Assistant Commissioner Of Income Tax, CPC, Bangalore V. Ashwin Shetty, Bangalore

MA 41/BANG/2023

AI Insights

The case revolves around a miscellaneous petition filed by the revenue seeking rectification of an earlier Tribunal order that allowed the assessee's claim regarding the disallowance of employees' contributions to PF & ESI. The original Tribunal decision was based on the payments being made within the due date for filing the return of income under section 139(1) of the Income Tax Act, despite being beyond the statutory deadlines prescribed by respective acts. The revenue's subsequent petition was dismissed due to being filed beyond the permissible time limit, as the Tribunal found it lacked the authority to condone such a delay under section 254(2) of the Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124400 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-04-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 21-12-2022
• Other Referred Cases: Essae Taroka (P.) Ltd. vs. CIT, CHECKMATE SERVICES PVT LTD VS CIT-1, M/s. Sasmos HET Technologies Ltd. vs. ITA No.636/Bang/2021, Powankumar Jain vs. Dy. CIT, Srinivas Sashidhar Chaganty vs. ITO, Vijay Kumar Ruia Vs. CIT, Dariyapur Shetkari Sahakari Ginning and Pressing Factory Vs. ACIT, Muninaga Reddy Vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation
• Section: 251; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P. No. 41/Bang/2023 (in ITA No. 600/Bang/2021) Assessment Year : 2018-19 The Assistant Commissioner of Income Tax, CPC, Bangalore. Vs. Shri Ashwin Shetty, No. 63/A, 13 th Cross, J.P. Nagar 3 rd Phase, Bangalore – 560 078. PAN: ANAPS7985B APPELLANT RESPONDENT Assessee by : None Revenue by : Shri Srinivasa Rao, JCIT (DR) Date of Hearing : 21-04-2023 Date of Pronouncement : 24-04-2023 ORDER PER BEENA PILLAI, JUDICIAL MEMBER This miscellaneous petition filed by the revenue seeking rectification of order of the Tribunal in ITA No. 600/Bang/2021 dated 31.03.2022. 2. The assessee came in appeal before us with regard to disallowance of employees contribution to PF & ESI which was deposited beyond the due date prescribed under relevant Act for filing the return of income for year under consideration. The Page 2 M.P. No. 41/Bang/2023 (in ITA No. 600/Bang/2021) Tribunal while disposing the appeal of the assessee allowed the claim of the assessee by observing that that it has been paid within due date of filing return of income u/s 139(1), though it was beyond the date mentioned in the respective Act. The Tribunal replied on the decision of Hon’ble Karnataka High Court in case of Essae Taroka (P.) Ltd. reported in (2014) 266 CTR 246. 2.1 Subsequently the Hon’ble Supreme Court in case of CHECKMATE SERVICES PVT LTD VS CIT-1 in CIVIL APPEAL 2833/2016 vide its judgment dated 12 October 2022 decided the issues against the assessee and therefore the Department is seeking rectification of the order passed by this Tribunal. 2.2 The Ld.AR submitted that the miscellaneous petition filed by the Revenue is beyond the period of limitation. It was submitted that the Tribunal passed the order in ITA No.600/Bang/2021 on 31.03.2022 and was served on the department on 25.04.2022, which has been duly acknowledged by the department in the miscellaneous petition itself. The Ld.AR submitted that the present miscellaneous petition has been filed by the department on 22.12.2022, which is time barred and same cannot be entertained by this Tribunal. He placed reliance on the order of the Tribunal in MP No.115/Bang/2022 dated 30.11.2022 arising out of ITA No.636/Bang/2021 dated 30.3.2022. 3. We have heard the rival submissions and perused the materials available on record. With regard to admission of miscellaneous petition, similar issue came before this Tribunal in the case of M/s. Sasmos HET Technologies Ltd. in ITA Page 3 M.P. No. 41/Bang/2023 (in ITA No. 600/Bang/2021) No.636/Bang/2021 dated 30.3.2022 wherein the Tribunal held as under: “5. We have heard the rival submissions and perused the materials available on record. Admittedly, the order in this case has been passed on 30.3.2022 and it has been communicated to the assessee on 20.4.2022 by RPAD and to the revenue it was served by hand on 25.4.2022 on PCIT, Bengaluru. Now the question is whether the time limit to file application u/s 254(2) of the Act is to be reckoned from the date of passing of the order or from the date of communication of order to the revenue authorities. For this purpose, we go through the provisions of section 254(2) of the Act, which reads as under:- “The appellate may, at any time within 6 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 in 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 AO.” 5.1 A bare perusal of the above provisions shows that either parties can file application for rectification of order passed u/s 254(1) of the Act within a period of 6 months from the end of the month in which the order was passed. In the present case, the order was passed on 30.3.2022 and according to the ld. A.R., the time limit to file MA u/s 254(2) of the Act expires on 30.9.2022 and there was delay in filing this miscellaneous petition and hence, it is to be dismissed. 5.2 In context of the provisions of section 254(2) of the Act (as prior to its amendment by Finance Act, 2016 w.e.f. 1.6.2016) the Mumbai Tribunal has in Powan Kumar Jain vs. Dy. CIT (2013) 155 TTJ 14 (Mum-Tribunal), held that for purposes of filing application u/s 254(2) of the Act, the period of limitation would start from the point of time when order u/s 254(1) is “communication to the assessee” and not from the “date of the passing of the order”. In coming to this decision, the Mumbai Tribunal has noted as: "From the principles and maxims laid down by the Hon 'ble Supreme Court in catena of cases as referred to above, it is amply clear that the "date of order" should be construed and reckoned with the date of knowledge of the order i.e., when the order has been communicated to the pacify. The legal Page 4 M.P. No. 41/Bang/2023 (in ITA No. 600/Bang/2021) maxim behind this is, how a person concerned or a person aggrieved is expected to exercise the right of remedy conferred by the Statute, unless the order is communicated or known to him either actual or constructively. The underlying principles is of fair play and recognition of legal rights of remedy in a constructive manner and not to give any construction or interpretation so as to defeat the purpose for which the legal remedy has been enacted in the provisions relating to limitations. It iso fundamental principle of justice and fair play that parties, whose rights are affected by an order must have a knowledge or notice of it, otherwise, the legal rights to remedy is lost to the party, even when he is not at fault." 5.3 However, in a recent decision, the Hyderabad Tribunal in miscellaneous application proceedings u/s 254 (2) in the case of Srinivas Sashidhar Chaganty vs. ITO ( Hyd. ITAT — "A" Bench — M.A. no. 05/Hyd/2017 arising in ITA no. 1420/Mum/2015 dated 12-7-2017 for Assessment Year 2007-08 — reported in www.itatonline.org) in context of the subsequently amended provisions of section 254 (2) by Finance Act. 2016 w.e.f. 1-6-2016 has held diametrically the opposite of what the Mumbai Tribunal held in the case of Pawan Kumar Jain (supra). In the case before it, order u/s 254 (1) was passed / pronounced on 21-06-2016 and from the end of this month (June 2016), the period of six months ended on 31-12-2016. The case of the assessee was that order u/s 254 (1) was served on him on 05-07-2016 and if this date is considered. the miscellaneous application filed on 20-01-2017 was within time and maintainable. 5.4 However, the Hon’ble Allahabad High Court in the case of Vijay Kumar Ruia Vs. CIT (2011) 334 ITR 38 (Allahabad) in the decision concerned in an appeal preferred by the assessee under Rule 86 of recovery proceedings in Schedule II of the Act. The rule prescribed that the appeal must be preferred by the assessee within 30 days of the order passed by the Tax Recovery Officer. The question before the High Court was whether words "date of the order" in Rule 86 should be construed as "date of service or communication of the order" to the assessee? The Allahabad High Court held as under — "The second point of determination is as to whether the limitation for filing the appeal would run from the actual date of the order or from the date of service of the order Page 5 M.P. No. 41/Bang/2023 (in ITA No. 600/Bang/2021) and, consequently as to whether the appeal is barred by limitation. There is no dispute to the fact that the order confirming the sale was passed on 25-4-1988 and the sale certificate was also issued on the same day. The appeal was presented under rule 86 on 19-9-1988. The limitation for filing the appeal under rule 86(2) is 30 days from the date of the order'. Thus, the appeal apparently appears to be beyond time by 117 days. However, the argument is that the limitation for filing the appeal would start running from the date when the order was served and the date of service of the order would be recognised as the date of the order. Generally speaking, judicial and quasi-judicial orders are required to be passed in the presence of the parties or their representatives and where parties or their representatives are not present, normally the orders are communicated, especially where the order is appealable or revisable so as to enable the party to avail of the remedy so provided. Therefore, communication and knowledge of the order passed is necessary and in consonance with the principles of fair play. If the party aggrieved is not made aware of the order it cannot be expected to take recourse to the remedy available against it. Therefore, the fundamental principle is that the party whose rights are affected by any order must have the knowledge of the order.  Thus, it can be said that for the purposes of calculating limitation the expression ‘from the date of the order’, is to be construed to mean ‘the date of communication or knowledge of the order’. In the instant case, the date of knowledge of the order, according to the petitioner is 18-8- 1988 and the date of actual service and communication undisputedly happens to 29-2-1988. The appeal was preferred on 19-9- 988. On 18-9-1988 there was a holiday. Thus, the appeal was within limitation both from the date of knowledge of the order and its service. In this view of the matter, the appellate authority manifestly erred in law in dismissing the appeal as barred by time." 5.5 In view of the above precedents, in our opinion, the time limit to file a miscellaneous petition u/s 254(2) of the Act to rectify the order of the Tribunal passed u/s 254(1) of the Act is to be considered is within 6 months from the end of the month in which the order was communicated so as to rectify the mistake passed u/s 254(1) of the Act. Accordingly, we admit the miscellaneous petition filed by the revenue as the miscellaneous petition Page 6 M.P. No. 41/Bang/2023 (in ITA No. 600/Bang/2021) has been filed on 31.10.2022 as it was received only on 25.4.2022 by the revenue authorities and in our opinion, miscellaneous petition filed in this case is within time limit allowed u/s 254(2) of the Act and the same is admitted for adjudication.” 3.1 As seen from the above order of the Tribunal, the parties who wants rectification of the order of the Tribunal are required to file the miscellaneous petitions u/s 254 of the Act to rectify the order of the Tribunal passed u/s 251 of the Act within 6 months from the end of the month in which the order was communicated so as to rectify the mistake which is apparent in the order passed u/s 254(1) of the Act. In the present case, the Tribunal order, which has been passed on 31.03.2022 was served on department on 25.04.2022 and the revenue filed the MP on 22.12.2022, which is beyond the time allowed u/s 254(2) of the Act. In our opinion, the Tribunal has no power to condone the delay which is filed beyond the time limit u/s 254(2) of the Act i.e. 6 months from the end of the month in which the order was communicated to the assessee. 3.2 Accordingly, we decline to admit the miscellaneous petition filed by the department. It was submitted before us by the Ld.DR that, Hon’ble Bombay High Court in the case of Dariyapur Shetkari Sahakari Ginning and Pressing Factory Vs. ACIT (320 CTR 456) (Bom) condoned the delay of 3052 days in seeking the restoration of appeal. Further, Hon’ble Karnataka High Court in the case of Muninaga Reddy Vs. ACIT also condoned the delay vide W.No.25553/2018 dated 12.7.2018. In our opinion, the Tribunal do not have such power u/s 254 (2) of the Act, to condone the delay. Accordingly, we reject the argument of the Page 7 M.P. No. 41/Bang/2023 (in ITA No. 600/Bang/2021) Ld.DR and dismiss the miscellaneous petition filed by the department as time barred. In the result, the miscellaneous petition filed by the department is dismissed. Order pronounced in the open court on 24 th April, 2023. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 24 th April, 2023. /MS / Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore