AI Insights
The case revolves around a Miscellaneous Application by M/s Redwook I.T. Services Pvt. Ltd., seeking recall of an order from the Income Tax Appellate Tribunal, Mumbai. The original appeal concerned penalties under sections 271D and 271E of the Income-tax Act, 1961, related to journal entries. The assessee argued that the Tribunal had not considered their oral plea invoking Rule 27 during the appeal, which constituted a mistake apparent from the record. The Tribunal acknowledged the oversight and recalled the order to allow for the adjudication of the assessee's plea regarding reasonable cause for non-compliance with sections 269SS and 269T.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 123681 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
6 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
19-02-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
H
Next Hearing Date
02-02-2023
Assessment Year
2013-2014
Appeal Filed On
04-08-2022
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H” MUMBAI BEFORE SHRI ABY T VARKEY (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) M.A. No. 213/MUM/2022 (Arising out of ITA No. 1643/MUM/2021) Assessment Year: 2013-14 M/s Redwood I.T. Services Pvt. Ltd., D-211, Ghatkopar Industrial Estate, Behind R-City Mall Off LBS Marg, Ghatkopar-West, Mumbai-400086. Vs. ACIT, Circle-14(1)(2), Room No. 455, 4 th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN No. AADCR 7296 K Appellant Respondent Assessee by : Mr. J.D. Mistry Revenue by : Mr. Manoj Kumar Sinha, CIT-DR Date of Hearing : 03/02/2023 Date of pronouncement : 20/02/2023 ORDER PER OM PRAKASH KANT, AM This Miscellaneous Application by the assessee has been preferred seeking recall/rectification of the order of the Tribunal dated 05.07.2022 passed in ITA No. 1643/Mum/2021 for assessment year 2013-14. 2. The Ld. Counsel of the assessee referred to the Miscellaneous Application filed by the assessee and submitted that the Tribunal while adjudicating the appeal of the Revenue has not decided the plea of invoking Rule 27 of the ITAT Rules, 1963 raised orally assessee, which amounts to a mistake apparent f therefore, the order of the Tribunal need to be recalled for adjudication of said plea. 3. The Ld. Counsel of the assessee referred to the decision of the Hon’ble High Court of Gujarat in the case of Kharid Vechan Sangh Ltd. v. C (Gujarat). 4. We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. The Revenue in its appeal raised the issue journal entries are liable for penalty u/s 271D & 271E respectively of the Income-tax Act, 1961 (in short ‘the Act’), i the Hon’ble Bombay High Court in the case of International Finance India Ltd 345 ITR 270 of the assessee that the assessee raised issue of reasonable cause for not complying the said provisions of the Act. The contention of the assessee that a plea was raised by way of oral submission however the Tribunal has held that no Rule 27 by the assessee and therefore did not adjudicate on the plea of the assessee M/s Redwook I.T. while adjudicating the appeal of the Revenue has not decided the plea of invoking Rule 27 of the ITAT Rules, 1963 raised orally amounts to a mistake apparent f order of the Tribunal need to be recalled for of said plea. The Ld. Counsel of the assessee referred to the decision of the Hon’ble High Court of Gujarat in the case of Dahod Sahakari Kharid Vechan Sangh Ltd. v. CIT [2005] 149 Taxman 456 We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. The Revenue in its appeal raised the issue of loan given or accepted through are liable for penalty u/s 271D & 271E respectively Act, 1961 (in short ‘the Act’), in view of decision of the Hon’ble Bombay High Court in the case of International Finance India Ltd 345 ITR 270 but the contention e that the assessee raised issue of reasonable cause for not complying the said provisions of the Act. The contention of the assessee that a plea was raised by way of oral submission however the Tribunal has held that no application by the assessee and therefore did not adjudicate on the plea of the assessee of existence of reasonable cause for M/s Redwook I.T. Services Pvt. Ltd. MA No. 213/M/2021 2 AY 2013-14 while adjudicating the appeal of the Revenue has not decided the plea of invoking Rule 27 of the ITAT Rules, 1963 raised orally by the amounts to a mistake apparent from record, order of the Tribunal need to be recalled for The Ld. Counsel of the assessee referred to the decision of the Dahod Sahakari IT [2005] 149 Taxman 456 We have heard rival submission of the parties on the issue-in- dispute and perused the relevant material on record. The Revenue loan given or accepted through are liable for penalty u/s 271D & 271E respectively view of decision of the Hon’ble Bombay High Court in the case of Triumph but the contention e that the assessee raised issue of reasonable cause for not complying the said provisions of the Act. The contention of the assessee that a plea was raised by way of oral submission was filed under by the assessee and therefore did not adjudicate on the reasonable cause for non- compliance of provision of section 269SS/269T of the Act. The relevant finding of the Tribunal is reproduced as under: “11.6 In the case, before us by way of appeal or cross under Rule 27 of the ITAT Rules to support existence of reasonable cause. The Department has challenged the finding of the Ld. CIT(A) wherein it is held that receipt/payment of loan by way of not in contravention of 269SS or 269T provisions. Therefore, we are restricted to decide the ground of the Department only. The finding of the Ld. CIT(A) is contrary to the decision of the Hon’ble Jurisdiction High Court and therefore liable to set aside. We order accordingly.” 4.1 We find that the Hon’ble Gujarat High Court in the case of Dahod Sahakari Kharid Vechan Sangh Ltd. (supra) has held that the assessee is entitled to support the order of the Commis the appeals by such challenging the finding invoking Rule 27 of the Income-tax Appellate Tribunal Rules. The relevant part of the Hon’ble High Court is reproduced as under: “12. In relation to the observation of the Tribunal that the finding of C guilty of concealing particulars of income and / or furnishing inaccurate particulars of income remained unchallenged in absence of any cross objection filed by the assessee, Mr. Shah submitted that the Tribunal h failed to take into consideration Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 (the Tribunal Rules). That as per Rule 27 of the Tribunal rules, a respondent is entitled to support the order appealed against on any of the grounds decided ag respondent, even though the respondent may not have appealed against such an order. He, therefore, urged that the assessee was entitled to support the order of M/s Redwook I.T. compliance of provision of section 269SS/269T of the Act. The relevant finding of the Tribunal is reproduced as under: In the case, we find that assessee is neither before us by way of appeal or cross-objection or even under Rule 27 of the ITAT Rules to support existence of reasonable cause. The Department has challenged the finding of the Ld. CIT(A) wherein it is held that yment of loan by way of journal (Sic) entry is not in contravention of 269SS or 269T provisions. Therefore, we are restricted to decide the ground of the Department only. The finding of the Ld. CIT(A) is contrary to the decision of the Hon’ble Jurisdiction High Court and therefore liable to set aside. We order accordingly.” We find that the Hon’ble Gujarat High Court in the case of Dahod Sahakari Kharid Vechan Sangh Ltd. (supra) has held that the assessee is entitled to support the order of the Commis the appeals by such challenging the finding invoking Rule 27 of the tax Appellate Tribunal Rules. The relevant part of the Hon’ble High Court is reproduced as under: 12. In relation to the observation of the Tribunal that the finding of CIT (A) to the effect that the assessee was guilty of concealing particulars of income and / or furnishing inaccurate particulars of income remained unchallenged in absence of any cross objection filed by the assessee, Mr. Shah submitted that the Tribunal h failed to take into consideration Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 (the Tribunal Rules). That as per Rule 27 of the Tribunal rules, a respondent is entitled to support the order appealed against on any of the grounds decided against the respondent, even though the respondent may not have appealed against such an order. He, therefore, urged that the assessee was entitled to support the order of M/s Redwook I.T. Services Pvt. Ltd. MA No. 213/M/2021 3 AY 2013-14 compliance of provision of section 269SS/269T of the Act. The relevant finding of the Tribunal is reproduced as under: we find that assessee is neither objection or even under Rule 27 of the ITAT Rules to support existence of reasonable cause. The Department has challenged the finding of the Ld. CIT(A) wherein it is held that entry is not in contravention of 269SS or 269T provisions. Therefore, we are restricted to decide the ground of the Department only. The finding of the Ld. CIT(A) is contrary to the decision of the Hon’ble Jurisdictional High Court and therefore liable to set aside. We order We find that the Hon’ble Gujarat High Court in the case of Dahod Sahakari Kharid Vechan Sangh Ltd. (supra) has held that the assessee is entitled to support the order of the Commissioner in the appeals by such challenging the finding invoking Rule 27 of the tax Appellate Tribunal Rules. The relevant part of the 12. In relation to the observation of the Tribunal that IT (A) to the effect that the assessee was guilty of concealing particulars of income and / or furnishing inaccurate particulars of income remained unchallenged in absence of any cross objection filed by the assessee, Mr. Shah submitted that the Tribunal has failed to take into consideration Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 (the Tribunal Rules). That as per Rule 27 of the Tribunal rules, a respondent is entitled to support the order appealed ainst the respondent, even though the respondent may not have appealed against such an order. He, therefore, urged that the assessee was entitled to support the order of Commissioner (Appeals) by challenging the aforesaid finding.” 4.2 Further, we find tha of Sanjay Sawhney v. PCIT in decision in ITA No. 834/2019 that assessee can raise relevant finding of the Hon’ble Delhi High Court is reproduced as under: “26. The upshot of the above discussion is that Rule 27 embodies a fundamental principal that a Respondent who may not have been aggrieved by the final order of the Lower Authority or the Court, and therefore, has not filed an appeal against the same, is en such an order before the Appellate forum on all grounds, including the ground which has been held against him by the Lower Authority, though the final order is in its favour. In the instant case, the Assessee was not an aggrieved party, as in the ultimate analysis. Not having filed a cross objection, even when the appeal was preferred by the Revenue, it does not mean that an inference can be drawn that the Respondent findings in part of the final order, that was decided against him. Therefore, when the Revenue filed an appeal before the ITAT, the Appellant herein (Respondent before the Tribunal) was entitled under law to defend the same and support the order in appeal on any of the grounds decided against it. The Respondent assessee had taken the ground of maintainability before Commissioner (Appeals) and, therefore, in the appeal filed by the Revenue, it could rely upon Rule 27 and advance his arguments, even though it had not filed cross objections against the findings which were against him. The ITAT, therefore, committed a mistake by not permitting the assessee to support the final order of CIT (A), by assailing the findings of the CIT(A) on the issues that had been decided a The Appellant M/s Redwook I.T. Commissioner (Appeals) by challenging the aforesaid Further, we find that the Hon’ble Delhi High Court in the case Sanjay Sawhney v. PCIT in decision in ITA No. 834/2019 that assessee can raise Rule 27 by way of oral application also. The relevant finding of the Hon’ble Delhi High Court is reproduced as 26. The upshot of the above discussion is that Rule 27 embodies a fundamental principal that a Respondent who may not have been aggrieved by the final order of the Lower Authority or the Court, and therefore, has not filed an appeal against the same, is entitled to defend such an order before the Appellate forum on all grounds, including the ground which has been held against him by the Lower Authority, though the final order is in its favour. In the instant case, the Assessee was not an aggrieved party, as he had succeeded before the CIT (A) in the ultimate analysis. Not having filed a cross objection, even when the appeal was preferred by the Revenue, it does not mean that an inference can be drawn that the Respondent- assessee had accepted the part of the final order, that was decided against him. Therefore, when the Revenue filed an appeal before the ITAT, the Appellant herein (Respondent before the Tribunal) was entitled under law to defend the same and support the order in appeal on he grounds decided against it. The Respondent assessee had taken the ground of maintainability before Commissioner (Appeals) and, therefore, in the appeal filed by the Revenue, it could rely upon Rule 27 and advance his arguments, even though it had not filed cross objections against the findings which were against him. The ITAT, therefore, committed a mistake by not permitting the assessee to support the final order of CIT (A), by assailing the findings of the CIT(A) on the issues that had been decided against him. Appellant - assessee, as a Respondent before the M/s Redwook I.T. Services Pvt. Ltd. MA No. 213/M/2021 4 AY 2013-14 Commissioner (Appeals) by challenging the aforesaid t the Hon’ble Delhi High Court in the case Sanjay Sawhney v. PCIT in decision in ITA No. 834/2019 held Rule 27 by way of oral application also. The relevant finding of the Hon’ble Delhi High Court is reproduced as 26. The upshot of the above discussion is that Rule 27 embodies a fundamental principal that a Respondent who may not have been aggrieved by the final order of the Lower Authority or the Court, and therefore, has not titled to defend such an order before the Appellate forum on all grounds, including the ground which has been held against him by the Lower Authority, though the final order is in its favour. In the instant case, the Assessee was not an he had succeeded before the CIT (A) in the ultimate analysis. Not having filed a cross objection, even when the appeal was preferred by the Revenue, it does not mean that an inference can be assessee had accepted the part of the final order, that was decided against him. Therefore, when the Revenue filed an appeal before the ITAT, the Appellant herein (Respondent before the Tribunal) was entitled under law to defend the same and support the order in appeal on he grounds decided against it. The Respondent - assessee had taken the ground of maintainability before Commissioner (Appeals) and, therefore, in the appeal filed by the Revenue, it could rely upon Rule 27 and advance his arguments, even though it had not filed cross objections against the findings which were against him. The ITAT, therefore, committed a mistake by not permitting the assessee to support the final order of CIT (A), by assailing the findings of the CIT(A) on the gainst him. assessee, as a Respondent before the ITAT was entitled to agitate the jurisdictional issue relating to the validity of the reassessment proceedings. We are, therefore, of the considered opinion that the impugned order passed by from perversity in so far as it refused to allow the Appellant Tribunal) to urge the grounds by way of an oral application under Rule 27. framed is answered in favour of the Appellan assessee and resultantly the impugned order is set aside. The matter is remanded back before the ITAT with a direction to hear the matter afresh by allowing the Appellant under Rule 27 of the ITAT Rules, perta relating to the assumption of jurisdiction and the validity of the reassessment proceedings under 153C of the Act. 4.3 Further the Hon’ble Punjab and No. 445 of 2015 in order dated 16.09.2016 held that additional ground can be raised even by way of oral request. 4.4 In view of the above binding precedent that due to non-adjudicating of the oral plea of invoking Rule 27 of the ITAT Rule, the order of the Tribunal. Accordingly, we recall Tribunal for adjudicating the plea of the assessee of existence of reasonable cause for violation of sect invoking Rule 27 of the ITAT Rules. 4.5 The Registry is directed to fix the appeal in regular course and intimate the parties accordingly M/s Redwook I.T. ITAT was entitled to agitate the jurisdictional issue relating to the validity of the reassessment proceedings. We are, therefore, of the considered opinion that the impugned order passed by the ITAT suffers from perversity in so far as it refused to allow the Appellant - assessee (Respondent before the Tribunal) to urge the grounds by way of an oral application under Rule 27. The question of law as framed is answered in favour of the Appellan assessee and resultantly the impugned order is set aside. The matter is remanded back before the ITAT with a direction to hear the matter afresh by allowing the Appellant- assessee to raise the additional grounds, under Rule 27 of the ITAT Rules, pertaining to issues relating to the assumption of jurisdiction and the validity of the reassessment proceedings under Section of the Act.” (emphasis supplied externally) Further the Hon’ble Punjab and Haryana High Court in ITA No. 445 of 2015 in order dated 16.09.2016 held that additional ground can be raised even by way of oral request. In view of the above binding precedents, we are of the opinion adjudicating of the oral plea of the assessee for voking Rule 27 of the ITAT Rule, there is a apparent mistake in ibunal. Accordingly, we recall the order of the Tribunal for adjudicating the plea of the assessee of existence of reasonable cause for violation of section 269SS/269T of the Act invoking Rule 27 of the ITAT Rules. The Registry is directed to fix the appeal in regular course and accordingly. M/s Redwook I.T. Services Pvt. Ltd. MA No. 213/M/2021 5 AY 2013-14 ITAT was entitled to agitate the jurisdictional issue relating to the validity of the reassessment proceedings. We are, therefore, of the considered opinion that the ITAT suffers from perversity in so far as it refused to allow the assessee (Respondent before the Tribunal) to urge the grounds by way of an oral The question of law as framed is answered in favour of the Appellant - assessee and resultantly the impugned order is set aside. The matter is remanded back before the ITAT with a direction to hear the matter afresh by allowing assessee to raise the additional grounds, ining to issues relating to the assumption of jurisdiction and the Section (emphasis supplied externally) High Court in ITA No. 445 of 2015 in order dated 16.09.2016 held that additional , we are of the opinion the assessee for here is a apparent mistake in the order of the Tribunal for adjudicating the plea of the assessee of existence of ion 269SS/269T of the Act, The Registry is directed to fix the appeal in regular course and 5. In the result, the Miscellaneous Application filed by the assessee is allowed as abov Order pronounced Sd/- (ABY T VARKEY JUDICIAL MEMBER Mumbai; Dated: 20/02/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// M/s Redwook I.T. In the result, the Miscellaneous Application filed by the assessee is allowed as above. Order pronounced in the open Court on 20/02/2023. Sd/- ABY T VARKEY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s Redwook I.T. Services Pvt. Ltd. MA No. 213/M/2021 6 AY 2013-14 In the result, the Miscellaneous Application filed by the 02/2023. - OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai
Other Referred Cases
Kharid Vechan Sangh Ltd. v. CIT, International Finance India Ltd 345 ITR 270, Dahod Sahakari Kharid Vechan Sangh Ltd. v. CIT [2005] 149 Taxman 456, Sanjay Sawhney v. PCIT
Laws Referred To
Income-tax Act, 1961
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