ACIT, CHENNAI V. M/s. S.M.Clothing, CHENNAI

MA 57/CHNY/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4869 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-08-2010
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 06-08-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 06-01-2009
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Rectification of order
• Section: 80HHC; 260A

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI C BENCH, CHENNAI. (BEFORE SHRI.U.B.S. BEDI J.M. & SHRI. ABRAHAM P. GE ORGE, A.M.) M.A. NO. 57/MDS/2009 [IN I.T.A. NO. 64/MDS/2008] ASSESSMENT YEAR: 2003-04 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE V, CHENNAI. VS. M/S. S.M. CLOTHING, NO.45A, VELACHERY MAIN ROAD, VELACHERY, CHENNAI 600 042. [PAN: AADFS0146J] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI B. SRINIVAS ASSESSEE BY : SHRI R. VIJAYARAGHAVAN ORDER PER U.B.S. BEDI, J.M. BY MEANS OF PRESENT MISCELLANEOUS APPLICATION, THE DEPARTMENT SEEKS TO GET RECTIFIED THE ORDER OF THE TRIBUNAL IN I.T.A. N O. 64/MDS/2008 DATED 04.07.2008 ON THE GROUND THAT THE TRIBUNAL HAS ALLOWED THE APP EAL OF THE ASSESSEE IN RESPECT OF THE ISSUE WHETHER THE ASSESSEE IS ENTITL ED TO DEDUCTION OF 10% DUTY DRAW BACK AND QUOTA SALES FROM INDIRECT COST WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC FOLLOWING HONBLE SUPREME COURTS DEC ISION IN THE CASE OF M/S. HERO EXPORTS VS. CIT 295 ITR 454 WHEN IT OMITTED TO CONSIDER THE FACT THAT THE ASSESSEE IS ONLY A MIXED EXPORTER AND AS SUCH THE D ECISION OF THE HONBLE SUPREME COURTS DECISION IN THE CASE OF M/S. HERO E XPORTS VS. CIT (SUPRA) IS NOT APPLICABLE TO THE PRESENT CASE, MOREOVER, THE ASSES SEE HAS NOT AGITATED THIS ISSUE BEFORE THE LD. CIT(A), THEREFORE, THIS IS A M ISTAKE APPARENT FROM THE RECORD AS SUCH PRAYED THAT IN ORDER TO CORRECT THE ORDER, THE ORDER OF THE TRIBUNAL SHOULD BE RECALLED AND IT BE DISPOSED OFF ON MERITS TO REN DER JUSTICE. M. M.M. M.A AA A. .. . NO. NO. NO. NO.57 5757 57/MDS/0 /MDS/0 /MDS/0 /MDS/09 99 9 2 2. THE LD. DR AT THE TIME OF HEARING, ARGUING THE APPLICATION MAINLY LAID STRESS ON THE PLEA THAT THE TRIBUNAL HAS WRONGLY AP PLIED THE HONBLE SUPREME COURT DECISION (SUPRA). THEREFORE, THE IMPUGNED ORD ER SHOULD BE RECALLED AND APPEAL BE DISPOSED OFF ON MERITS BECAUSE THE ASSESS EE IS NOT ENTITLED TO DEDUCTION OF 10% OF DUTY DRAW BACK AND QUOTA SALES FROM INDIRECT COST WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC. IT WAS ALS O PLEADED THAT SINCE THIS ISSUE DOES NOT ARISE OUT OF THE ORDER OF THE LD. CI T(A), THEREFORE, NEITHER THE ASSESSEE WAS CORRECT IN INCORPORATING THIS ISSUE IN THE GROUNDS OF APPEAL NOR THE TRIBUNAL IS LEGALLY CORRECT TO DECIDE THE SAME IN F AVOUR OF THE ASSESSEE, WHICH CALLS FOR RECTIFICATION. AS SUCH, ORDER BE RECTIFIE D. 3. SHRI R. VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASS ESSEE STRONGLY OPPOSED THE APPLICATION OF THE DEPARTMENT ON THE GROUND THAT SI NCE THE ISSUE WAS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE DE CISION OF THE HONBLE SUPREME COURT AND BY INCORPORATING RELEVANT PORTION, TRIBUN AL HAS FOLLOWED SUCH DECISION. IN CASE THE DEPARTMENT HAS ANY GRIEVANCE, IT COULD GO FOR FURTHER APPEAL UNDER SECTION 260A OF THE INCOME TAX ACT AND THE SAME CAN NOT BE AGITATED IN RECTIFICATORY PROCEEDINGS BEFORE THE TRIBUNAL, WHEN THE BENCH HAS CONSCIOUSLY TAKEN SUCH DECISION BY APPLYING THE JUDGMENT OF THE HIGHEST COURT OF LAND. AS REGARDS OTHER ISSUE RAISED, IT DOES NOT ARISE OUT O F THE ORDER OF THE LD. CIT(A), IT WAS CONTENDED THAT THE ASSESSEE HAS RAISED THIS PAR TICULAR GROUND IN THE GROUNDS OF APPEAL BEFORE THE TRIBUNAL AND AT THAT POINT OF TIME WHEN THE APPEAL WAS HEARD, THE DEPARTMENT DID NOT CHALLENGE SUCH ACTION OF THE ASSESSEE AND OTHERWISE, LEGAL GROUND CAN BE RAISED AT ANY STAGE AND RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F NATIONAL THERMAL POWER M. M.M. M.A AA A. .. . NO. NO. NO. NO.57 5757 57/MDS/0 /MDS/0 /MDS/0 /MDS/09 99 9 3 COMPANY LIMITED VS. CIT 229 ITR 383. THEREFORE, IT CANNOT BE AGITATED IN RECTIFICATION PROCEEDING, BECAUSE THERE IS NO MISTA KE MUCH LESS A MISTAKE APPARENT FROM THE RECORD AND IN CASE APPLICATION OF THE DEPARTMENT IS ACCEPTED THAT WOULD AMOUNT TO REVIEW OF THE ORDER, WHICH IS NOT PERMISSIBLE UNDER LAW. IT WAS, THUS PRAYED FOR DISMISSAL OF THE APPLICATION O F THE DEPARTMENT. 4. IN ORDER TO COUNTER THE SUBMISSION OF THE LD. C OUNSEL FOR THE ASSESSEE, THE LD. DR RELIED UPON THE DECISION OF HONBLE MADHYA P RADESH HIGH COURT IN THE CASE OF CIT VS. TOLLARAM HASSOMAL 298 ITR 22 TO SUP PORT THE PLEA THAT MATTER SHOULD BE RESTORED TO THE LD. CIT(A) IF THIS BENCH DECIDES TO ALLOW THE APPLICATION OF THE DEPARTMENT. 5. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MA TERIAL ON RECORD AS WELL AS CASE LAW CITED BY RIVAL SIDES AND FIND THAT THE TRIBUNAL WHILE DECIDING THE GROUNDS WITH REGARD TO ENTITLEMENT OF THE ASSESSEE FOR DEDUCTION OF 10% OF DUTY DRAW BACK AND QUOTA SALES FROM INDIRECT COST, WHILE COMPUTING THE DEDUCTION UNDER SECTION 80HHC, THIS BENCH HAS OBSERVED THAT T HE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF M/S. HERO EXPORTS VS. CIT (SUPRA), B Y ALLOWING THE APPEAL OF THE ASSESSEE ON THIS POINT AND WHILE DOING SO, THE TRIB UNAL HAS ALSO INCORPORATED RELEVANT PORTION OF THE HONBLE SUPREME COURTS DEC ISION IN THE CASE OF HERO EXPORTS (SUPRA) AND CLEARLY HELD THAT THE RATIO OF SUCH DECISION IS FULLY APPLICABLE TO THE PRESENT CASE. NOW IN THE RECTIFICATORY PROCE EDINGS, THE DEPARTMENT HAS NOT ONLY AGITATED SUCH ORDER OF THE TRIBUNAL ON MERITS BUT ALSO AGITATED THAT THE GROUND TAKEN AND DECIDED BY THE TRIBUNAL DOES NOT A RISE OUT OF THE ORDER OF THE LD. CIT(A). THEREFORE, IT CONSTITUTE MISTAKE, WHICH SHOULD BE RECTIFIED BY RECALLING M. M.M. M.A AA A. .. . NO. NO. NO. NO.57 5757 57/MDS/0 /MDS/0 /MDS/0 /MDS/09 99 9 4 THE ORDER OF THE TRIBUNAL TO PASS THE ORDER ON MERI TS WITH RESPECT TO THIS GROUND. 5.1 AFTER CAREFULLY CONSIDERING THE POINT AT ISSUE AND MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THIS BENCH HAS PASSED A REASON ED ORDER GIVING PROPER BASIS IN CASE THE APPLICATION OF THE DEPARTMENT IS ALLOWE D THAT WOULD AMOUNT TO REVIEW OF ORDER AS RIGHTLY PLEADED BY THE LD. AR OF THE AS SESSEE, WHICH IN OUR VIEW, IS NOT PERMISSIBLE UNDER THE INCOME TAX ACT AND FOR THAT P URPOSE USEFUL REFERENCE CAN BE MADE TO THE FOLLOWING DECISIONS. 5.2 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS GOKUL CHAND AGARWAL (202 ITR 14), HAS HELD AS UNDER: SECTION 254(2) OF THE INCOME TAX ACT, 1961, EMPOWE RS THE TRIBUNAL TO AMEND ITS ORDER PASSED UNDER SECTION 254(1) TO RECT IFY ANY MISTAKE APPARENT FROM THE RECORD EITHER SUO MOTO OR ON AN A PPLICATION. THE JURISDICTION OF THE TRIBUNAL TO AMEND ITS ORDER THU S DEPENDS ON WHETHER OR NOT THERE IS A MISTAKE APPARENT FROM THE RECORD. IF, IN ITS ORDER, THERE IS NO MISTAKE WHICH IS PATENT AND OBVIOUS ON THE BA SIS OF THE RECORD, THE EXERCISE OF THE JURISDICTION BY THE TRIBUNAL UNDER SECTION 254(2) WILL BE ILLEGAL AND IMPROPER. AN OVERSIGHT OF A FACT CANNOT CONSTITUTE AN APPARENT MISTAKE RECTIFIABLE UNDER SECTION 254(2). THIS MIGH T, AT THE WORST, LEAD TO PERVERSITY OF THE ORDER FOR WHICH THE REMEDY AVAILA BLE TO THE ASSESSEE IS NOT UNDER SECTION 254(2) BUT A REFERENCE PROCEEDING UNDER SECTION 256. THE NORMAL RULE IS THAT THE REMEDY BY WAY OF REVIEW IS A CREATURE OF THE STATUTE AND, UNLESS CLOTHED WITH SUCH POWER BY THE STATUTE, NO AUTHORITY CAN EXERCISE THE POWER. REVIEW PROCEEDINGS IMPLY PR OCEEDINGS WHERE A PARTY, AS OF RIGHT, CAN APPLY FOR RECONSIDERATION O F THE MATTER, ALREADY DECIDED UPON, AFTER A FRESH HEARING ON THE MERITS O THE CONTROVERSY BETWEEN THE PARTIES. SUCH REMEDY IS CERTAINLY NOT P ROVIDED BY THE INCOME TAX ACT, 1961, IN RESPECT OF PROCEEDINGS BEFORE THE TRIBUNAL. 5.3 IN SIMILAR SITUATION, WHILE DEALING WITH THE RE CTIFICATION, THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT AND ANOR VS. I.T.A.T AND ANOR (206 ITR 126 HAS HELD AS UNDER: THE APPELLATE TRIBUNAL, BEING A CREATURE OF THE ST ATUTE, HAS TO CONFINE ITSELF IN THE EXERCISE OF ITS JURISDICTION TO THE E NABLING OR EMPOWERING M. M.M. M.A AA A. .. . NO. NO. NO. NO.57 5757 57/MDS/0 /MDS/0 /MDS/0 /MDS/09 99 9 5 TERMS OF THE STATUTE. IT HAS NO INHERENT POWER. E VEN OTHERWISE, IN CASES WHERE SPECIFIC PROVISION DELINEATES THE POWERS OF T HE COURT OR TRIBUNAL, IT CANNOT DRAW UPON ITS ASSUMED INHERENT JURISDICTI ON AND PASS ORDERS AS IT PLEASES. THE POWER OF RECTIFICATION WHICH IS SPECIFICALLY CONFERRED ON THE TRIBUNAL HAS TO BE EXERCISED IN TERMS OF THA T PROVISION. IT CANNOT BE ENLARGED ON ANY ASSUMPTION THAT THE TRIBUNAL HAS GOT AN INHERENT POWER OF RECTIFICATION OR REVIEW OR REVISION. IT IS AXIOMATIC THAT SUCH POWER OF REVIEW OR REVISION HAS TO BE SPECIFICALLY CONFERRED, IT CANNOT BE INFERRED. UNLESS THERE IS A MISTAKE APPARENT FR OM THE RECORD IN THE SENSE OF PATENT, OBVIOUS AND CLEAR ERROR OR MISTAKE , THE TRIBUNAL CANNOT RECALL ITS PREVIOUS ORDER. IF THE ERROR OR MISTAKE IS ONE WHICH COULD BE ESTABLISHED ONLY BY LONG DRAWN ARGUMENTS OR BY A PR OCESS OF INVESTIGATION AND RESEARCH, IT IS NOT A MISTAKE APP ARENT FROM THE RECORD. 5.4 FURTHER, THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS KARAM CHAND THAPAR AND BR.P.LTD. (176 ITR 535) HAS HELD AS UNDE R: APPELLATE TRIBUNAL DUTY TO CONSIDER CUMULATIVE E FFECT OF CIRCUMSTANCES AND TOTALITY OF FACTS NO NEED TO STATE SO IN APPELLATE ORDER SPECIFICALLY INCOME TAX ACT , 1961, SEC. 254 FURTHER IT WAS HELD AS UNDER: IT IS EQUALLY WELL SETTLED THAT THE DECISION OF TH E TRIBUNAL HAS NOT TO BE SCRUTINIZED SENTENCE BY SENTENCE MERELY TO FIND OUT WHETHER ALL FACTS HAVE BEEN SET OUT IN DETAIL BY THE TRIBUNAL OR WHET HER SOME INCIDENTAL FACT WHICH APPEARS ON THE RECORD HAS NOT BEEN NOTIC ED BY THE TRIBUNAL IN ITS JUDGMENT. IF THE COURT, ON A FAIR READING O F THE JUDGMENT OF THE TRIBUNAL, FINDS THAT IT HAS TAKEN INTO ACCOUNT ALL RELEVANT MATERIAL AND HAS NOT TAKEN INTO ACCOUNT ANY IRRELEVANT MATERIAL IN BASING ITS CONCLUSIONS, THE DECISION OF THE TRIBUNAL IS NOT LI ABLE TO BE INTERFERED WITH, UNLESS, OF COURSE, THE CONCLUSIONS ARRIVED AT BY THE TRIBUNAL ARE PERVERSE. IT IS NOT NECESSARY FOR THE TRIBUNAL TO STATE IN IT S JUDGEMENT SPECIFICALLY OR IN EXPRESS WORDS THAT IT HAS TAKEN INTO ACCOUNT THE CUMULATIVE EFFECT OF THE CIRCUMSTANCES OR HAS CONSIDERED THE TOTALITY OF THE FACTS, AS IF THAT WERE A MAGIC FORMULA; IF THE JUDGMENT OF THE TRIBUN AL SHOWS THAT IT HAS, IN FACT, DONE SO, THERE IS NO REASON TO INTERFERE W ITH THE DECISION OF THE TRIBUNAL. M. M.M. M.A AA A. .. . NO. NO. NO. NO.57 5757 57/MDS/0 /MDS/0 /MDS/0 /MDS/09 99 9 6 SIMILARLY THE BOMBAY HIGH COURT IN THE CASE OF CIT- VS- RAMESH ELECTRIC AND TRADING CO. (203 ITR 497) .IT IS AN ACCEPTED POSITION THAT THE APPELLATE TRIBUNAL DOES NOT HAVE ANY POWER TO REVIEW ITS OWN ORDERS UNDER THE P ROVISIONS OF THE ACT. THE ONLY POWER WHICH THE TRIBUNAL POSSESSES IS TO R ECTIFY ANY MISTAKE IN ITS OWN ORDER WHICH IS APPARENT FROM THE RECORD.. THE POWER OF RECTIFICATION UNDER SECTION 254(2) CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED S AN OBVIOU S AND PATENT MISTAKE WHICH IS APPARENT FROM THE RECORD AND NOT A MISTAKE WHICH REQUIRED TO BE ESTABLISHED BY ARGUMENTS AND A LONG DRAWN PROCES S OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIO N. FAILURE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON THE REC ORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENTS 5.5 WE ALSO DRAW SUPPORT HERE FROM HONBLE MADRAS HIGH COURT DECISION IN T.C.(A) NO. 156 OF 2006 DATED 21.08.2007 IN THE CAS E OF CIT VS. TAMIL NADU SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD. WHEREIN THE HONBLE HIGH COURT HELD AS UNDER:- THE TRIBUNAL HAS NO POWER TO REVIEW ITS ORDER. WHE N THE TRIBUNAL HAS ALREADY DECIDED AN ISSUE BY APPLYING ITS MIND AGAIN ST THE ASSESSEE, THE SAME CANNOT BE RECTIFIED UNDER SECTION 254 (2) OF T HE ACT. THERE WAS NO NECESSITY WHATSOEVER ON THE PART OF THE TRIBUNAL TO REVIEW ITS OWN ORDER. EVEN AFTER THE EXAMINATION OF THE JUDGMENTS OF THE TRIBUNAL, WE COULD NOT FIND A SINGLE REASON IN THE WHOLE ORDER A S TO HOW THE TRIBUNAL IS JUSTIFIED AND FOR WHAT REASONS. THERE IS NO APPA RENT ERROR ON THE FACE OF THE RECORD AND THEREBY THE TRIBUNAL SAT AS AN AP PELLATE AUTHORITY OVER ITS OWN ORDER. IT IS COMPLETELY IMPERMISSIBLE AND THE TRIBUNAL HAS TRAVELED OUT OF ITS JURISDICTION TO ALLOW A MISCELL ANEOUS PETITION IN THE NAME OF REVIEWING ITS OWN ORDER. IN THE PRESENT CASE, IN THE GUISE OF RECTIFICATION , THE TRIBUNAL REVIEWED ITS EARLIER ORDER AND ALLOWED THE MISCELLANEOUS PET ITION WHICH IS NOT IN ACCORDANCE WITH LAW. SECTION 254(2) OF THE ACT DOE S NOT CONTEMPLATE REHEARING OF THE APPEAL FOR A FRESH DISPOSAL AND DO ING SO, WOULD OBLITERATE THE DISTINCTION BETWEEN THE POWER TO REC TIFY MISTAKES AND POWER TO REVIEW THE ORDER MADE BY THE TRIBUNAL. TH E SCOPE AND AMBIT OF THE APPLICATION OF SECTION 254(2) IS LIMITED AND NARROW. IT IS RESTRICTED TO RECTIFICATION OF MISTAKES APPARENT FR OM THE RECORD. M. M.M. M.A AA A. .. . NO. NO. NO. NO.57 5757 57/MDS/0 /MDS/0 /MDS/0 /MDS/09 99 9 7 RECALLING THE ORDER OBVIOUSLY WOULD MEAN PASSING OF A FRESH ORDER. RECALLING OF THE ORDER IS NOT PERMISSIBLE UNDER SEC TION 254(2) OF THE ACT. ONLY GLARING AND ANY MISTAKE APPARENT ON THE FACE OF THE RECORD ALONE CAN BE RECTIFIED AND HENCE ANYTHING DEBATABLE CANNOT BE A SUBJECT MATTER OF RECTIFICATION. 5.6 FURTHER, WE PLACE RELIANCE UPON HONBLE DELHI H IGH COURT EXPOSITION ON THE SCOPE OF RECTIFICATION U/S 254(2) AS REPORTED IN TH E CASE OF RAS BIHARI BANSAL VS. COMMISSIONER OF INCOME TAX (2007) 293 ITR 365:- SECTION 254 OF THE INCOME TAX ACT, 1961, ENABLES T HE CONCERNED AUTHORITY TO RECTIFY ANY MISTAKE APPARENT FROM THE RECORD. IT IS WELL SETTLED THAT AN OVERSIGHT OF A FACT CANNOT CONSTITU TE AN APPARENT MISTAKE RECTIFIABLE UNDER THIS SECTION. SIMILARLY, FAILURE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR A RRIVING AT A CONCLUSION, IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. THE MERE FACT THAT THE TRIBUN AL HAD NOT ALLOWED A DEDUCTION, EVEN IF THE CONCLUSION IS WRONG, WILL BE NO GROUND FOR MOVING AN APPLICATION UNDER SECTION 254(2) OF THE ACT. FUR THER, IN THE GARB OF AN APPLICATION FOR RECTIFICATION, THE ASSESSEE CANN OT BE PERMITTED TO REOPEN AND RE-ARGUE THE WHOLE MATTER, WHICH IS BEYO ND THE SCOPE OF THE SECTION. 6. THEREFORE, IN VIEW OF THE FACTS, CIRCUMSTANCES, IN THE LIGHT OF RATIO OF DECISIONS CITED AND DISCUSSION AS HELD ABOVE, WE DO NOT FIND ANY SUBSTANCE IN THE APPLICATION OF THE REVENUE AND DISMISS THE SAME BEING DEVOID OF ANY MERITS. 7. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE REVENUE STANDS DISMISSED. THE ORDER PRONOUNCED ON 23.08.2010. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER VM/- DATED :. 23.08.2010. COPY TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.