ACIT-3(1)(1), MUMBAI V. UMBERTO CERAMICS INT P.LTD, MUMBAI

MA 440/MUM/2022

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The case involves the revenue's miscellaneous applications seeking recall of a common order passed by the Tribunal, which had deleted the disallowance of Employees Contribution to PF/ESI. The revenue argued that a subsequent Supreme Court decision in Checkmate Services P Ltd vs. CIT mandated the disallowance if the contributions were not credited to the employees' accounts by the due date prescribed in the relevant statutes, even if paid before the due date for filing the return of income under section 139(1) of the Act. The Tribunal, referencing the Supreme Court's decision in ACIT vs. Saurashtra Kutch Stock Exchange Ltd, acknowledged the oversight and recalled the earlier order, directing that the appeals be heard afresh.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136458 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-03-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-02-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 28-12-2022
• Other Referred Cases: Checkmate Services P Ltd vs. CIT, ACIT vs. Saurashtra Kutch Stock Exchange Ltd
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 139(1); 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI ‘SMC’ BENCH, MUMBAI. Before Shri B.R. Baskaran (AM) M.A. No. 440/Mum/2022 in I.T.A. No. 1661/Mum/2021 (A.Y. 2017-18) M.A. No. 441/Mum/2022 in I.T.A. No. 1662/Mum/2021 (A.Y. 2018-19) ACIT-3(1)(1) Room No. 607 Aayakar Bhavan M.K. Road Mumbai-400 020. V s . M/s. Umberto Ceramics International Pvt. Ltd. 302, Maanav Mansion Mc.Donald, Sarojini Road, Vile Parle West Mumbai-400 058. PAN : AABCU2672E (Appellant) (Respondent) Assessee by Shri Ketan Ved Department by Ms. Richa Gulati D ate of He a rin g 24.02.2023 D ate of P r on ou nc em ent 03.03.2023 O R D E R Per B.R.Baskaran (AM) :- The revenue has filed these miscellaneous applications seeking recall of the common order dated 29-03-2022 passed by SMC bench of Tribunal in the Income tax Appeal No.1661 and 1662/Mum/2021 relating to AY 2017-18 and 2018-19. 2. The issue adjudicated by the Tribunal in the above said appeals related to disallowance of Employees Contribution of PF/ESI. The Tribunal had deleted the disallowance on the ground that the assessee had paid the above said amount before the due date for filing return of income u/s 139(1) of the Act. M/s. Umberto Ceramics International Pvt. Ltd. 2 3. The revenue has filed this miscellaneous application stating that the Hon’ble Supreme Court, in the subsequent decision rendered in the case of Checkmate Services P Ltd vs. CIT (Civil Appeal No.2833 of 2016 dated 12.10.2022) has held that the disallowance of employees contributions to PF/ESI is required to be made in terms of sec. 36(1)(va), if they are not credited by the assessee to the employees account in the relevant fund or funds on or before the due date prescribed in the relevant fund/Act/Rule etc. Hence the payments made after the due date prescribed in the relevant statutes, but before the due date prescribed u/s 139(1) of the Act shall be liable to be disallowed. Accordingly, it is submitted that the decision rendered by the Tribunal is contrary to the decision rendered by Hon’ble Supreme Court in the above said case and the same constitutes mistake apparent from record. Accordingly, it is prayed for recall of the order. 4. We heard the parties and perused the record. We may gainfully refer to the decision rendered by Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd (305 ITR 227)(SC) regarding the power of the tribunal to recall its order, when the order passed by the jurisdictional High Court or Hon’ble Supreme Court (whether previous one or subsequent one) was not considered by the Tribunal. Following observations made by Hon’ble Supreme Court in the above said case are relevant here:- “39. As stated earlier, the decision was rendered in appeal by the Income- tax Appellate Tribunal, Rajkot. Miscellaneous Application came to be filed by the assessee under sub-section (2) of section 254 of the Act stating therein that a decision of the 'Jurisdictional Court', i.e., the High Court of Gujarat in Hiralal Bhagwati's case (supra) was not brought to the notice of the Tribunal and thus there was a "mistake apparent from record" which required rectification. 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). M/s. Umberto Ceramics International Pvt. Ltd. 3 41. A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Ltd.'s case (supra). It was held by the Division Bench of the High Court that if the point is covered by a decision of the Jurisdictional Court rendered prior or even subsequent to the order of rectification, it could be said to be "mistake apparent from the record" under section 254(2) of the Act and could be corrected by the Tribunal. 42. In our judgment, it is also well-settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a 'new rule' but to maintain and expound the 'old one'. In other words, Judges do not make law, they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite sometime, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. 43. Salmond in his well-known work states : ". . . (T)he theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicataor accounts that have been settled in the meantime." [Emphasis supplied] 44. It is no doubt true that after a historic decision in Golak Nath v. State of Punjab AIR 1967 SC 1643, this Court has accepted the doctrine of 'prospective overruling'. It is based on the philosophy: "The past cannot always be erased by a new judicial declaration". It may, however, be stated that this is an exception to the general rule of the doctrine of precedent. 45. Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and to disturb the finality. 46. In S. Nagaraj v. State of Karnataka 1993 Supp. (4) SCC 595, Sahai, J. stated : "15. Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the Court should not be prejudicial to anyone. Rule of stare decisis is adhered for consistency but it is not as inflexible in Administrative Law as in Public Law. Even the law bends before justice. Entire concept of writ jurisdiction exercised by the higher courts is founded on equity and fairness. If the Court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in M/s. Umberto Ceramics International Pvt. Ltd. 4 fact did not exist and its perpetration shall result in miscarriage of justice then it cannot on any principle be precluded from rectifying the error. Mistake is accepted as valid reason to recall an order. Difference lies in the nature of mistake and scope of rectification, depending on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustice. It is either statutory or inherent. The latter is available where the mistake is of the Court. In Administrative Law, the scope is still wider. Technicalities apart if the Court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order...." (p. 618) 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. 48. For the foregoing reasons, in our view, no case has been made out to interfere with the order passed by the Income-tax Appellate Tribunal, Ahmedabad and confirmed by the High Court of Gujarat. The appeal deserves to be dismissed and is accordingly dismissed. On the facts and in the circumstances of the case, however, the parties are ordered to bear their own costs.” 5. Following the principle laid down by Hon’ble Supreme Court in the case off Saurashtra Kutch Stock Exchange Ltd (supra), we hold that the decision rendered by the Tribunal in the impugned cases is contrary to the subsequent binding decision rendered by Hon’ble Supreme Court in the case of Checkmate Services P Ltd (supra) and hence the same constitutes mistake apparent from record. Since the error apparent from record goes to the root of the case, we feel it proper to recall the impugned common order dated 29- 03-2022 passed by the Tribunal. 6. Accordingly we recall the common order dated 29-03-2022 passed in both the impugned appeals and direct the registry to post both the appeals in the normal course under intimation to the parties. M/s. Umberto Ceramics International Pvt. Ltd. 5 7. In the result, the miscellaneous applications filed by the revenue are allowed. Pronounced in the open court on 03.03.2023 Sd/- (B.R. BASAKARAN) Accountant Member Mumbai; Dated : 03/03/2023 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. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai