M/s. Stewarts & Lloyds of India Ltd., Kolkata V. DCIT, Circle-1, Kolkata, Kolkata

MA 173/KOL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9080 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 13-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH SRDR
• Keywords: Reasonable cause; Procedural lapse; Set aside
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. GODARA, JUDICIAL MEMBER) M.A. NOS. 172 & 173/KOL/2019 ARISING OUT OF M.A. NOS. 83 & 84/KOL/2019 ASSESSMENT YEARS: 2008-09 & 2009-10 M/S. STEWARTS & LLOYDS OF INDIA LTD..................................APPELLANT [PAN : AAECS 0445 G] VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-1, KOLKATA...........................................................RESPONDENT APPEARANCES BY: SHRI PANKAJ PARAKH, FCA, APPEARED ON BEHALF OF THE ASSESSEE. SHRI C.J. SINGH, SR.DR, JCIT, APPEARED ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 6 TH , 2019 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 20 TH , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- MISCELLANEOUS APPLICATION NO. 172/KOL/2019 IS FILED FOR RECTIFICATION OF A MISTAKE IN M.A. NO. 83/KOL/2019, ORDER DATED 24.07.2019 AND ITAT ORDER DATED 15.03.2019. MISCELLANEOUS APPLICATION NO. 173/KOL/2019 IS FILED FOR RECTIFICATION OF A MISTAKE IN M.A. NO. 84/KOL/2019, ORDER DATED 24.07.2019 AND ITAT ORDER DATED 15.03.2019. 2. THESE MISCELLANEOUS APPLICATIONS (M.A.S FOR SHORT) HAVE BEEN FILED FOR RECTIFICATION OF A MISTAKE IN THE ORDER PASSED U/S 254(2) OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) ON 24.07.2019 AS WELL AS FOR RECTIFICATION OF THE ORDER OF THE ITAT DATED 15.03.2019 PASSED U/S 254(1) OF THE ACT. 3. ONE OF THE POINTS FOR OUR CONSIDERATION IS WHETHER M.A.S OR AN M.A. IS MAINTAINABLE. HONBLE HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. INCOME-TAX APPELLATE TRIBUNAL REPORTED IN [1992] 196 ITR 683 (ORISSA) HAS HELD AS FOLLOWS: IN ORDER TO ATTRACT THE APPLICATION OF SECTIONS 154(1) AND SECTION 254(2) A 'MISTAKE' MUST EXISTS, 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; AN ERROR, A FAULT; A MISUNDERSTANDING; A MISCONCEPTION. 'APPARENT' MEANS VISIBLE; CAPABLE OF BEING 2 M.A. NOS. 172 & 173/KOL/2019 ARISING OUT OF M.A. NOS. 83 & 84/KOL/2019 ASSESSMENT YEARS: 2008-09 & 2009-10 M/S. STEWARTS & LLOYDS OF INDIA LTD SEEN; EASILY SEEN; OBVIOUS; PLAIN. THEREFORE, THE MISTAKE WHICH CAN BE RECTIFIED UNDER SECTION 254(2) IS ONE WHICH IS PATENT, WHICH IS OBVIOUS AND WHOSE DISCOVERY IS NOT DEPENDENT ON AN ARGUMENT OR ELABORATION. NO MISTAKE CAN BE SAID TO BE APPARENT FROM THE RECORD IF IT IS NOT SELF- EVIDENT AND IF IT REQUIRES AN EXAMINATION OR ARGUMENT TO ESTABLISH IT. WHAT IS A MISTAKE APPARENT FROM THE RECORD CANNOT BE DEFINED PRECISELY OR EXHAUSTIVELY, THERE BEING AN ELEMENT OF INDEFINITENESS INHERENT IN ITS VERY NATURE, AND IT MUST BE DETERMINED JUDICIALLY ON THE FACTS OF EACH CASE. IN THE INSTANT CASE, THE ASSESSEE HAD TAKEN A SPECIFIC GROUND THAT SECTION 176(3A) HAD NO APPLICATION TO ITS CASE, BECAUSE THE PARTNERSHIP HAD BEEN DISSOLVED PRIOR TO THE DATE, WHEN THE SAID SUB-SECTION CAME INTO EFFECT. THE TRIBUNAL DEALT WITH THIS ASPECT AND CAME TO HOLD THAT THERE WAS NOTHING ON RECORD TO SHOW WHETHER THE FIRM WAS DISSOLVED. IT WAS CATEGORICALLY OBSERVED THAT THE PLEA RELATED TO DISCONTINUANCE OF THE FIRM, AND WHAT WAS MEANT BY DISCONTINUANCE OF THE FIRM WAS NOT EXPLAINED. THEREFORE, IT WAS NOT A CASE WHERE THE APPLICABILITY OF SECTION 176(3A) ASPECT WAS NOT CATEGORICALLY DEALT WITH. WHETHER THE CONCLUSION ON FACTS WAS CORRECT OR NOT WAS INCONSEQUENTIAL. MERELY BECAUSE REFERENCE HAD NOT BEEN MADE TO SECTION 176(3A), IT DID NOT MEAN THAT THE TRIBUNAL DID NOT ADDRESS ITSELF TO THE FACTUAL ASPECT ON WHICH THE APPLICABILITY OF SECTION 176(3A) WAS DEPENDENT. THEREFORE, THE CONCLUSION OF THE TRIBUNAL THAT, IN THE ORDER, NO DECISION WAS GIVEN BY THE TRIBUNAL ON THIS ASPECT WAS CLEARLY ERRONEOUS. THE LANGUAGE USED IN SECTION 254(2) MAKES IT CLEAR THAT ONLY 'AMENDMENT' TO THE ORDER PASSED UNDER SECTION 254(1) IS PERMISSIBLE, WHERE IT IS BROUGHT TO THE NOTICE OF THE TRIBUNAL THAT THERE IS ANY MISTAKE APPARENT FROM THE RECORD. 'AMENDMENT' OF AN ORDER DOES NOT MEAN OBLITERATION OF THE ORDER ORIGINALLY PASSED, AND ITS SUB-SITUATION BY A NEW ORDER. RECALLING THE ENTIRE ORDER OBVIOUSLY WOULD MEAN PASSING OF A FRESH ORDER. THAT DOES NOT APPEAR TO BE THE LEGISLATIVE INTENT. THE ORDER PASSED BY THE TRIBUNAL UNDER SECTION 254(1) IS THE EFFECTIVE ORDER SO FAR AS THE APPEAL IS CONCERNED. ANY ORDER PASSED UNDER SECTION 254(2) EITHER ALLOWING AN AMENDMENT OR REFUSING TO AMEND GETS MERGED WITH THE ORIGINAL ORDER PASSED. THE ORDER AS AMENDED OR REMAINING UNAMENDED IS THE EFFECTIVE ORDER FOR THE ALL PRACTICAL PURPOSES. THE SAME CONTINUES TO BE AN ORDER UNDER SECTION 254(1). THAT IS THE FINAL ORDER IN THE APPEAL. AN ORDER UNDER SECTION 254(2) DOES NOT HAVE EXISTENCE DE HORS THE ORDER UNDER SECTION 254(1). RECALLING OF THE ORDER IS NOT PERMISSIBLE UNDER SECTION 254(2). RECALLING OF AN ORDER AUTOMATICALLY NECESSITATES REHEARING AND READJUDICATION 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 OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1963, AND THAT TOO ONLY IN CASES WHERE THE ASSESSEE SHOWS THAT IT HAD REASONABLE CAUSE FOR BEING ABSENT AT A TIME WHEN THE APPEAL WAS TAKEN UP AND WAS DECIDED EX PARTE. THERE MAY BE CASES WHERE THE TRIBUNAL ITSELF COMES TO NOTICE THAT THE ORDER WAS PASSED WITHOUT ANY ISSUE OF NOTICE OR THERE WERE SUCH PROCEDURAL LAPSES WHICH RENDERED THE ORDER ILLICIT. IN SUCH CASES, THE ORDER MAY BE SET ASIDE AND A REHEARING MAY BE DIRECTED. THIS IS SO BECAUSE NO PEJUDICE SHOULD BE CAUSED TO A PARTY FOR A WRONG COMMITTED BY THE TRIBUNAL. OTHERWISE, UNDER SECTION 254(2), AN ORDER CANNOT BE RECALLED IN ITS ENTIRETY AND A REHEARING CANNOT BE DIRECTED. THERE IS NO SCOPE FOR A REFERENCE IN RESPECT OF AN ORDER UNDER SECTION 254(2). SECTION 254(2) HAS NO INDEPENDENT EXISTENCE. THE MOMENT IT IS PASSED, IT GETS MERGED WITH THE ORDER UNDER SECTION 254(1). THE RECTIFICATION OF AN ERROR UNDER SECTION 254(2) IN AN ORDER PASSED BY THE TRIBUNAL UNDER SECTION 254(1) CANNOT BE SAID TO BE THE PASSING OF A NEW ORDER WHICH GIVES A RIGHT TO EITHER PARTY TO APPLY TO THE TRIBUNAL REQUIRING A CASE TO BE STATED REFERRING A QUESTION OR QUESTIONS OF LAW FOR THE OPINION OF THE HIGH COURT ARISING OUT OF THE ORDER IN WHICH THE CORRECTION IS MADE. THE GRANTING OF THE APPLICATION FOR RECTIFICATION AND CORRECTING THE ERROR IN THE ORDER IS NEITHER AN ORDER WITHIN SECTION 254(1) NOR ONE IN RESPECT OF WHICH SECTION 256(1) ENABLES A CASE TO BE STATED. THEREFORE, THE ORDER OF THE TRIBUNAL RECALLING ITS EARLIER ORDER COULD NOT BE MAINTAINED. THE TRIBUNAL, CONSEQUENT UPON ACCEPTANCE OF THE PRAYER FOR RECTIFICATION, HAD DISMISSED THE REFERENCE APPLICATIONS OF BOTH THE ASSESSEE AND THE COMMISSIONER AS INFRUCTUOUS. AS A 3 M.A. NOS. 172 & 173/KOL/2019 ARISING OUT OF M.A. NOS. 83 & 84/KOL/2019 ASSESSMENT YEARS: 2008-09 & 2009-10 M/S. STEWARTS & LLOYDS OF INDIA LTD CONSEQUENCE OF SETTING ASIDE THE IMPUGNED ORDER, THE REFERENCE APPLICATION WERE TO BE RESTORED. HONBLE HIGH COURT IN THE CASE OF MENTHA & ALLIED PRODUCTS CO. (P.) LTD. V. INCOME- TAX APPELLATE TRIBUNAL REPORTED IN [2000] 244 ITR 470 (DELHI) HAS HELD AS FOLLOWS: ACCORDING TO SECTION 254, THE TRIBUNAL IS COMPETENT TO RECTIFY A MISTAKE APPARENT FROM THE RECORD AND AMEND ANY ORDER WHICH HAS BEEN PASSED UNDER SUB-SECTION (1). ADMITTEDLY, BY THE IMPUGNED ORDER, THE TRIBUNAL HAD SOUGHT TO RECTIFY THE ORDER PASSED BY IT UNDER SECTION 256(1) AND NOT AN ORDER PASSED UNDER SECTION 254(1). THE TRIBUNAL IS, THUS, NOT CLOTHED WITH AN INHERENT POWER TO RECTIFY/RECALL AN ORDER PASSED UNDER SECTION 256(1) BY TAKING RECOURSE TO SECTION 254(2) AND, THEREFORE, THE IMPUGNED ORDER WAS ILLEGAL AND INVALID. THE WRIT PETITION WAS, ACCORDINGLY, ALLOWED AND THE IMPUGNED ORDER WAS SET ASIDE. THE ITAT DELHI BENCH (SPECIAL BENCH) IN THE CASE OF SHRI PADAM PRAKASH (HUF) V. INCOME-TAX OFFICER, WARD-2(1), MEERUT REPORTED IN [2011] 131 ITD 121 (DELHI) (SB) HAS HELD AS FOLLOWS: IT IS TRUE THAT SUB-SECTION (2) OF SECTION 254 CAN BE INVOKED ONLY IN A SITUATION IF THERE IS A MISTAKE IN THE ORDER PASSED BY THE TRIBUNAL UNDER SUB-SECTION (1) OF SECTION 254. THE IMPUGNED MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE WAS AGAINST THE ORDER PASSED UNDER SECTION 254(2). THEREFORE, PRINCIPALLY, THE APPLICATION FILED BY THE ASSESSEE HAD TO BE REJECTED ON THIS GROUND ALONE. [PARA 9] THE RELIEF WHICH WAS BEING SOUGHT BY THE ASSESSEE BY WAY OF IMPUGNED RECTIFICATION APPLICATION WAS NOT LEGALLY TENABLE FOR THE REASON THAT THE TRIBUNAL HAS NO POWER TO ADJUDICATE UPON SUBSEQUENT APPLICATION FILED UNDER SECTION 254(2). HERE, IT MIGHT BE THE CASE OF THE ASSESSEE THAT EARLIER ORDER AGAINST WHICH IMPUGNED RECTIFICATION APPLICATION WAS FILED WAS ALSO AN ORDER PASSED ON SUBSEQUENT APPLICATION, THEN THE ONLY COURSE PERMISSIBLE TO THE ASSESSEE WAS TO FILE AN APPEAL AGAINST THAT ORDER AND NOT TO APPROACH THE TRIBUNAL TO CONTEND THAT THE SAID ORDER WAS AN INVALID ORDER, THEREFORE IT SHOULD BE RECALLED. [PARA 12] MOREOVER, WHAT HAD BEEN DONE BY THE TRIBUNAL WAS THAT BY KEEPING IN VIEW THE LATEST DECISION OF SUPREME COURT, IT WAS OBSERVED THAT THE OBSERVATIONS MADE BY IT IN EARLIER ORDER WERE NO MORE RELEVANT AND THEREFORE, THOSE OBSERVATIONS HAD BEEN WITHDRAWN. ACCORDING TO THE WELL ESTABLISHED LAW, THE ORDER OF THE TRIBUNAL HAS TO BE BROUGHT IN CONFORMITY WITH THE DECISION OF THE APEX COURT, EVEN IF THE SAID DECISION IS RENDERED SUBSEQUENT TO THE PRONOUNCEMENT OF THE ORDER. [PARA 13] THEREFORE, THERE WAS NO FORCE IN THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE WHICH WAS REJECTED AND DISMISSED. [PARA 15] 4. THUS THIS PART OF THE APPLICATION SEEKING RECTIFICATION U/S 254(2) OF THE ACT OF AN ORDER PASSED U/S 254(2) OF THE ACT IS REJECTED. 5. NEVERTHELESS THE ASSESSEE ALSO STATED THAT IT SOUGHT RECTIFICATION OF THE ORDER OF THE TRIBUNAL PASSED U/S 254(1) OF THE ACT ON 15.03.2019. AFTER CONSIDERING THE APPLICATION FOR RECTIFICATION AND ARGUMENTS OF BOTH SIDES, WE AGREE THAT A MISTAKE APPARENT ON RECORD CREPT INTO THE ORDER OF THE ITAT WHICH REQUIRES RECTIFICATION ON THE 4 M.A. NOS. 172 & 173/KOL/2019 ARISING OUT OF M.A. NOS. 83 & 84/KOL/2019 ASSESSMENT YEARS: 2008-09 & 2009-10 M/S. STEWARTS & LLOYDS OF INDIA LTD ISSUE OF TAXABILITY OF RETENTION MONEY FOR THE AY 2008-09 AND FOR AY 2009-10. THE MISTAKE WAS THAT THE ITAT WAS UNDER THE WRONG IMPRESSION THAT THIS GROUND ON TAXABILITY OF RETENTION MONEY DID NOT COME IN BOTH THESE YEARS. IN VIEW OF THE ABOVE THE RELIEF GRANTED FOR AY 2007-08, ON THE ISSUE OF RETENTION MONEY BEING BROUGHT TO TAX HAS ALSO TO BE GRANTED FOR THE AY 2008-09 AND AY 2009-10. RETENTION MONEY CANNOT BE BROUGHT TO TAX IN ANY OF THE YEARS. ORDERED ACCORDINGLY. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS OF THE ASSESSEE ARE ALLOWED. KOLKATA, THE 20 TH SEPTEMBER, 2019. SD/- SD/- [S.S. GODARA] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20.09.2019 BIDHAN COPY OF THE ORDER FORWARDED TO: 1. M/S. STEWARTS & LLOYDS OF INDIA LTD., 41, CHOWRINGHEE ROAD, KOLKATA- 700 071. 2. DCIT, CIRCLE-1, KOLKATA. 3. CIT(A)- KOLKATA. 4. CIT- 5. CIT(DR), KOLKATA BENCHES, KOLKATA. (SENT THROUGH MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES