MEASAGE SSTOCK EXCHANGE CUSTMER PROTECTION FUND, LUDHIANA V. INCOME TAX OFFICER ( EXEMPTION) WARD, JALANDHAR

MA 27/ASR/2023

AI Insights

The case involves M/s Stock Exchange Customer Protection Fund appealing against the Income Tax Officer (Exemptions), Jalandhar, concerning the dismissal of their appeals by the ITAT on grounds of limitation. The assessee argued that they were unaware of the ITAT's original order until a later date, claiming the limitation period should start from the date of receipt of the order, not the date it was passed. The Tribunal, referencing decisions from the Bombay High Court and the Supreme Court, upheld the dismissal of the applications, emphasizing that the powers under section 254(2) are limited to rectifying mistakes apparent from the record and do not extend to recalling orders unless within the specified limitation period.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114766 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 15-02-2023
• Other Referred Cases: Golden Times Services (P) Ltd. vs DCIT, Bharat Petroleum Corpn. Ltd. v. ITAT, Ms. Shamsunissa Begum vs. Deputy Commissioner of Income-tax Circle 11(1), Bengaluru, Reliance Telecom Ltd. v. Commissioner of Income Tax (IT-4), Mumbai
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: BOHNIMAAN DUTTA; MANAGER
• Keywords: Period of limitation; Condonation of delay; Set aside
• Section: 12; 11; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER M. A. Nos. 23 to 27/Asr/2023 (Arising out of ITA Nos. 646,159,160, 260 &457/Asr/2016 to 2018 & 2019) Assessment Years: 2009-10 to 2011-12 & 2014-15 to 2015-16 M/s Stock Exchange Customer Protection Fund, LSE Building, Feroze Gandhi Market, Ludhiana [PAN: AAHTS 2730E] Vs. Income Tax Officer (Exemptions), Jalandhar (Appellant) (Respondent) Appellant by : Sh. J. K. Gupta, Adv. & Sh. Bohnimaan Dutta, Manager Respondent by: Sh. Rajiv Wadhera, Sr. DR Date of Hearing: 27.07.2023 Date of Pronouncement: 04.08.2023 ORDER Per Dr. M. L. Meena, AM: The captioned Miscellaneous Applications are arising out the order of the ITAT dated 23.06.2022 in ITA Nos. 646,159,160, 260 &457/Asr/2016 to 2018 & 2019 in respect of Assessment Years: 2009-10 to 2011-12 & 2014- 15 to 2015-16. MA Nos. 23 to 27/Asr/2023 Stock Exchange C. P. Fund v. ITO Page 2 2. On identical facts, the assessee has pleaded for condonation of delay in filing the MA’s and merits with support of written note which reads as under: 1. That the aforesaid appeal was fixed for hearing on 09.05.2022 and dismissed on 23.06.2022. 2. That the assessee filed the miscellaneous application for restoration of appeal through registered post on 14.02.2023 which was received by your office on 16.02.2023. The proof of delivery through postal record enclosed. 3. That the same was rejected on the ground that the same are filed beyond limitation period as prescribed u/s 254(2) of the Income tax Act, 1961 vide letter Dated 09.03.2023 and received by assessee on 13.03.2023. 4. That no hearing was provided for the rejection of restoration application which is against natural law and justice. 5. That the application has been rejected by the ITAT by considering the date of the order passed (23.06.2022) by the ITAT as the starting point of limitation in submitting the miscellaneous application and not the date of the receipt of the order, which according to the assessee was 25.08 2022, the date wherefrom it gained knowledge of the order. Thus, no attempt was made by the ITAT to ascertain the date of actual receipt of the order passed by the ITAT and the ITAT has proceeded to hold the application to be barred by limitation as provided under Section 254(2) of the Act. 6. That it is pointed out that section 254(2) of the Act was amended by the Finance Act, 2016 w.e.f. 01.06.2016 and the words “four years from the date of the order” were substituted by “six months from the end of the month in which the order was passed”. The explanatory notes to the provisions of the Finance Act, 2016, do not throw much light for the purpose of the amendment, except for stating that the period of limitation has been shortened in order to bring certainty to the orders of the ITAT. MA Nos. 23 to 27/Asr/2023 Stock Exchange C. P. Fund v. ITO Page 3 That 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. In this situation, the assessee has rightly claimed that it did not have the knowledge of the earlier order passed by the ITAT on 23.06.2022 and the period of limitation of six months should commence from the date of the receipt of the order i.e. 25.08.2022. 7. That it is further pointed out that u/s 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. Thus, the date of communication or knowledge, actual or constructive, of the orders sought to be rectified or amended u/s 254(2) of the Act becomes critical and determinative for the commencement of the period of limitation. The ITAT has not considered 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. Reliance is placed on the latest and direct judgment of Delhi High Court in the case Golden Times Services (P) Ltd. vs DCIT reported at 422 ITR 102 (Delhi) dated 13.01. 2020. Copy enclosed for ready reference. It is, therefore, requested that the miscellaneous application may kindly be restored and fixed for hearing and provide justice to the assessee as no one should be condemned unheard is the basic principle of law which should not be put to winds.” 3. Following the Hon’ble Bombay High Court judgement delivered in the case of “Bharat Petroleum Corpn. Ltd. v. ITAT”, [2013] 359 ITR 371/[2014] 42 taxmann.com 25 (Bombay); the ITAT Bangolore Bench ‘A’, in the case of Ms. Shamsunissa Begum vs. Deputy Commissioner of Income-tax Circle MA Nos. 23 to 27/Asr/2023 Stock Exchange C. P. Fund v. ITO Page 4 11(1), Bengaluru* vide para (para 5 & 6), on identical facts dismissed the MA of the appellant by observing as under: 5. We have no doubt in our mind that there is an apparent mistake in the order dated 07.04.2016 as the Tribunal has not decided the appeals of the assessee on merit but dismissed the same inlimini for want of prosecution. However, the question of rectification of mistake cannot be entertained until and unless the Miscellaneous Petition filed by the assessee is found to be maintainable. The miscellaneous petitions filed by the assessee are beyond the period of 6 months from 01.06.2016 and therefore the same are barred by limitation. In the absence of any provision to condone the delay under the Income Tax Act, it may be a case of omission in the provision of Act which cannot be supplied by us when there is no ambiguity in the provisions of section 254(2) of the Act. The Hon'ble Bombay High Court in the case of Bharat Petroleum Corpn. Ltd. v. ITAT [2013] 359 ITR 371/[2014] 42 taxmann.com 25, while dealing with an identical issue has held in paras 16 to 18 as under:— "16 It was next contended on behalf of the petitioner that the power of the Tribunal under section 254(2) of the Act is only to rectify an error apparent from the record. It does not empower the Tribunal to recall its earlier order dated December 6, 2007, for which the miscellaneous application was filed on August 6, 2012. It was submitted on behalf of the petitioner that the application under section 254(1) of the Act would be the only provision under which an application could be made for recall of an order, as under section 254(2) of the Act only the order can be rectified but cannot be recalled. We find that there is an error apparent on record and the miscellaneous application is to correct the error apparent from the record. The consequence of such rectification application being allowed may lead to a fresh hearing in the matter after having recalled the original order. However, the recall, if any, is only as a consequence of rectifying the original order. It is pertinent to note that section 254(2) of the Act does not prohibit the recall of an order. In fact the power/jurisdiction of the Tribunal to recall an order on rectification application made under section 254(2) of the Act is no longer res integra. The issue stands covered by the decision of the apex court in Asst. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227 (SC) which held that though the Tribunal has no power to review its own order, yet it has jurisdiction to rectify any mistake apparent on the face of the record and as a consequence, therefore, the Tribunal can even recall its order. In the above case, before the apex court on October 27, 2000, the Tribunal dismissed the appeal of stock exchange holding that it was not entitled to exemption under section 11 read with section 12 of the Act. On November 13, 2000, the stock exchange filed a rectification application under section 254(2) of the Act before the Tribunal. The Tribunal by its order dated September 5, 2001, allowed the application and held MA Nos. 23 to 27/Asr/2023 Stock Exchange C. P. Fund v. ITO Page 5 that there was a mistake apparent on the record which required rectification. Accordingly, the Tribunal recalled its order dated October 27, 2000, for the purpose of entertaining the appeal afresh. The Revenue filed a writ petition in the Gujarat High Court challenging the order dated September 5, 2001. The above challenge by the Revenue was turned down by the Gujarat High Court. The Revenue carried the matter in appeal to the apex court which also dismissed the appeal of the Revenue. The apex court observed that the Tribunal in its original order while dismissing the stock exchange (assessee's) appeal overlooked the binding decisions of the jurisdictional High Court. This mistake was corrected by the Tribunal under section 254(2) of the Act. The Supreme Court held that the rectification of an order stands on the fundamental principle that justice is above all and upheld the exercise of power under section 254(2) of the Act by the Tribunal in recalling its earlier order dated October 27, 2000. Thus, recall of an order is not barred on rectification application being made by one of the parties. In these circumstances, the application would be an application for rectification of the order dated December 6, 2007, and would stand governed by section 254(2) of the Act. 17 In the facts of the present case there can be no denial that the order dated December 6, 2007, suffers from an error apparent from the record. The error is in having ignored the mandate of rule 24 of the Tribunal Rule s which required the Tribunal to dispose of the matter on the merits after hearing the respondents. In these circumstances, an application for rectification would he under section 254(2) of the Act. The recall of an order would well be a consequence of rectifying an order under section 254(2) of the Act. In these circumstances, we find no reason to interfere with the order of the Tribunal holding that the miscellaneous application filed by the appellant is barred by limitation under section 254(2) of the Act as i was filed beyond a period of four years from the order sought to be rectified. 18 Before concluding, we would like to make it clear that an order passed in breach of rule 24 of the Tribunal Rules, is an irregular order and not a void order. However, even if it is assumed that the order in breach of rule 24 of the Tribunal Rules is an void order, yet the same would continue to be binding till it is set aside by a competent tribunal. In fact, the apex court in the Sultan Sadik v. Sanjay Raj Subba [2004] 2 SCC 377 h observed as under: "Patent and latent invalidity In a well known passage Lord Radcliffe said: 'An order, even if not made in good faith, is still an act capable at legal consequences. It bears no brand of invalidity upon its forehead.. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders.' MA Nos. 23 to 27/Asr/2023 Stock Exchange C. P. Fund v. ITO Page 6 This must be equally true even where the 'brand of invalidity' is plainly visible: for there also the order can effectively be resisted in law only by obtaining a decision of the court." Further, the Supreme Court in Sneh Gupta v. Devi Sarup [2009] 16 SCC 194 has observed: "We are concerned herein with the question of limitation. The compromise decree, as indicated herein before, even if void was required to be set aside. A consent decree as is well known, is as good as a contested decree. Such a decree must be set aside if it has been passed in violation of law. For the said purpose, the provisions contained in the Limitation Act, 1963, would be applicable. It is not the law that where the decree is void, no period of limitation shall be attracted at all." Therefore, in this case also the period of four years from the date of order sought to be rectified/recalled will apply as provided in section 254(2) of the Act. This is so even if it is assumed that the order dated December 6, 2006, is a void order. 19 We shall now answer the questions arising in this case as raised by us in paragraph 4 above as under : Question (a) : No. The Tribunal has no power in terms of rule 24 of the Tribunal Rules to dismiss an appeal before it for non-prosecution. Question (b) : The miscellaneous application for recall of an order falls under section 254(2) of the Act and not under section 254(1) of the Act. Question (c) : Does not arise in view of our response to query (b) above. 20. In view of the reasons given hereinabove, we find the Tribunal was correct in dismissing the miscellaneous application by its order dated April 10, 2013, as being beyond the period of four years as provided under section 254(2) of the Act. 21. Accordingly, the petition is dismissed with no order as to costs." 6. In view of the facts and circumstances of the case as well as the decision of the Hon'ble Bombay High Court in the case of Bharat Petroleum Corpn. Ltd., (supra), we hold that the miscellaneous petition filed by the assessee are beyond the period of limitation as provided under section 254(2) and are not maintainable. Accordingly, the same are dismissed being barred by limitation. 7. In the result, the miscellaneous petition filed by the assessee is dismissed.” 4. In the present cases the orders were pronounced on 23/06/2022 and the MA’s were filed on 16/02/2023. Thus, the miscellaneous petitions were filed by the assessee beyond the period of limitation 6 months as provided MA Nos. 23 to 27/Asr/2023 Stock Exchange C. P. Fund v. ITO Page 7 under section 254(2) and therefore, these are not maintainable. Accordingly, the same are dismissed being barred by limitation. 5. That the Tribunal had passed speaking orders on merits of the case, we, therefore, hold that even if the orders passed by the ITAT was erroneous, either on facts or in law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court. The Tribunal has limited powers u/s 254(2) of the Act, in view of the latest judgment of Reliance Telecom Ltd. v. Commissioner of Income Tax (IT-4), Mumbai wherein the Hon’ble Apex Court has observed as under: “3.2 Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is beyond the scope and ambit of the powers under section 254(2) of the Act. While allowing the application under section 254(2) of the Act and recalling its earlier order dated 6-9-2013, it appears that the ITAT has re- heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record. 4. In the present case, a detailed order was passed by the ITAT when it passed an order on 6-9-2013, by which the ITAT held in favour of the Revenue. Therefore, the said order could not have been recalled by the Appellate Tribunal in exercise of powers under section 254(2) of the Act. If the Assessee was of the opinion that the order passed by the ITAT was erroneous, either on facts or in MA Nos. 23 to 27/Asr/2023 Stock Exchange C. P. Fund v. ITO Page 8 law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court, which as such was already filed by the Assessee before the High Court, which the Assessee withdrew after the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 6-9-2013 which has been passed in exercise of powers under section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under section 254(2) of the Act. Therefore, the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is unsustainable, which ought to have been set aside by the High Court. 5. From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT. 6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors section 254(2) of the Act. As observed hereinabove, the powers under section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that. Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case. 7. In view of the above and for the reasons stated above, the impugned common judgment and order passed by the High Court as well as the common MA Nos. 23 to 27/Asr/2023 Stock Exchange C. P. Fund v. ITO Page 9 order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9- 2013 deserve to be quashed and set aside and are accordingly quashed and set aside. The original orders passed by the ITAT dated 6-9-2013 passed in the respective appeals preferred by the Revenue are hereby restored.” 6. Following the Hon’ble Apex High Court in the case of Reliance Telecom Ltd. (Supra), the grievance of the appellant is not acceptable as genuine within our powers to pass an order recalling to recall our orders passed on merits. 7. Accordingly, the Miscellaneous Applications Nos. 23 to 27/Asr/2023 are quashed and set aside. Order pronounced in the open court on 04.08.2023 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order