The ACIT Central-1, Indore V. Shri Manish Kedia, Indore

MA 19/Ind/2022

AI Insights

The case revolves around a Miscellaneous Application filed by the Revenue seeking recall of an ITAT order that had dismissed their appeal due to a low tax effect, which was initially reported as below Rs. 50 lakh. The Revenue contended that the actual tax effect was Rs. 66.07 lakh, supported by official documents. The assessee opposed the recall, citing that the application was filed beyond the permissible six-month period as stipulated under section 254(2) of the Income-tax Act, 1961. However, the Tribunal, referencing a decision by the Hon'ble Delhi High Court, held that the limitation period should commence from the date of actual receipt of the order by the parties, not from the date of the order itself. Consequently, the Tribunal allowed the M/A and recalled the earlier order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130927 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-03-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 23-08-2022
• Other Referred Cases: Raja Malwinder Singh Vs. Union of India & Anr., Pacific Projects Limited Vs. ACIT, Shri Kasturilal Sardarilal Luthra, Nashik Vs. DCIT, Nashik
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IBRAHIM KANNODWAL
• Keywords: Tax effect; Period of limitation; Tax effect; Time period of passing order
• Section: 254(2)

Judgement Text

Page 1 of 7 आयकर अपीलीय अिधकरण, इंदौर ायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER MA No. 19/Ind/2022 (Arising out of ITA No. 82/Ind/2021) Assessment Year: 2018-19 ACIT (Central )-1 Indore बनाम/ Vs. Shri Manish Kedia 323AD, Scheme No.74C Vijay Nagar Indore (Applicant/Revenue) (Respondent/ Assessee) PAN: ADUPK6439N Assessee by Shri V.N. Dubey, & Ibrahim Kannodwal, ARs Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 03.03.2023 Date of Pronouncement 26.05.2023 आदेश / O R D E R Per B.M. Biyani, A.M.: This Misc. Application [“M/A”] u/s 254(2) of Income-tax Act, 1961 is preferred by Revenue seeking recall of the Order dated 31.01.2022 of ITAT, Indore Bench in ITA No. 82/Ind/2021 for assessment-year 2018-19 by which the Revenue’s appeal was dismissed on account of low tax effect i.e. tax effect being less than Rs. 50 lakh as prescribed in CBDT Circular No. 3/2018 dated 08.08.2019. 2. Heard the learned Representatives of both sides at length and case- records perused. Manish Kedia MANo.19/Ind/2022 Assessment year 2018-19 Page 2 of 7 3. Ld. DR representing the Applicant-Revenue filed a letter F.No. Pr. CIT/(Central)/BPL/260A/20-21/967 dated 12.08.2022 alongwith Office- Order of even date of Principal Commissioner of Income-tax, Bhopal and submitted that the tax effect was in fact Rs. 66.07 lakh; therefore the Revenue’s appeal has been wrongly dismissed treating the tax effect less than Rs. 50 lakh. Hence, Ld. DR prays, the Revenue’s Appeal was maintainable and could not have been dismissed. Ld. DR submits that the appeal must be restored and properly adjudicated. 4. Ld. AR representing the assessee, however, raised a legal objection stating that the impugned Order dismissing the Revenue’s appeal was passed by ITAT on 31.01.2022 and the present M/A is filed by Revenue on 25.08.2022. Ld. AR invited our attention to the provision of section 254(2) whereunder this M/A is filed; that reads as under: “(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:” 5. Ld. AR submitted that the language of section 254(2) is very clear which provides for filing of M/A within six months from the end of the month in which the order was passed. Since in the present case, the original order disposing of appeal was passed on 31.01.2022, the prescribed limit got expired on 31.07.2022. Hence, the M/A filed by Revenue on 25.08.2022 is barred by limitation having been filed beyond the outer limit prescribed in section 254(2) and is not maintainable and the same must be dismissed. Ld. AR also relied upon the decision of Hon’ble Punjab & Haryana High Court in Raja Malwinder Singh Vs. Union of India & Anr. 278 ITR 568 and argued that the Hon’ble High Court has categorically held that ITAT has no power to amend its order after expiry of the period of 6 months (4 years at the time when the said decision was rendered) as prescribed in section 254(2). Ld. AR also relied upon decision of ITAT, Pune Bench in Shri Kasturilal Sardarilal Manish Kedia MANo.19/Ind/2022 Assessment year 2018-19 Page 3 of 7 Luthra, Nashik Vs. DCIT, Nashik, M.A. No. 38/Pun/2017 dated 04.04.2018 wherein the original order of ITAT was passed on 29.07.2016; the assessee received order on 07.11.2016 and thereafter filed M/A on 08.05.2017 (6 th and 7 th May were closed holidays). The assessee claimed that the M/A filed within 6 months from date of actual receipt of order was well within time and must be allowed. However, the ITAT held that in terms of provision of section 254(2), the limitation period of 6 months started from 01.08.2016 (i.e. from end of the month in which the order was passed by ITAT) and ended on 31.01.2017; therefore the M/A filed on 08.05.2017 was time-barred. Accordingly, the Hon’ble Pune Bench dismissed assessee’s M/A. This way, relying upon these judicial rulings, Ld. AR argued that in the present case too, the Revenue’s M/A must be dismissed. 6. Ld. DR, however, submitted that although the Bench passed impugned order on 31.01.2022, it was served upon Revenue on 28.04.2022. Ld. DR submitted that unless the order reaches to party, how it would come to know about the result of appeal and how it would take a conscious decision for filing of M/A, if required. Ld. DR placed a hypothetical but practical situation that supposedly the impugned Order would not have been served upto 31.08.2022, the time-limit for filing of M/A would have expired and in that case the Revenue would have been deprived from filing of M/A without any fault; wouldn’t it be illogical or illegal or absurd?. Ld. DR submitted that by the way in the present matter, the Revenue is concerned for filing of M/A but exactly same thing can happen with the assessee also. Therefore, Ld. DR prayed that the provision of section 254(2) should be interpreted in a manner which is practical, logical and which would provide the remedy and suppress the mischief. 7. Then, Ld. DR also relied upon the decision of Hon’ble Delhi High Court in the case of Pacific Projects Limited Vs. ACIT, W.P. (C) 2080/2020 & CM APPLs. 7346-7347/2020 dated 23.12.2020 wherein the Hon’ble High Court, while dealing with an identical issue, has held that Manish Kedia MANo.19/Ind/2022 Assessment year 2018-19 Page 4 of 7 the M/A filed within 6 months of the actual receipt of the order, is valid. For the sake of immediate reference, the said order is extracted below: “7. This Court is also of the view that the ITAT has erroneously concluded that the miscellaneous application filed by the petitioner was barred by limitation under Section 254(2) of the Act in as much as the petitioner had filed the miscellaneous application within six months of actual receipt of the order. If the petitioner/assessee had no notice and no knowledge of the order passed by the ITAT, it cannot be said that the limitation would start from the date the order was pronounced by the Tribunal. 8. In fact, the issue raised in the present petition is squarely covered in favour of the petitioner/assessee by way of the Division Bench judgment of this Court in ‘Golden Times Services Pvt. Ltd. Vs. DCIT’ being W.P. (C) No. 402/2020 dated 13 th January, 2020 wherein it has been held as under: “10. Be that as it may, the real question before us is as to what would be the relevant date for the purpose of commencement of period of limitation. To hold the date of the order to be the relevant date for the purpose of calculating the period of six months envisaged under Section 254(2) of the Act, can lead to several absurd and anomalous situations. An order passed without the knowledge of the aggrieved party, would render the remedy against the order meaningless as the same would be lost by limitation while the person aggrieved would not even know that an order has been passed. Such an interpretation would not advance the cause of justice and would not be the correct approach and thus cannot be countenanced. A person who is aggrieved or concerned with an order would legitimately be expected to exercise his rights conferred by the provision and unless the order is communicated or is known to him, either actually or constructively, he would not be in a position to avail such a remedy. The words “six months from the end of the month in which the order was passed” therefore, cannot be given a narrow and restrictive interpretation. There are several decisions of the Apex Court and other High Courts, where similar question came up for consideration. The Courts have always leaned in favour of an interpretation which would enable an aggrieved party to avail its remedy in a meaningful manner, so that the right conferred by a provision does not remain fanciful or illusionary. xxxx xxxx xxxx xxxx 12. As noted above, Section 254(2) of the Act has undergone certain amendments. However, there is no dispute that the provision still retains the distinctive two parts as observed by the Supreme Court in the above noted case. We are presently concerned with a scenario under Section 254(2) of the Act where the assessee has invoked its jurisdiction seeking rectification / amendment of the order passed by the ITAT. In this situation, the assessee has claimed that it did not have the knowledge of the earlier order passed by the ITAT on 18.10.2016 and the period of limitation of six months should commence from the date of the receipt of the order. In our opinion, the limitation would Manish Kedia MANo.19/Ind/2022 Assessment year 2018-19 Page 5 of 7 begin to run when the affected person has the knowledge of the decision. The date when the order was passed cannot be solely determined by referring to the date when the same was signed by the ITAT. We further find that under Section 254(3) of the Act, the law stipulates that the ITAT shall send a copy of the order passed by it to the assessee and the Principal Commissioner. Further, Rule 35 of the ITAT Rules also requires that the orders are required to be communicated to the parties. For ready reference, Section 254(3) of the Act and the relevant rule are reproduced hereinunder: “254. Orders of Appellate Tribunal. xxxx xxxx xxxx (3) The Appellate Tribunal shall send a copy of any orders passed under this section to the assessee and to the Principal Commissioner or Commissioner. 35. Order to be communicated to parties. The Tribunal shall, after the order is signed, cause it to be communicated to the assessee and to the Commissioner.” 13. From the abovenoted provisions, it emerges that the Section and the Rule mandates the communication of the order to the parties. Thus, the date of communication or knowledge, actual or constructive, of the orders sought to be rectified or amended under Section 254(2) of the Act becomes critical and determinative for the commencement of the period of limitation. The ITAT has not applied its mind on this aspect and has been swayed by the literal and mechanical construction of the words “six months from the end of the month in which the order was passed”. The ITAT failed to even delve into the question whether the affected party, either actually or constructively, was in knowledge of the order passed by the ITAT. xxxx xxxx xxxx xxxx 15. The assessee had challenged the ex parte order dated 18.10.2016 and consequently, keeping in view, the aforesaid decisions, we are of the considered opinion that the starting point of limitation provided under Section 254(2) of the Act has to commence from the date of the actual receipt of the judgment and order passed by the ITAT which is sought to be the reviewed.” 9. For the foregoing reasons, the course adopted by the ITAT at the first instance, by dismissing the appeal for non-prosecution, and then compounding the same by refusing to entertain the application for recall of the order, cannot be sustained. We, therefore have no hesitation in quashing the impugned order. Accordingly, the present petition is allowed. The order dated 29th July, 2019 is quashed and in the peculiar facts and circumstances of the case, we also set-aside the ex-parte order dated 1st September 2017 with a direction that the ITAT shall hear and dispose of ITA No. 6686/De1/2013 on merits after affording the parties an opportunity of hearing.” Manish Kedia MANo.19/Ind/2022 Assessment year 2018-19 Page 6 of 7 8. We have considered rival submissions of both sides and perused the provisions of section 254(2) in the light of decisions cited before us. After a mindful consideration, we find that the Hon’ble Delhi High Court in Pacific Projects Limited (supra) has made a detailed analysis of the provision of section 254(2) and categorically held that the time-limit of 6 months would have to be computed with reference to the actual receipt of order by the parties. We have also perused the decision of Hon’ble Punjab & Harayana High Court in Raja Malwinder Singh (supra) and find that the said decision was concerned with a different controversy and it did not deal the issue as to whether or not the time-limit shall be computed with reference to actual receipt of order by parties. Therefore, the said decision does not resolve the controversy involved in present-appeal. Another decision of ITAT, Pune in Shri Kasturilal Sardarilal Luthra, Nashik (supra) relied upon by Ld. AR has, though held that the time-limit cannot be reckoned from date of actual receipt of order, but the same is given by ITAT which is a lower forum than the Hon’ble High Court of Delhi. Therefore, we are duty bound to follow the judicial discipline and obey the decision of Hon’ble Delhi High Court in the case of Pacific Projects Limited (supra) which has clearly held that the time-limit has to be computed with reference to the date of receipt of order. No other decision of any High Court against this proposition held by Hon’ble Delhi High Court has been cited before us. Therefore, respectfully following the decision in Pacific Projects Limited (supra), we are inclined to hold that in the present case, the Revenue’s M/A filed on 25.08.2022 within 6 months with reference to the date of actual receipt of order by Revenue is valid. Consequently, the objection raised by Ld. DR is rejected. 9. Reverting back to the merit of application, it is undisputably agreed by both sides that the tax effect was more than Rs. 50 lakhs. Therefore, the original appeal of Revenue was maintainable and could not have been dismissed by ITAT. In such a situation, we are persuaded to admit this M/A and recall the impugned order dated 31.01.2022 passed ITAT, Indore. The registry shall list the original appeal for hearing after due notices to parties. Manish Kedia MANo.19/Ind/2022 Assessment year 2018-19 Page 7 of 7 10. Resultantly, this Misc. Application is allowed. Order pronounced in the open court on 26/05/2023. Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on ....../....../2023. Sd/- Sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 26.05..2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore 1. Date of taking dictation 2. Date of typing & draft order placed before the Dictating Member 3. Date on which the approved draft comes to the Sr. P.S./P.S. 4. Date on which the approved draft is placed before other Member 5. Date on which the fair order is placed before the Dictating Member for pronouncement 6. Date on which the file goes to the Bench Clerk 7. Date on which the file goes to the Head Clerk 8. Date on which the file goes to the Assistant Registrar for signature on the order 9. Date of dispatch of the Order