M/s Sun Minerals, Hyderabad V. The Addl. CIT, Range-6, Hyderabad

MA 178/HYD/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9379 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 27-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Assessee Lawyers: I RAMA RAO
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER MA NO. 178/HYD/2012 IN ITA NO. 2116/HYD/2011 A.Y. 2008-09 M/S. SUN MINERALS HYDERABAD PAN: ABGFS5262D VS. THE ADDL. COMMISSIONER OF INCOME-TAX, RANGE 6 HYDERABAD ASSESSEE RESPONDENT MA NO. 179/HYD/2012 IN ITA NO. 2117/HYD/2011 A.Y. 2008-09 M/S. SUN INFRAA HYDERABAD PAN: ABCFS2833A VS. THE ADDL. COMMISSIONER OF INCOME-TAX, RANGE 6 HYDERABAD ASSESSEE RESPONDENT ASSESSEE BY: SHRI I. RAMA RAO RESPONDENT BY: SMT. VIDISHA KALRA DATE OF HEARING: 02.11.2012 DATE OF PRONOUNCEMENT: 02.11.2012 O R D E R PER CHANDRA POOJARI, AM: THESE TWO MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEE ARE SEEKING RECTIFICATION OF THE TRIBUNAL ORDER DATED 1 8.5.2012 IN ITA NOS. 2116 & 2117/HYD/2011. 2. THE LEARNED AR SUBMITTED THAT THE ASSESSEES RAISED THE GROUND IN THEIR RESPECTIVE APPEALS WITH REGARD TO DISALLOWANC E OF COMMISSION. THE SAME WAS TURNED DOWN BY THE TRIBUNAL ON THE FOLLOWI NG REASONS: (A) THERE WAS NO WRITTEN AGREEMENT FOR PAYMENT OF COMMI SSION AND, THEREFORE, DOUBTED THE GENUINENESS OF THE PAYM ENT. (B) THE ASSESSEES HEREIN WERE UNABLE TO FURNISH THE DET AILS OF CUSTOMERS INTRODUCED BY EACH AGENT AND FURNISH THE EXACT WORKING OF COMMISSION PAYMENT. MA NOS. 178 & 179/HYD/2012 M/S. SUN MINERALS & ANR. ======================= 2 3. THE LEARNED AR SUBMITTED THAT IN RESPECT OF REASONS AT (A) ABOVE, IT IS WELL SETTLED PRINCIPLE OF LAW THAT FOR ALLOWANCE OF COMMISSION PAYMENT THAT THERE NEED NOT BE AN AGREEMENT IN WRITING. NON -EXISTENCE OF AGREEMENT AT THE MOST MAY GIVE SCOPE FOR SUSPICION, BUT IT IS THE SETTLED PRINCIPLES OF LAW THAT NO ADDITION CAN BE MADE MERE LY BASED ON SURMISES AND CONJECTURES AND RELIANCE IN THIS REGARD IS PLAC ED ON THE FOLLOWING DECISIONS OF HON'BLE SUPREME COURT:- (A) UMACHARAN SHAW & BROS. V. CIT, 37 ITR 271 (SC); (B) LARCHAND BHAGAT AMBICA RAM V. CIT, 37 ITR 288 (SC); (C) DHAKESHWARI COTTON MILLS LTD. V. CIT, 26 ITR 775 (S C); (D) DHIRAJLAL GIRDHARILAL V. CIT, 26 ITR 736 (SC) 4. IN RESPECT OF REASON AT (B) ABOVE, THE TRIBUNAL, J ODHPUR BENCH IN THE CASE OF SUPREME RAYONS (P) LTD. VS. DCIT (104 T TJ 896) HAD CLEARLY HELD THAT NON-FURNISHING OF WORKING OF COMMISSION P AYMENT DOES NOT ENTAIL ANY ADDITION. IN ANY EVENT, THE PAYMENT WAS MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THERE WERE NO EXTRANEOUS CONSIDERATIONS INVOLVED NOR WAS IT THE CASE OF REVE NUE THAT UNREASONABLE AMOUNTS WERE PAID TO THE RELATED PARTIES. THEREFORE , THERE WERE NO GROUNDS OF WHATSOEVER NATURE TO DISALLOW THE COMMIS SION PAYMENTS. RELIANCE IN THIS REGARD IS PLACED ON THE HON'BLE SU PREME COURT JUDGMENT IN THE CASE OF SWADESHI COTTON MILLS CO. LTD. V. CI T (63 ITR 57) (SC). IN SIMILAR AND IDENTICAL FACTS IN THE CASE OF M/S. MUR ARI TRADING CO., HYDERABAD VS ITO [ITA NOS. 458 & 459/HYD/09), THIS TRIBUNAL ALLOWED THE COMMISSION PAYMENT AS DEDUCTION. FOR ANY REASON S, IF THIS TRIBUNAL FEELS THAT A DIFFERENT VIEW HAS TO BE TAKE N, THE MATTER SHOULD HAVE BEEN PLACED BEFORE THE HON'BLE PRESIDEN T OF THE TRIBUNAL SO AS TO ENABLE HIM TO CONSTITUTE A SPECIAL BENCH, AS SPECIFICALLY PROVIDED UNDER THE PROVISIONS OF SECTION 255 OF THE INCOME-T AX ACT. BUT THE OTHER OPTION THAT IS DIFFERING WITH THE EARLIER DECISION IS AGAINST THE CANONS OF JUDICIAL PROPRIETY AND CONSTITUTES A MISTAKE APPARE NT ON THE FACE OF THE RECORD. MA NOS. 178 & 179/HYD/2012 M/S. SUN MINERALS & ANR. ======================= 3 5. THE HON'BLE SUPREME COURT IN THE CASE OF UNION OF I NDIA VS. PARAS LAMINATES PVT. LTD. (1990) 186 ITR 722, 726-2 7 (SC) HELD AS FOLLOWS: '... THAT POWER SHOULD BE CONSTRUED TO BE WIDE ENOU GH TO ENABLE THE PRESIDENT TO MAKE A REFERENCE WHERE MEMBE RS OF A BENCH FIND THEMSELVES UNABLE TO DECIDE A CASE ACC ORDING TO WHAT THEY PERCEIVE TO BE THE CORRECT LAW AND FAC T BECAUSE OF AN IMPEDIMENT ARISING FROM AN EARLIER DECISION W ITH WHICH THEY CANNOT HONESTLY AGREE. IN SUCH CASES, IT IS NECESSARY FOR THE HEALTHY FUNCTIONING OF THE TRIBUN AL THAT THE PRESIDENT SHOULD HAVE THE REQUISITE AUTHORITY TO REFER THE CASE TO A LARGER BENCH. THAT IS A POWER WHICH I S IMPLIED IN THE EXPRESS GRANT AUTHORIZING THE PRESIDENT TO CO NSTITUTE BENCHES OF THE TRIBUNAL FOR EFFECTIVE AND EXPEDITIO US DISCHARGE OF ITS FUNCTIONS. ' 6. ACCORDINGLY, THE AR SUBMITTED THAT THE IMPUGNED ORD ER WAS PASSED CONTRARY TO THE LAW DOWN BY THE HON'BLE SUPR EME COURT AS HIGHLIGHTED IN THE PARAGRAPH SUPRA. NEEDLESS TO MEN TION THAT SUCH ORDERS CONSTITUTES MISTAKES APPARENT ON THE FACE OF THE RE CORD. THEREFORE, HE SUBMITTED THAT THE IMPUGNED ORDER REQUIRES TO BE RE CALLED IN THE INTEREST OF FAIR PLAY AND JUSTICE. FURTHER HE RELIED ON THE JUDGEMENTS OF HONDA SIEL POWER PRODUCTS LTD. VS. CIT (295 ITR 466) (SC), ACI T VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. (305 ITR 227) (SC), CIT V S. S.K. GUPTA (327 ITR 267) (ALL). 7. THE LEARNED DR SUBMITTED THAT THE TRIBUNAL PASSED A VERY DETAILED ORDER AND GIVEN VALID REASONS FOR DISALLOWANCE OF C OMMISSION AND THE PLEA OF THE ASSESSEE IS NOTHING BUT RE-ARGUMENT OF THE C ASE AGAIN WHICH CANNOT BE ENTERTAINED IN THE MA. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. AT THE TIME OF ADJUDICATING APPEALS OF THE ASSESSEE S, THE TRIBUNAL CONSIDERED ALL RELEVANT FACTS AND DELIVERED THE ORD ER. NOW CONSIDERING THE ASSESSEE'S COUNSEL ARGUMENTS WOULD AMOUNT TO RE-APP RAISAL OF THE SAME FACTS. THERE IS NO EXPRESS POWER OF REVIEW CALLED FOR ON THIS TRIBUNAL. 9. FURTHER IT IS WELL SETTLED THAT STATUTORY AUTHORITY CANNOT EXERCISE POWER OF REVIEW UNLESS SUCH POWER IS EXPRESSLY CONF ERRED. THERE IS NO MA NOS. 178 & 179/HYD/2012 M/S. SUN MINERALS & ANR. ======================= 4 EXPRESS POWER OF REVIEW CONFERRED ON THIS TRIBUNAL. EVEN OTHERWISE, THE SCOPE OF REVIEW DOES NOT EXTENT TO RE-HEARING OF TH E 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 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 OTHERWIS E, 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 LIT IGANT NOR BY INVOLVING DOCTRINE OF INCIDENTAL POWER, COULD TH E TRIBUNAL REVERSE A DECISION ON THE MERITS. THE TRI BUNAL WAS NOT JUSTIFIED IN RECALLING ITS PREVIOUS FINDING RESTORING THE ADDITION, MORE SO WHEN AN APPLICATION FOR THE S AME RELIEF HAD BEEN EARLIER DISMISSED. 10. THE SCOPE AND AMBIT OF APPLICATION OF SECTION 254(2 ) IS VERY LIMITED. THE SAME IS RESTRICTED TO RECTIFICATION O F 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 FRESH ORDER. THA T 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 CONC ERNED. 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 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 TO ANY MISTAKE SOUGHT TO BE RECT IFIED. POWER TO RECALL AN ORDER IS PRESCRIBED IN TERMS OF RULE 24 OF THE I TAT 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 THE APPEAL WA S TAKEN UP AND WAS DECIDED EX-PARTE. JUDGED IN THE ABOVE BACKGROUND T HE ORDER PASSED BY THE TRIBUNAL IS INDEFENSIBLE. MA NOS. 178 & 179/HYD/2012 M/S. SUN MINERALS & ANR. ======================= 5 11. THE WORDS USED IN S. 254(2) ARE SHALL MAKE SUCH AM ENDMENT, IF THE MISTAKE IS BROUGHT TO ITS NOTICE. CLEARLY, IF THE RE IS A MISTAKE, THEN AN AMENDMENT IS REQUIRED TO BE CARRIED OUT IN THE ORIG INAL ORDER TO CORRECT THAT PARTICULAR MISTAKE. THE PROVISION DOES NOT IN DICATE THAT THE TRIBUNAL CAN RECALL THE ENTIRE ORDER AND PASS A FRESH DECISI ON. THAT WOULD AMOUNT TO A REVIEW OF THE ENTIRE ORDER AND THAT IS NOT PER MISSIBLE 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 REVIEW HAS BEEN GIVE N TO THE TRIBUNAL UNDER THE IT ACT. THUS, WHAT IT COULD NOT DO DIRECTLY CO ULD NOT BE ALLOWED TO BE DONE INDIRECTLY. 12. IN THE CASE OF CIT VS. HINDUSTAN COCA COLA BEVERAGE S (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 EQUIVALE NT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RE CTIFIED. 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 FRO M 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. 13. 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 APPA RENT 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, WHI CH PREJUDICE 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- CONSIDERATION OF PRECEDENT BY THE TRIBUNAL CAUSES A PREJUDICE TO THE ASSESSEE. MA NOS. 178 & 179/HYD/2012 M/S. SUN MINERALS & ANR. ======================= 6 (C) THIRDLY, POWER TO RECTIFY A MISTAKE IS NOT EQUIVALE NT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RECTIFIE D. (D) FOURTHLY, UNDER S. 254(2) AN OVERSIGHT OF A FACT CA NNOT CONSTITUTE AN APPARENT MISTAKE RECTIFIABLE UNDER TH E SECTION. (E) FIFTHLY, FAILURE ON THE PART OF THE TRIBUNAL TO CON SIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON 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 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. 14. ACCORDINGLY, IN OUR OPINION, THE TRIBUNAL AFTER CON SIDERING THE ENTIRE FACTS AND ARGUMENTS OF BOTH THE PARTIES PASS ED A DETAILED ORDER WHICH DOES NOT REQUIRE ANY INTERFERENCE. NOW THE C ASE LAW RELIED ON BY THE ASSESSEE COUNSEL WAS OF NO HELP AS THE TRIBUNAL CONSIDERED ALL THE CASE LAW RELIED ON BY THE ASSESSEE ON EARLIER OCCASION A ND THERE IS NO LAPSE ON THE PART OF THE TRIBUNAL. 15. IN THE RESULT, BOTH THE MAS BY THE ASSESSEE ARE DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND NOVEMBER, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 2 ND NOVEMBER, 2012 COPY FORWARDED TO: 1. M/S. SUN MINERALS, C/O. M/S. P.R. DATLA & CO., CHART ERED ACCOUNTANTS, 6-3-788/A/9, FIRST FLOOR, DURGA NAGAR, AMEERPET, HYDERABAD-500 016. 2. M/S. SUN INFRAA, C/O. M/S. P.R. DATLA & CO., CHARTER ED ACCOUNTANTS, 6-3-788/A/9, FIRST FLOOR, DURGA NAGAR, AMEERPET, HYDERABAD-500 016. 3. THE ADDL. COMMISSIONER OF INCOME - TAX, RANGE - 6, HYDERABAD. 4. THE CIT(A) - IV, HYDERABAD. 5. THE CIT - III, HYDERABAD 6. THE DR B BENCH, ITAT, HYDERABAD TPRAO