INCOME TAX OFFICER, WARD6(3), PATHANKOT V. SHRI VIPAN KHANNA , PATHANKOT

MA 7/ASR/2020

AI Insights

The case involves a miscellaneous application filed by Sh. Vipan Khanna against an earlier ITAT order concerning the assessment year 2013-14. The application sought rectification of the Tribunal's decision, which had allowed a partial relief of 5% and confirmed the interest calculation by the Assessing Officer amounting to Rs. 63,411. The assessee argued that the Tribunal had overlooked certain points and evidence presented during the original hearing, which led to an erroneous decision. The Tribunal, however, found no apparent mistake in its original order and emphasized that its powers under section 254(2) are confined to correcting mistakes that are evident from the record, without delving into the merits of the case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114764 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 6 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-04-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 13-11-2019
• Other Referred Cases: Commissioner of Income Tax (IT-4), Mumbai v. Reliance Telecom Ltd
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Opportunity of being heard; Principle of natural justice; Set aside
• Section: 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. No. 7/Asr/2020 (Arising out of ITA No. 209/Asr/2018) Assessment Year: 2013-14 Sh. Vipan Khanna, C/o Pushap Palace, Dhangu Road, Pathankot [PAN: AELPK 0437Q] Vs. Income Tax Officer, Ward 6(3), Pathankot, Punjab (Appellant) (Respondent) Appellant by : Sh. P. N. Arora, Adv. Respondent by: Sh. Ravinder Mittal, Sr. DR Date of Hearing: 27.04.2023 Date of Pronouncement: 22.05.2023 ORDER Per Dr. M. L. Meena, AM: The Miscellaneous Application was filed by the assessee against the order of the ITAT dated 07.06.2019 in ITA No. 209Asr/2018. MA No. 7/Asr/2020 Vipan Khanna v. ITO 2 2. At the outset, the counsel for the assessee submitted that there are certain mistakes arising out of the order dated 07.06.2019 passed by the Tribunal in ITA No. 209/Asr/2018 which calls for rectification u/s 254(2) of the Act. The counsel contended that there is apparent mistake in the order where the ld. Member had observed that “a relief to the extent of 5% may be allowed. It was further observed that no mistake in the working of interest by the AO having been pointed out and the same works to Rs. 63,411/-.” The ld. counsel has filed a written note in support of the MA which reads as under: “This misc. application arises out of the ITA No. 209(ASR)/2018 vide order dated 07/06/2019. There are certain mistakes apparent from record which calls for rectification. In this connection, it is pertinent to point out that while deciding the appeal the Learned Member observed in his order that “a relief to the extent of 5% may be allowed. It was further observed that no mistake in the working of interest by the AO having been pointed out. The same works to Rs.63411/-.” It was further argued by my counsels Shri Anil Vasudeva and Sh. P.N. Arora, Advocate, time & again before the Learned Bench that there were mostly old debit balances on which no interest can be disallowed. In this connection, the following copies of accounts were duly submitted, the necessary details of which are given hereunder:- (i) Shri Inderjit Mahajan Rs. 184620/- [Refer Page No.36] (ii) — Rs.72427/- [Refer Page No.37] (iii) Shri Veeru Ram Rs.98973/- [Refer Page No.37] (iv) Shri Sohail Malik Rs.200000/- [Refer Page No.37] (v) Khanna Engineering Transpon Co. Rs.80642/- [Refer Page No.38] MA No. 7/Asr/2020 Vipan Khanna v. ITO 3 (Vi) Kush Palace Rs.586112/- [Refer Page No.39] It was also pointed out before the Tribunal that this very point was also raised before the Ld CIT(A) and the written submissions are available on Page No.34 & 35 of the paper-book. There is no discussion on this point and this point has not been discussed and considered by the Learned Member while deciding the appeal when this point was strongly argued by the Counsel before the Learned Bench. As such the order of Ld. Member is against the facts of this case and is untenable under the law. It was also further argued with the help of charts that a sum of Rs. 10,00,000/- was transferred to reconstruct the building which was burnt in tire and due to stay order the work could not get completed. This point was specifically argued and the same was given in writing also but there was no discussion and adjudication on this point also. It is further relevant to point out that in order to prove before the Learned Bench the necessary charts were also given which are duly available on Page No.29A, 30A & 31A of the paper-book. At the time of hearing it was specifically pointed out that mostly certain balances are old debit balances which are brought forward and it was duly proved with the help of above said referred charts. It was also emphatically proved that there was no such amount of loan was raised which was not for the purpose of business. But all these arguments have not been considered by the Learned Member at the time of hearing of the appeal and these facts also do not find place in the appellate order passed by the Learned Member (Referred Above). It was also pointed out at the time of hearing of the appeal and it was explained that there was also capital of the assessee in various firms and there were sundry creditors which were interest free and after considering the same, it was pointed out that there was no necessity for disallowing the proportionate interest because no such loan was taken during the year under consideration which was utilized for non-business purposes. All these points were explained before the bench with the help of charts but all these discussions and evidence do not find place in the body of the assessment order. MA No. 7/Asr/2020 Vipan Khanna v. ITO 4 In view of these circumstances, all these mistakes are apparent from record and call for rectification. The Learned Member has not considered all the above points while deciding the case otherwise; it will have far reaching effects on the judgment delivered by the bench. Thus, it appears that these points have not been considered specially when the subsequent charts were given which contained the gist of the whole arguments and have lost the attention of the Learned Member while deciding the case. It is prayed that a reasonable opportunity of being heard may be allowed in order to arrive at a proper and legal conclusion. It was also argued that the same bench under the same circumstances has accepted the same matter in other appeals also but inadvertently all these points have lost the sight of the learned Member. It is further relevant to point out that a reasonable opportunity of being heard may be allowed as the points raised and discussed before the tribunal neither have been discussed nor have been adjudicated upon. All the mistakes are apparent from record which calls for rectification. 2. That this Misc. Application is filed within time. 3. That the Challan for Rs.50/- on account of necessary fees for filing the Misc. Application is being enclosed herewith. 4. That Power of Attorney is also enclosed herewith. 5. That it is prayed that this Misc. Application may kindly be accepted in the interest of natural justice. 6. This may be taken as an application for rectification u/s 254 of the IT Act. 1961.” 3. Per contra, the ld. DR for the department submitted the Tribunal order and contended that the Tribunal has passed a detailed order originally during the appellate proceedings holding ‘that I find no reason to interfere, except to direct relief to the extent of 5%’, by further relaxing the interest MA No. 7/Asr/2020 Vipan Khanna v. ITO 5 free financing components of the amount advanced by the assessee, obtaining for the year. No mistake in the working of the interest by the AO having been pointed out, ‘same works out to Rs. 63,411/-. The Tribunal has taken reference to the elaborate decision in Sunil Grovers case and also consider the decision of the higher Court of law while explaining, further, the matter to be principally factual and while deciding the matter accordingly to grant assessee part relief. 4. We have heard the rival contentions, pursued the mater on record, the impugned order of the Tribunal and submissions made before us. Admittedly, the Tribunal has passed a detailed order originally during the appellate proceedings holding that the appellant gets part relief to the extent of 5% by way of relaxing the interest free financing components of the amount advanced by the assessee obtained during the year. In the Tribunal order, the Hon’ble Member has given a detailed finding of fact allowbility of interest on borrowed capital u/s 36(1)(iii) of the Act. In our view, if we allow the miscellaneous application of the assessee that would require us to revisit the original order passed by the Tribunal and go in details on merits by way of completely recalling our order whereas our MA No. 7/Asr/2020 Vipan Khanna v. ITO 6 powers under provisions of 254(2) are limited only to rectify correct mistake apparent from record. 5. The Hon’ble Supreme Court in the case of Commissioner of Income Tax (IT-4), Mumbai v. Reliance Telecom Ltd [2021] 133 taxmann.com 41 (SC) has observed vide paras 3.2, 4, 5, 6 & 7 is as under: “Section 254, read with sections 9 and 195, of the Income-tax Act, 1961 - Appellate Tribunal - Powers of (Recalling of order) - Assessee-company entered into a supply contract with a non-resident company - It had filed an application before Assessing Officer under section 195(2) to make payment to a non-resident company for purchase of software without deducting tax at source on ground that said company had no Permanent Establishment (PE) in India and in terms of DTAA between India and Sweden & USA, no tax was to be deducted in India on such purchase - Assessing Officer rejected application of assessee holding that payment made for purchase of software was in nature of royalty and was taxable in India under section 9(1)(vi) and, accordingly, assessee was liable to deduct tax at source at rate of 10 per cent on said payment - Tribunal also upheld said view taken by Assessing Officer by passing a detailed order - Subsequently, assessee filed a miscellaneous application under section 254 - Tribunal allowed said application in exercise of his powers under section 254(2) and re-heard entire appeal on merits and recalled its original order - Whether while considering application under section 254(2), Tribunal was not required to re-visit its original order and go in details on merits and completely recall its order as powers under provision of section 254(2) were only to rectify/correct any mistake apparent from record - Held, yes - Whether, therefore, impugned order passed by Tribunal recalling its detailed original order passed during appellate proceedings was to be set aside and its original order was to be restored - Held, yes [Para 7] [In favour of revenue] MA No. 7/Asr/2020 Vipan Khanna v. ITO 7 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 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 MA No. 7/Asr/2020 Vipan Khanna v. ITO 8 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.” 6. In the instant case, there is no apparent mistake in the order passed by the Tribunal in ITA No. 209/Asr/2018 in respect of AY 2013-14 and merely because the assessee has filed a detailed miscellaneous application, which does not confirm the jurisdiction upon the Tribunal to pass the order de hors u/s 250(4) as the powers u/s 250(4) are only to MA No. 7/Asr/2020 Vipan Khanna v. ITO 9 correct/or rectification the mistake apparent from the record and not beyond that. Even the observations that the merits might have been decided erroneously in the Tribunal had jurisdiction and within its powers it may pass an order recalling its earlier order which is erroneous order cannot be accepted in the light of the Hon’ble Apex Court decision in the case of Reliance Telecom Ltd. (supra). 7. In view of the matter, we hold that the order passed by the Tribunal is sustained and the MA filed by the assessee recalling the Tribunal order is unsustainable and as such rejected. 8. In the result, the miscellaneous application filed by the assessee is dismissed. Order pronounced in the open court on 22.05.2023 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(A), (4) The CIT concerned MA No. 7/Asr/2020 Vipan Khanna v. ITO 10 (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order