Sri.Venkataramanappa, Bangalore V. The Income Tax Officer Ward-3(2)(3), Bangalore

MA 2/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5250 (ITAT-BANGALORE)
• Duration Of Justice: 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-02-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 12-01-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Question of law; Set aside
• Section: 148; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P. No.2/Bang/2022 [in ITA No. 304/Bang/2018] Assessment year: 2009-10 Sri Venkataramanappa, Kanminike Village, Kengeri Hobli, Bangalore South Taluk, Bangalore – 560 039. PAN: BBAPV 2308C Vs. The Income Tax Officer, Ward 3(2)(3), Bangalore. APPELICANT RESPONDENT Appellant by : Shri Ravi Shankar, Advocate Respondent by : None Date of hearing : 04.02.2022 Date of Pronouncement : 08.02.2022 O R D E R Per Chandra Poojari, Accountant Member By this miscellaneous petition, the assessee seeks to recall the order of the Tribunal dated 17.09.2021 in ITA No.304/Bang/2018. 2. The ld. AR submitted that one of the grounds raised by the assessee before the Tribunal was in respect of reopening of the assessment in ground No.3(n) which reads as follows:- MP 02/B/2022 Page 2 of 10 “3. n) The assessment order is further bad in law as the objections to the reasons under section 148 have not been disposed of by a speaking order and hence contrary to law and on this count also the assessment is liable to be cancelled on the facts and circumstance of the case.” 3. The ld. AR submitted that the assessee has argued the legal issues raised and also on the merits of the matter, by relying upon various authorities and records. The primary issue argued before this Bench in the appeal is with regard to the short point of whether the assessment order was non-est, when the objections raised against the reopening, were not disposed of by way of a speaking order and no further opportunity shall be granted to pass a fresh order of assessment. 4. The assessee has relied upon the binding decision of the jurisdictional High Court in Deepak Extrusions (P.) Ltd. v. Deputy Commissioner of Income-tax, Central Circle 1(4), Bangalore [2017] 80 taxmann.com 77 (Karnataka),which has quashed the order of the AO, for not disposing objections, by way of a separate order. He has also relied upon a decision of the Bangalore Tribunal, in the case of Sri Lakshmana, in ITA No. 382/Bang/2018, dt: 28/07/2021, which was allowed on similar set of facts, by following the decision of the jurisdictional High Court, both of which has been noted in the order passed at page No. 6, by way of a tabulated chart. 5. The ld. AR submitted that, however, the appeal has been remanded to the file of the Assessing officer, to dispose of the objections raised to the reopening of the assessment. The decision rendered is diametrically opposite to the binding decision rendered by the High Court of Karnataka, in the case of Deepak Extrusions (P.) Ltd. v. Deputy Commissioner of MP 02/B/2022 Page 3 of 10 Income-tax, Central Circle 1(4), Bangalore [2017] 80 taxmann.com 77 (Karnataka) wherein it was observed as follows:- “11. If the facts of the present case are examined in the light of aforesaid legal position, it is an admitted position that the reasons for re-opening of the assessment by issuing of the notice under Section 148 of the Act were supplied to the appellant assessee. It is also admitted position that the appellant assessee after receipt of such reasons raised objections. It is also undisputed position that the Assessing Officer did not dispose of the objections prior to proceeding with the assessment further and proceeded to pass the order for assessment. Under the circumstances, it can be said that the mandatory procedure of disposal of the objection by Assessing Officer before proceeding with the assessment has not been followed and exercise of power can be said as not only vitiated, but the order of assessment cannot be sustained.(emphasis supplied) 12. If the decision of the Assessing Officer is illegal on the face of it, in our view, it would fall in the exceptional category of making departure from the normal principles of self impose limitation of not to interfere in a matter where there is existence of alternative statutory remedy. 13. In view of the aforesaid, the impugned order passed by the learned Single Judge is set aside. The impugned order of assessment is also set aside. It is observed that the Assessing Officer shall be at liberty to proceed in the matter in accordance with law. The appeal is allowed to the aforesaid extent.” 6. He submitted that the intention of the High court in stating that the assessment order and order of the single judge, is set aside, would only mean to having been quashed. The Tribunal has followed the same proposition in the case of Sri Lakshmana (supra). The prayer of the assessee was that following the decision in Deepak Extrusions (P) Ltd., (supra), the impugned order has to be quashed. MP 02/B/2022 Page 4 of 10 7. The ld. AR submitted that however, this hon’ble Tribunal has not followed a binding decision of the jurisdictional High court in Deepak Extrusions (P.) Ltd, supra, and also a decision of the Jurisdictional Tribunal in the case of Lakshmana (supra) which renders the impugned order erroneous and amounts to a mistake apparent from record. 8. The ld. AR further submitted that the decisions extracted in the impugned order were not relied upon by the revenue nor was it put forth to the petitioner to make a rebuttal, during arguments or later on. The decisions cited by the Tribunal and the assessee’s submissions are as follows:- A. Para 10 (i) page 10 of 17 ACIT V Mukut Mahal Pvt Ltd, ITA No. 226/Del/2012, dt: 23/11/2012 B. Para 10 (ii) page 14 of 17 Hajee Hameed V DCIT, 511 to 516/Bang/2009 and 552 to 557/Bang/2009, dt: 28/09/2011. The petitioner has relied upon a binding decision of the jurisdictional High court in Deepak extrusions, supra, dt:15/03/2017, which is a subsequent and binding decision. C. Para 10 (iii) page 15 of 17 ACIT v M R Seetharam ITA 1220/Bang/2015, dt;27/10/2017 The order of the High court in Deepak Extrusions (P.) Ltd, dt: 15/03/2017 was not relied upon during the course of arguments and considered by the Tribunal in the case of M R MP 02/B/2022 Page 5 of 10 Seetharam (supra), hence the said case law cannot be said to be laying down the correct proposition. Further, considering the supreme court order in ACIT Vs. Saurashtra Kutch Stock Exchange Ltd., reported in 305 ITR 227 (SC) (2008), the above case law would also amount to a mistake apparent and was amenable to a rectification. Hence the decision in M R Seetharam, supra, cannot be said to be laying down good law. 9. In the alternative it is submitted that the case laws relied upon by the Tribunal in its order are distinguishable and further the petitioner submits that a fair opportunity for making submissions in respect of the above grounds be given to the assessee-appellant / Respondent, since the assessee-appellant / Respondent was not put to notice about the decisions relied upon by this Tribunal in the interest of justice and equity. 10. The petitioner places reliance upon the decision of the Apex court in ACIT Vs. Saurashtra Kutch Stock Exchange Ltd., reported in 305 ITR 227, in which case the Apex Court as well as the High Court of Gujarat, regarding a recall of an order, which was passed without appreciating a binding decision of the jurisdictional High Court, as being a mistake apparent on record to attract section 254(2) of the income Tax Act, 1961 which held as below:- “40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a "mistake apparent from the record"? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a "mistake apparent from the record" which could be rectified under section 254(2). MP 02/B/2022 Page 6 of 10 47. In the present case, according to the assessee, the Tribunal decided the matter on October 27, 2000. Hiralal Bhagwati was decided few months prior to that decision, but it was not brought to the attention of the Tribunal. In our opinion, in the circumstances, the Tribunal has not committed any error of law or of jurisdiction in exercising power under sub-section (2) of section 254 of the Act and in rectifying "mistake apparent from the record". Since no error was committed by the Tribunal in rectifying the mistake, the High Court was not wrong in confirming the said order. Both the orders, therefore, in our opinion, are strictly in consonance with law and no interference is called for.” 11. In view of the above submissions, it was submitted that the non- appreciation of the binding decision of the jurisdictional High Court and the earlier decision of the coordinate Bench of this Tribunal as regards the non -disposal of the objections by way of a separate speaking order and consequence thereof wherein the Tribunal has cancelled the assessment as bad in law, this Bench ought to have followed the said decision or ought to have referred the said issue to a larger bench following the decision of the Delhi High Court in the case of DLF Universal reported in 172 Taxman 107 [DEL]. 12. Thus, there is a mistake apparent on record and it is prayed that the order of the Tribunal may be recalled for rectification to consider the decision of the High Court of Karnataka in Deepak Extrusions (P.) Ltd, (supra) and quash the assessment order. 13. On the other hand, none appeared for the department. 14. We have heard both the parties and perused the material on record. The main plea of the assessee is that the Tribunal overlooked the judgment of the jurisdictional High Court in the case of Deepak Extrusions (P.) Ltd., 80 taxmann.com 77 (Kar). As such there is a mistake apparent on record. MP 02/B/2022 Page 7 of 10 In our opinion, the Tribunal has carefully considered the above judgment and observed that the issue has to go back to the file of the Assessing Officer to pass a separate speaking order on the objections raised by the assessee. The Tribunal took such a view on the reason that in this case, the AO duly considered the objections and disposed of the same by discussing it in the assessment order itself. The Tribunal was of the opinion that he should have disposed it by a separate speaking order instead of disposing the petition in the assessment order itself. That would not lead to the nullity of the order. Now the contention of the ld. AR is that this finding of the Tribunal is incorrect in view of the judgment of the jurisdictional High Court in the case of Deepak Extrusions (P.) Ltd. (supra). In the case of Deepak Extrusions (P.) Ltd. (supra), jurisdictional High Court quashed the reassessment order on the reason that the AO did not dispose of the objections prior to the assessment proceedings and he proceeded to pass the assessment order. This is evident from para 11 of that judgment. For clarity, we reproduce the same hereinbelow:- “11. If the facts of the present case are examined in the light of aforesaid legal position, it is an admitted position that the reasons for re-opening of the assessment by issuing of the notice under Section 148 of the Act were supplied to the appellant assessee. It is also admitted position that the appellant assessee after receipt of such reasons raised objections. It is also undisputed position that the Assessing Officer did not dispose of the objections prior to proceeding with the assessment further and proceeded to pass the order for assessment. Under the circumstances, it can be said that the mandatory procedure of disposal of the objection by Assessing Officer before proceeding with the assessment has not been followed and exercise of power can be said as not only vitiated, but the order of assessment cannot be sustained.” 15. Being so, in our opinion, that judgment is of no assistance to the assessee. Failure to consider a decision or fact relied upon by a party to the appeal may not amount to a mistake apparent from the record so as to MP 02/B/2022 Page 8 of 10 attract the provisions of section 254(2) of the Act. Considering and discussing such decision or fact by the Tribunal in its order and arriving at a conclusion based on the same cannot be said to be a mistake apparent on the record warranting any rectification by the Tribunal in exercise of its powers u/s. 254(2) of the Act. For this purpose, we place reliance on the judgment of the jurisdictional High Court in the case of CIT v. McDowell & Co. Ltd., 310 ITR 215 (Kar) wherein it was held as under:- “8. We are not concerned in this appeal with the question: "whether the said expenditure has to be treated as 'revenue in nature' as contended by the assessee-company or as 'capital in nature'" as contended by the revenue. But we are concerned only with the question "whether the Tribunal was justified in reversing its findings recorded in its earlier order dated 25-9-2000 in exercise of its power under section 254(2) of the Income-tax Act?" Therefore, we need not discuss in detail the principles laid down in the said three decisions. ......... 12. Application of the principles laid down by the superior courts, to the facts of the case before the Tribunal on erroneous understanding of such principles; recording of an erroneous finding by it based on the facts on record; arriving at a conclusion on erroneous application of provisions of law to the facts of the case, etc., cannot be held to be 'a mistake apparent from the record' warranting any rectification by the Tribunal in exercise of its power under section 254(2) of the Income-tax Act, by reconsidering the application of principles of superior courts to the facts of the case or by reconsidering its findings recorded, or by reconsidering the application of the relevant provisions of law to the facts of the case as is done by the Tribunal in the instant case. Such an exercise of power under section 254(2) of the Act amounts to review of its earlier order on merits but not 'rectification of mistake apparent from the record' and such review would certainly be beyond the scope of section 254(2) of the Income-tax Act. Therefore, we are of the considered view that by passing the impugned order dated 23-10-2002 on the said miscellaneous petition of the assessee-company, the Tribunal, in MP 02/B/2022 Page 9 of 10 exercise of its power under section 254(2) of the Income-tax Act, whereunder it reviewed its earlier order dated 25-9-2000 and reversed its findings recorded under it. As such, the impugned order deserves to be set aside by allowing this appeal. Therefore, substantial question of law that has emerged in this appeal for our consideration and decision is answered in the 'negative' and in favour of the appellant-revenue.” 16. Since we have observed that the judgment relied on by the ld. counsel for the assessee in the case of Deepak Extrusions (P.) Ltd. (supra) is not applicable to the facts of the assessee’s case, the Supreme Court judgment in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd., reported in 305 ITR 227 (SC) (2008) is of no assistance to the assessee. 17. In our opinion, the scope of rectification is confined to mistake apparent on the face of the record and not a mistake with regard to debatable questions, where a conscious decision has been taken. Reference may be made to the judgment of Hon’ble Supreme Court in the case of Deva Metal Powders (P.) Ltd. v. Commissioner, Trade of Tax, U.P., 2 SCC 439 (SC). 18. In the present case, a reading of the application itself shows that instead of pointing out a mistake apparent on record, the ld. AR attempts to argue out a case for review or re-writing of the order of the Tribunal. The entire arguments of the ld. AR was not to point out any obvious or patent mistake to be rectified, but to make out a case for re-argument, which cannot be permitted u/s. 254(2) of the Act. 19. In our opinion, there is no mistake apparent on the record in the present case so as to exercise jurisdiction u/s. 254(2) of the Act for rectification of the order of the Tribunal. Accordingly, the miscellaneous petition is rejected. MP 02/B/2022 Page 10 of 10 20. In the result, the miscellaneous petition by the assessee is dismissed. Pronounced in the open court on this 8 th day of February, 2022. Sd/- Sd/- ( BEENA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore, Dated, the 8 th day of February, 2022. /Desai S Murthy / Copy to: 1. Applicant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore.