SHRI MANJIT KRISHAN MALHOTRA, ABOHAR V. JOINT COMMISIONER OF INCOME TAX , BATHINDA

MA 5/ASR/2023

AI Insights

The case involves Sh. Manjit Krishan Malhotra, who filed a Miscellaneous Application against the order of the ITAT concerning penalties for the Assessment Year 2008-09. The penalties were related to violations under sections 271D and 271E of the Income Tax Act, which pertain to the acceptance and repayment of cash loans beyond the prescribed limits. The main contention of the assessee was that the penalties were time-barred and that there was no required satisfaction recorded for the initiation of these penalties. The Tribunal, referencing a judgment by the Hon'ble Apex Court, emphasized that its powers under section 254(2) of the Act are limited to rectifying mistakes apparent from the record and do not extend to re-evaluating the merits of the case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114770 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-09-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-09-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2023
• Other Referred Cases: Reliance Telecom Ltd. v. Commissioner of Income Tax (IT-4), Mumbai
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 271D; 271E; 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. 5 & 6/Asr/2023 (Arising out of ITA Nos. 768 & 769/Asr/2017) Assessment Year: 2008-09 Sh. Manjit Krishan Malhotra Street No. 3, Jain Market, Abohar. [PAN: ABOPM 0859N] Vs. Joint Commissioner of Income Tax, Range-2, Bathinda (Appellant) (Respondent) Appellant by : Sh. Anil Puri, Adv. Respondent by: Sh. Manoj Aggarwal, Sr. DR Date of Hearing: 12.09.2023 Date of Pronouncement: 21.09.2023 ORDER Per Dr. M. L. Meena, AM: This Miscellaneous Application has been filed by the assessee against the order of the ITAT dated 11.08.2022 in ITA Nos. 5 & 6/Asr/2023 in respect of Assessment Year 2008-09. MA Nos. 5 & 6/Asr/2023 Manjit Krishan Malhotra v. Jt.CIT 2 2. At the outset, the ld. counsel for the appellant has submitted that the disputed penalties levied were time barred and there was absence of required satisfaction that has not been addressed by the bench as per the grounds of appeal. The objections of the ld. AR are as the matter was factually incorrect, adjudicated by the bench with respect to date of the issue of show cause notice for levy of penalty u/s 271D and 271E and recording of required satisfaction. Accordingly, the ld. AR contention that the Tribunal has omitted to be decided about the specific finding of the ld. CIT(A), Bathinda is vague and without supporting documentary evidence, and under the fact & circumstances. 3. It is seen that the Tribunal has passed a detailed order on merits of the case after considering the arguments of the ld. counsel for the assessee and the ld. DR for department and after considering the merits of the case delivered a finding of facts that it was a question of fact which is required to be verified and ascertained by the AO, the Jt. CIT in the present cases from the office record whether the penalties were time barred and the fact regarding time barring and recording of satisfaction can be ascertained from the assessment record by the AO, whether a proper satisfaction has been recorded for initiation of penalty proceedings u/s MA Nos. 5 & 6/Asr/2023 Manjit Krishan Malhotra v. Jt.CIT 3 271D and 271E of the Act. In view of the judgment delivered by the Hon’ble Apex Court in the case of Reliance Telecom Ltd. v. Commissioner of Income Tax (IT-4), Mumbai, the Tribunal has limited power to rectify the bonafide mistakes. The relevant part of the judgment is reproduced 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 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 MA Nos. 5 & 6/Asr/2023 Manjit Krishan Malhotra v. Jt.CIT 4 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 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.” 4. In view of the facts and circumstances of the present cases, the Tribunal considered that the cases fit to be restored to the JCIT, to examine MA Nos. 5 & 6/Asr/2023 Manjit Krishan Malhotra v. Jt.CIT 5 the issue of initiation of penalties u/s 271D and 271E of the Act afresh, on two points whether these penalties were time barred and was there absence of required satisfaction as claimed by the Ld. AR for the appellant assessee. Accordingly these two appeals were remanded back to the file of the AO to adjudicate the issues afresh after granting adequate opportunity of being heard to the assessee. 5. Respectfully, following the Hon’ble Apex Court judgment (supra), we find no merit in the Miscellaneous Application of the assessees and as such these are rejected. Order pronounced in the open court on 21.09.2023 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