DCIT, Rohtak V. M/s. Param Exim Ltd., New Delhi

MA 507/DEL/2019

AI Insights

The case involves the Revenue's Miscellaneous Application seeking rectification of an earlier ITAT order which had dismissed the department's appeal against M/s. Param Exim Ltd. The Revenue contended that there were factual inaccuracies in the ITAT's previous order regarding the amount involved and the financial year referenced for the assessment. The ITAT had to determine whether these inaccuracies constituted a 'mistake apparent from the record' under Section 254(2) of the Income Tax Act, 1961, and whether it had the jurisdiction to amend its earlier decision based on these claims.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122208 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-09-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 17-09-2019
• Other Referred Cases: CIT vs M/s. Reliance Communication Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Accommodation entries; Set aside
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “FRIDAY/D” BENCH: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER M.A.No.-507/Del/2019 [In ITA No.2845/Del/2019] [Assessment Year : 2007-08] DCIT, Rohtak Circle, Rohtak. vs M/s. Param Exim Ltd., 21/3GF, Geeta Mandir Marg, Near Rajinder Nagar, New Delhi. PAN-AACCP9669B APPELLANT RESPONDENT Appellant by Ms. Monica Aggarwal, Adv. Respondent by Shri Anuj Garg, Sr.DR Date of Hearing 16.12.2022 Date of Pronouncement 22.02.2023 ORDER PER KUL BHARAT, JM : The present Miscellaneous Applications (M.A.) has been filed by the Revenue seeking rectification of the order passed by the Tribunal in ITA No.2845/Del/2015 pertaining to Assessment Year 2007-08 vide order dated 08.04.2019. 2. Ld. Sr. DR submitted that certain mistake has occurred in the order passed by the Tribunal which needs to be rectified. Ld. Sr. DR further reiterated the submissions as made in the M.A. For the sake of clarity, the relevant contents of the M.A. are reproduced as under:- Sir, Sub:- Miscellaneous application against the Hon'ble ITAT's order ITA No. 2845/Del/2015 dated 08.04.2019 in the case of M/s Param Exim Ltd, 21/3 Ground floor, Geeta Mandir Marg, Near Rajinder Nagar, New Delhi for the A.Y. 2007-08 (PAN: AACCP9669B) -Reg. **** 2 | Page Please refer to the Hon 'ble IT AT's order ITA No. 2845/Dell20 15 dated 08.04.2019 on the subject cited above. 2. In this regard, it is submitted that the Hon'ble ITAT passed an order in the case of M/s Param Exim Ltd, 2113 Ground floor, Geeta Mandir Marg, Near Rajinder Nagar, New Delhi for the A.Y. 2007- 08 (PAN: AACCP9669B)- vide order no ITA No. 2845/Del/2015 dated 08.04.2019 (copy attached) and dismissed the department's appeal with the following observations:- "Ld Counsel for the assessee submitted that apart from the fact that the issue is same as have been considered in other case, but, in the present case the amount in question as mentioned in the reasons at Rs. 3.20 crores have been wrongly mentioned because the amount in question is Rs. 2.20 crores. He has also submitted that the Assessing Officer in the reasons has mentioned that income escaped for assessment for F. Y. 2007-08 instead of F.Y. 2006-07. He has, therefore, submitted that since wrong facts have been mentioned in the reasons for reopening of assessment, therefore, on this reason alone the reopening of the assessment is invalid and bad in law." However, the Hon'ble ITA T did not consider the following facts and the circumstances and legal position of the matter. As per Hon’ble ITAT's order, in the reasons for reopening incorrect F.Y. 2007-08 has been mentioned instead of A.Y. 2006-07 which is not found to be correct because in the reasons for re-opening the case, assessment year has been mentioned correctly at 3 places i.e. A.Y. 2007- 08, but it was wrongly mentioned at one place as F.Y. 2007-08 instead of A.Y. 2007-08 due to a typographical error, which should be considered as a human error. Also, as per the information on record, received from DIT(Inv.)-II, New Delhi, dated 15th March 2013, on the basis of which the case has been reopened, the assessee had taken accommodation entries amounting to Rs. 3.2 crores and not Rs. 2.20 crores (as per ITAT's order) from various shell companies, which was found to be correct during the course of assessment proceedings. 3 | Page Hence, it is requested to kindly accord an approval to file a miscellaneous application in this case before the Hon'ble ITAT. 3. Kindly find enclosed following documents herewith this Miscellaneous application for the necessary action:- a) Copy of order no. ITA No. 2845IDel/20 IS dated 08.04.2019 b) Approval from % Pr. CIT, Rohtak c) Copy of Complete set submitted during appeal filed in the Hon'ble ITAT dated 07.05.2015 in this case.” 3. On the other hand, Ld. Counsel for the assessee opposed these submissions. She further drew our attention to paras 9.1 and 11.2 of the order passed by the Tribunal. 4. To buttress the contention that the Tribunal had examined the facts carefully and decided the issue in favour of the assessee. 5. Now, the Revenue is seeking review of the order passed by the Tribunal which is beyond the provision of the section 254 of the Income Tax Act, 1961 (“the Act”). 6. We have heard Ld. Authorized Representatives of the parties and perused the material available on record. We find that the Tribunal in para 9.1 of the order has recorded the submissions of the assessee as under:- 9.1. “Learned Counsel for the Assessee submitted that apart from the fact that the issue is same as have been considered in other case, but, in the present case the amount in question as mentioned in the reasons at Rs.3.20 crores have been wrongly mentioned because the amount in question is Rs.2.20 crores [PB-10]. He has also submitted that the Assessing Officer in the reasons has mentioned that income escaped for assessment for F.Y. 2007-2008 instead of F.Y. 2006- 4 | Page 2007. He has, therefore, submitted that since wrong facts have been mentioned in the reasons for reopening of assessment, therefore, on this reason alone the reopening of the assessment is invalid and bad in Law.” 7. Thereafter, the Tribunal in para 11.2 recorded the finding as under:- 11.2. “In the instant case, the Assessing Officer has recorded vague reasons based on wrong facts. The escapement of income based on accommodation entry as informed by Investigation Wing have been mentioned at Rs.3.20 crores which in fact was Rs 2.20 crores. Such fact is mentioned in the balance sheet of the assessee, copy of which is, filed at Page-10 of the paper book, which is also supported by the list of Investors filed at Page-21 of the paper book. The Assessing Officer in the reasons for reopening has also mentioned incorrect F.Y. 2007-2008 instead of F.Y. 2006-2007. Therefore, the reasons are based on wrong facts, which clearly show that there was no application of mind on the part of the Assessing Officer ITA.No.2846/D/2015 & CO.No.333/D/2015 M/s. KLA Food (India) Ltd., New Delhi ITA.No.2845/D/2015 & CO.No.372/D/2015 M/s. Param Exim Ltd., New Delhi. while recording reasons for reopening of the assessment. We, therefore, considering the above discussion and following the reasons for decision in the case of M/s. KLF Food (India) Ltd., (supra), hold that assumption of jurisdiction by the Assessing Officer for reopening of the assessment is illegal and bad in Law. We, accordingly, set aside the orders of the authorities below and quash the reopening of assessment in the matter. Resultantly, all additions stand deleted. In view of the above, there is no need to decide the Departmental Appeal on merit in which Ld. CIT(A) has already deleted the addition.” 8. The Tribunal after considering the factual error in the reasons so recorded, came to the conclusion that there was no application of mind by the Assessing Officer (“AO”). Therefore, in our considered view, it would be beyond 5 | Page the scope of section 254(2) of the Act to review the order passed by the Tribunal. Law is well settled now on the scope and ambit of section 254 of the Act. Hon’ble Supreme Court in the case of CIT vs M/s. Reliance Communication Ltd. in Civil Appeal No.7111 of 2021 dated 03.12.2021 held as under:- 3. “We have heard Shri Balbir Singh, learned Additional Solicitor General of India appearing on behalf of the Revenue and Shri Anuj Berry, learned Advocate appearing on behalf of the Resolution Professional of the respondent-company. At this stage, it is required to be noted that the respondent-company/companies – respective assessees currently are undergoing corporate insolvency resolution process and the Resolution Professional is appointed. We have heard learned counsel for the Resolution Professional of the respondent- assessee. 3.1. We have considered the order dated 18.11.2016 passed by the ITAT allowing the miscellaneous application in exercise of powers under Section 254(2) of the Act and recalling its earlier order dated 06.09.2013 as well as the original order passed by the ITAT dated 06.09.2013. 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 06.09.2013 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 06.09.2013, 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 6 | Page 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 06.09.2013, 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 06.09.2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 06.09.2013 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 06.09.2013 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 7 | Page 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 06.09.2013 deserve to be quashed and set aside and are accordingly quashed and set aside. The original orders passed by the ITAT dated 06.09.2013 passed in the respective appeals preferred by the Revenue are hereby restored. 8. Considering the fact that the Assessee had earlier preferred appeal/s before the High Court challenging the original order passed by the ITAT dated 06.09.2013, which the Assessee withdrew in view of the subsequent order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013, we observe that if the Assessee/s prefers/prefer appeal/s before the High Court against the original order dated 06.09.2013 within a period of six weeks 8 | Page from today, the same may be decided and disposed of in accordance with law and on its/their own merits and without raising any objection with respect to limitation.” 8.1. In the light of judgement of Hon’ble Supreme Court in the case of CIT vs M/s. Reliance Communication Ltd. (supra), we do not see any merit into the application of Revenue, the same is hereby dismissed. 9. In the result, the Miscellaneous Application filed by the Revenue is dismissed. Order pronounced in the open Court on 22 nd February, 2023. Sd/- Sd/- (PRADIP KUMAR KEDIA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI