara. (Appellant) (Respondent) èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AABCP7377H Appellant by Shri Surendra Modiani, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 16/06/2023 Date of Pronouncement 11/09/2023 आदेश / O R D E R PER DR. A. L. SAINI, AM: By way of the captioned Miscellaneous Application, the assessee has sought to point out that a mistake apparent from record within the meaning of section 254(2) of the Income Tax Act, 1961 (in short ‘the Act’) has crept in the order of the Tribunal dated 30.12.2022. 2. Learned Counsel for the assessee, at the outset, argued that main grievances of the assessee in this Miscellaneous Application are that Tribunal in its order, (vide para no.9 and 10 of the Tribunal order) has directed the assessing officer to correct the typographical error. The ld Counsel stated that there were other typographical errors in the assessment order. Therefore, ld Counsel contended that Tribunal does not have power to direct enhancement or take back any benefit granted by the Assessing Officer as per decision of Hon'ble Supreme Court in case of Mcorp Global (P.) Ltd. V. CIT reported at Page | 2 MA.16/SRT/2023/AY.2014-15 Pragati Glass Pvt. Ltd. 178 Taxman 347. The ld Counsel also argued that the decision of the Tribunal states that expenditure on moulds are to be capital expenditure, which is wrong, and rather it should be revenue expenditure. Based on the contents of Miscellaneous Application, Ld. Counsel contended that argument of the assessee has not considered, hence there is a mistake apparent from record in the order of the Tribunal dated 30.12.2022, therefore order of the Tribunal may be recalled. 3. On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue submitted that Tribunal has adjudicated the issue on merit, which cannot be altered. Besides, typographical error may be corrected at any stage. Suppose, assessing officer has written Rs.111/-, however, correct figure, based on the facts of the assessee`s case is Rs. 101/-, such typographical error may be corrected. It is the primary responsibility of the assessee to file ratification application under section 154 of the Act before lower authorities to get corrected these typographical errors, however, assessee has failed to do so. The Tribunal has directed the assessing officer to correct the typographical error and thereafter assess the true tax liability of the assessee. Thus, to direct the assessing officer to correct typographical error does not amount to enhancement of assessment. The ld DR therefore contended that Tribunal has upheld the order of ld CIT(A), hence there is no apparent mistake in the order of the Tribunal, therefore such Tribunal order may not be recalled. 4. We have heard both the parties and perused the material available on record. We note that Tribunal has not corrected the typographical error in the figures of the assessment order, therefore it Page | 3 MA.16/SRT/2023/AY.2014-15 Pragati Glass Pvt. Ltd. is not tantamount to enhancement of assessment. The typographical error was highlighted at the time of hearing before the Bench. Therefore, it is duty of the Tribunal to instruct the assessing officer to examine the figures and correct the typographical errors to assess true tax liability of the assessee. In this process of reasoning there is no enhancement of assessment by the Tribunal. It is the basic principle of taxation that correct amount should be taxed in the hands of the assessee in correct assessment year and on correct figures. We also note that assessee under consideration, has mala-fide intention to defraud the Revenue, as the assessee has not get retified these typographical errors. We note that Tribunal has adjudicated the issue on merit after considering assessee`s submissions, hence there is no mistake apparent from record. 5. We note that the provisions of section 254(2) of the Act delas with rectification of mistake apparent from record, which reads as follows: “Orders of Appellate Tribunal. “254. (2) The Appellate Tribunal may, at any time within [six months from the end of the month in which the order was passed], with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [Assessing] Officer. Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard : [Provided further that any application filed by the assessee in this sub- section on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees.]” Having gone through sub-section 2 of section 254 of the Act, as noted above, we observed that “any mistake apparent from the record” can be rectified. Page | 4 MA.16/SRT/2023/AY.2014-15 Pragati Glass Pvt. Ltd. The plain meaning of the word 'apparent' is that it must be something which appears to be ex-facie and incapable of argument and debate. Thus, section 254(2) of the Act does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. Therefore, amendment of an order under section 254(2) of the Act, does not mean entire obliteration of order originally passed by the Tribunal and its substitution by a new order of Tribunal, this is not permissible under section 254(2) of the Act. Power to rectify an order, under section 254(2) of the Act is extremely limited and it does not extend to correcting errors of law, or re-appreciating factual findings. 6. We do not agree with ld Counsel that entire arguments advanced by him should be considered by the Tribunal. On the similar facts, the Co-ordinate Bench of ITAT, Delhi in the case of Prem Colonisers Pvt. Ltd. vs. ITO, Ward-14(3) [in MA No. 130/Del/2012 for AY.2002-03] order dated 12.12.2012 held as follows: “3. We have heard both the sides, considered the material on record and before reverting to facts, it would be apt to consider the relevant provisions of law relating to section 254(2). A bare look at section 254(2) of the Act, which deals with rectification, makes it amply clear that a ‘mistake apparent from the record’ is rectifiable. In order to attract the application of section 254(2), a mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. ‘Mistake’ means to take or understand wrongly or inaccurately; to make an error in interpreting, it is an error; a fault, a misunderstanding, a misconception. ‘Apparent’ means visible; capable of being seen; easily seen; obvious; plain. A mistake which can be rectified under section 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. The language used in section 254(2) is permissible where it is brought to the notice of the Tribunal that there is any mistake apparent from the record. Accordingly, 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). Further, where an error is far from self evident, it ceases to be an apparent error. It is no doubt true that a Page | 5 MA.16/SRT/2023/AY.2014-15 Pragati Glass Pvt. Ltd. mistake capable of being rectified under section 254(2) is not confined to clerical or arithmetical mistakes. On the other hand, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by the Supreme Court in Master Construction Co. (P.) Ltd. v. State of Orissa [1966] 17 STC 360, an error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. A similar view was also expressed in Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale AIR 1960 SC 137. It is to be noted that the language used in Order 47, Rule 1 of the Code of Civil Procedure, 1908 is different from the language used in section 254(2) of the Act. Power is given to various authorities to rectify any ‘mistake apparent from the record’ is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of ‘an error apparent on the face of the record’. Mistake is an ordinary word, but in taxation laws, it has a special significance. It is not an arithmetical or clerical error alone that comes within its purview. It comprehends errors which, after a judicious probe into the record from which it is supposed to emanate, are discerned. The word ‘mistake’ is inherently indefinite in scope, as what may be a mistake for one may not be one for another. It is mostly subjective and the dividing line in border areas is thin and indiscernible. It is something which a duly and judiciously instructed mind can find out from the record. In order to attract the power to rectify under section 254(2) it is not sufficient if there is merely a mistake in the orders sought to be rectified. The mistake to be rectified must be one apparent from the record. A decision on the debatable point of law or undisputed question of fact is not a mistake apparent from the record. The plain meaning of the word ‘apparent’ is that it must be something which appears to be so ex facie and it is incapable of argument or debate. It is therefore, follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification. 4. As is apparent from the discussion held in the preceding paragraphs, that a rectification application can lie only with regard to an error on the face of the record which has not emerged from the material on record and moreover, the assessee has not been able to point out any apparent mistake in the order passed by the Tribunal and in case application of the assessee is accepted, it would tantamount to review of the order of the Tribunal, as has rightly been pleaded by the ld. DR, that reviewing of the order of the Tribunal is not permissible and for that purpose useful reference can be made to the following decisions. 4.1 The Hon’ble Calcutta High Court in the case of CIT vs Gokul Chand Agarwal (202 ITR 14), has held as under: “Section 254(2) of the Income Tax Act, 1961, empowers the Tribunal to amend its order passed under section 254(1) to rectify any mistake apparent from the record either suo moto or on an application. The Page | 6 MA.16/SRT/2023/AY.2014-15 Pragati Glass Pvt. Ltd. jurisdiction of the Tribunal to amend its order thus depends on whether or not there is a mistake apparent from the record. If, in its order, there is no mistake which is patent and obvious on the basis of the record, the exercise of the jurisdiction by the Tribunal under section 254(2) will be illegal and improper. An oversight of a fact cannot constitute an apparent mistake rectifiable under section 254(2). This might, at the worst, lead to perversity of the order for which the remedy available to the assessee is not under section 254(2) but a reference proceeding under section 256. The normal rule is that the remedy by way of review is a creature of the statute and, unless clothed with such power by the statute, no authority can exercise the power. Review proceedings imply proceedings where a party, as of right, can apply for reconsideration of the matter, already decided upon, after a fresh hearing on the merits of the controversy between the parties. Such remedy is certainly not provided by the Income Tax Act, 1961, in respect of proceedings before the Tribunal.” 4.2 In similar situation, while dealing with the rectification, the Hon'ble Andhra Pradesh High Court in the case of CIT and Anor vs. I.T.A.T and Anor (206 ITR 126 has held as under: “The appellate Tribunal, being a creature of the statute, has to confine itself in the exercise of its jurisdiction to the enabling or empowering terms of the statute. It has no inherent power. Even otherwise, in cases where specific provision delineates the powers of the court or Tribunal, it cannot draw upon its assumed inherent jurisdiction and pass orders as it pleases. The power of rectification which is specifically conferred on the Tribunal has to be exercised in terms of that provision. It cannot be enlarged on any assumption that the Tribunal has got an inherent power of rectification or review or revision. It is axiomatic that such power of review or revision has to be specifically conferred, it cannot be inferred. Unless there is a mistake apparent from the record in the sense of patent, obvious and clear error or mistake, the Tribunal cannot recall its previous order. If the error or mistake is one which could be established only by long drawn arguments or by a process of investigation and research, it is not a mistake apparent from the record.” 4.3 Further, the Hon'ble Supreme Court in the case of CIT vs Karam Chand Thapar and Br.P.Ltd. (176 ITR 535) has held as under: “APPELLATE TRIBUNAL – DUTY TO CONSIDER CUMULATIVE EFFECT OF CIRCUMSTANCES AND TOTALITY OF FACTS – NO NEED TO STATE SO IN APPELLATE ORDER SPECIFICALLY – INCOME TAX ACT, 1961, SEC. 254,Further it was held as under: “It is equally well settled that the decision of the Tribunal has not to be scrutinized sentence by sentence merely to find out whether all facts have been set out in detail by the Tribunal or whether some incidental fact which appears on the record has not been noticed by the Tribunal in its judgment. If the court, on a fair reading of the judgment of the Tribunal, finds that it has taken into account all relevant material and has not taken into account any irrelevant material in basing its conclusions, the decision Page | 7 MA.16/SRT/2023/AY.2014-15 Pragati Glass Pvt. Ltd. of the Tribunal is not liable to be interfered 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 express words that it has taken into account the cumulative effect of the circumstances or has considered the totality of the facts, as if that were a magic formula; if the judgment of the tribunal shows that it has, in fact, done so, there is no reason to interfere with the decision of the Tribunal. Similarly the Bombay High Court in the case of CIT-vs- Ramesh Electric and Trading Co. (203 ITR 497) .............It is an accepted position that the Appellate Tribunal does not have any power to review its own orders under the provisions of the Act. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record........ The power of rectification under section 254(2) can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record and not a mistake which required to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinion. Failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgments........................” 4.4 We also draw support here from Hon’ble Madras High Court decision in T.C.(A) No. 156 of 2006 dated 21.08.2007 in the case of CIT Vs. Tamil Nadu Small Industries Development Corporation Ltd. wherein the Hon’ble High Court held as under:- “The Tribunal has no power to review its order. When the Tribunal has already decided an issue by applying its mind against the assessee, the same cannot be rectified under Section 254 (2) of the Act. There was no necessity whatsoever on the part of the Tribunal to review its own order. Even after the examination of the judgments of the Tribunal, we could not find a single reason in the whole order as to how the Tribunal is justified and for what reasons. There is no apparent error on the face of the record and thereby the Tribunal sat as an appellate authority over its own order. It is completely impermissible and the Tribunal has traveled out of its jurisdiction to allow a Miscellaneous Petition in the name of reviewing its own order. In the present case, in the guise of rectification, the Tribunal reviewed its earlier order and allowed the Miscellaneous Petition which is not in accordance with law. Section 254(2) of the Act does not contemplate rehearing of the appeal for a fresh disposal and doing so, would obliterate the distinction between the power to rectify mistakes and power to review the order made by the Tribunal. The scope and ambit of the application of Section 254(2) is limited and narrow. It is restricted to rectification of mistakes apparent from the record. Recalling the order obviously would mean passing of a fresh order. Recalling of the order is not permissible under Section 254(2) of the Act. Only glaring and any mistake apparent on the face of the record alone can be rectified and hence anything debatable cannot be a subject matter of rectification.” Page | 8 MA.16/SRT/2023/AY.2014-15 Pragati Glass Pvt. Ltd. 4.5 Further, we place reliance upon Hon’ble Delhi High Court exposition on the scope of rectification u/s 254(2) as reported in the case of Ras Bihari Bansal Vs. Commissioner of Income Tax (2007) 293 ITR 365: “Section 254 of the Income Tax Act, 1961, enables the concerned authority to rectify any “mistake apparent from the record”. It is well settled that an oversight of a fact cannot constitute an apparent mistake rectifiable under this section. Similarly, failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion, is not an error apparent on the record, although it may be an error of judgment. The mere fact that the Tribunal had not allowed a deduction, even if the conclusion is wrong, will be no ground for moving an application under section 254(2) of the Act. Further, in the garb of an application for rectification, the assessee cannot be permitted to reopen and re-argue the whole matter, which is beyond the scope of the section.” Therefore, in view of the facts, circumstances, in the light of ratio of decisions cited and discussion as held above, we do not find any substance in the application of the assessee and dismiss the same being devoid of any merits. 5. As a result, this misc. application filed by the assessee gets dismissed.” 7. Thus, it is abundantly clear from the decision of the Coordinate Bench in the case of Prem Colonisers Pvt. Ltd(supra) that failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. Review proceedings imply proceedings where a party, as of right, can apply for reconsideration of the matter, already decided upon, after a fresh hearing on the merits of the controversy between the parties, such remedy is certainly not provided by section 254(2) the Income Tax Act, 1961. Further, in the garb of an application for rectification, the assessee cannot be permitted to reopen and re-argue the whole matter, which is beyond the scope of the section 254(2) of the Act. Based on these facts and circumstances, we dismiss the miscellaneous application filed by the assessee. Page | 9 MA.16/SRT/2023/AY.2014-15 Pragati Glass Pvt. Ltd. 8. In the result, Miscellaneous Application filed by the assessee is dismissed. Order is pronounced on 11/09/2023 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 11/09/2023 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat
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