Assistant Commissioner of Income Tax, Circle-2, Jalandhar V. Anthony F.R. Madasser, Jalandhar

MA 8/ASR/2021

AI Insights

The case revolves around a Miscellaneous Application filed by the revenue against an earlier ITAT order concerning the assessment year 2013-14. The revenue contended that there were miscalculations in applying the profit rate to gross purchases instead of net purchases, which led to a lower gross profit being determined compared to that declared by the assessee. The ITAT, referencing decisions from the jurisdictional High Court and the Supreme Court, concluded that it could not amend its earlier order as it was a speaking order, and such an amendment would exceed the powers granted under section 254(2) of the Income-tax Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115186 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-03-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 30-03-2021
• Other Referred Cases: Popular Engg. Co Vs. Income-tax Appellate Tribunal, Commissioner of Income-tax Vs. Karam Chand Thapar & Bros. (P.) Ltd, CIT(IT-4) Mumbai vs Reliance Telecom Ltd
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80HHC; 254(2); 119; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER ANDSH. ANIKESH BANERJEE, JUDICIAL MEMBER M.A. No. 8/Asr/2021 (In I.T.A.No. 513/Asr/2017) Assessment Year: 2013-14 ACIT- Circle,-2, Jalandhar. (Appellant) Vs. Sh. Anthony F.R. Madassar Prop. M/s Navjeevan Enterprises, G-12, Guru Gobind Singh Avenue, Jalandhar. [PAN: APQPM9874B] (Respondent) Appellant by Smt. Balwinder Kaur, CIT. DR. Respondent by Sh. Rohit Kapoor, CA. Date of Hearing 13.03.2023 Date of Pronouncement 22 .03.2023 ORDER Per Anikesh Banerjee, JM: The Miscellaneous Application(in brevity MA) was filed by the revenue against the order of the ITAT, Amritsar Bench, bearing ITA No. 513/Asr/2017 for A.Y. 2013-14. The said order was pronouncedon dated 21.06.2019. The revenue has filed a petition against the ITA order with the following grievances. “5. From the perusal of the records it is noticed that some miscalculation has arisen in this case which needs attention of the Hon'ble Bench; M.A. No. 08/Asr/2021 (In I.T.A.No. 513/Asr/2017) 2 a) The Hon'ble bench followed its own composite order in the case of the assessee for the A.Y. 2008-09 to 2010-11 which itself had some infirmities in calculation which resulted in revenue loss to the department for the A.Y. 2008-09 and 2012-13 and again in the present year under consideration i.e. 2013-14. b) In the said order the Hon'ble Bench applied the profit rate of 38.23 % to gross purchase (following the working of Ld. CIT (A) while the Ld. CIT(A) vide para No. 6.9 of his order date 03.03.2014 had applied profit rate of 38.23 % on net purchase of Rs. 5,32,29,279, while the profit rate on gross purchase calculated by the CIT(A) was 27.66 %. c) The above order resulted in profit determined by the ITAT in A.Y. 2008-09 and 2012-13 even lower than the profit declared by the assessee in his return. This resulted in loss to the revenue as the income determined after giving appeal effect to the order of the ITAT, is lower than the income declared in return by the assesse. The tabular comparison will clear the facts as below:- A.Y. Declared by assesse GP declared by ITAT 2008-09 336758 -1392721 (loss) 2012-13 4618230 -4184547 (loss) As can be seen from chart above for A.Y. 2008-09 and 2012-13, the GP determined by the ITAT is lower than that the GP declared by the assessee. d) Similarly for the year under consideration i.e. 2013-14, the GP declared by the assessee is 83,64,009 and that by the ITAT is 2,28,540 which is much below than the declared by the assessee himself. M.A. No. 08/Asr/2021 (In I.T.A.No. 513/Asr/2017) 3 e) Thus inspite of rejecting the books of account which was upheld by the CIT(A) and Hon'ble ITAT bench also, the true profits determined remain lower than the profit declared by the assessee for the A.Y. 2008-09, 2012-13 and 2013-14 due to the error of applying GP rate to gross purchase while the formula relied upon by ITAT worked out by the Ld. CIT(A) applied the GP rate to Net purchase. f) The profit rate applied by the Ld. CIT(A) in his order date 03.03.2014 vide para 6.9 to net purchase ; -on higher side as the profit when calculated as percentage of gross amount of sale will be substantially low. In view of the apparent errors and omission as discussed above it is humbly requested that the order passed by the Hon'ble Bench may kindly be suitably amended.” 2. The ld. Counsel for assessee placed that the bench already discussed the issue in the ITA 513/Asr/2017 para no. 3 which is extracted as below: “3. Having heard the parties and perused the material available on record. We have realized from the impugned order that the Ld. CIT(A) not only considered and respectfully followed the judgment of jurisdictional Bench of ITAT in the assessee’s own case for Asst.Year:2008-09 but also considered the other three orders passed qua assessment years i.e. 2010-11, 2011-12, & 2012-12, for coming to right and logical conclusions, therefore, in our considered view once there are judgments of the jurisdictional Bench on the identical issues then the Ld. CIT(A) is not under obligation to follow the different reasoning and the order contrary passed by other CIT(A) if any as relied upon by the Ld. CIT-DR for the Asst. Year 2014-15. The Ld. CIT(A) has followed the judgments of the jurisdictional Bench, hence the order under challenge does not requires any inference as the same does not suffers M.A. No. 08/Asr/2021 (In I.T.A.No. 513/Asr/2017) 4 from perversity, impropriety and illegality and therefore liable to be sustained and resultantly the appeal of the Revenue Department deserves dismissal 4. In the result, the appeal filed by the Revenue Department stands dismissed.” 3. We heard the rival submission and relied on the documents available in the record. In argument the revenue let to inform that the rectification was required to relate this order of the ITAT, Amritsar Bench. But the ITAT Amritsar Bench has passed the speaking order in this issue. The ld. counsel during hearing relied on the order of the Hon’ble Jurisdictional High Courtand Hon’ble Apex Court in these cases. The following observation of the Hon’ble Courts are extracted as below: “8. Similarly, the same view has been held by jurisdictional Punjab & Haryana High Court in the case of Popular Engg. Co Vs. Income- tax Appellate Tribunal reported in 119 Taxmann 51 has held as under: "Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Assessment year 1992-93 - Tribunal approved speaking order of first appellate authority allowing petitioner’s appeal against Assessing Officer’s disallowance of petitioner’s claim for deduction under section 80HHC - Subsequently, it recalled its order under section 254(2) on ground that department’s plea had not been considered on merits - Whether under section 254(2), Appellate Tribunal is empowered to amend any order passed by it under section 254(1) in order to rectify any mistake apparent from record but it has M.A. No. 08/Asr/2021 (In I.T.A.No. 513/Asr/2017) 5 no power to review or revise its order - Held, yes - Whether since order of Tribunal under section 254(1) satisfied requirements of speaking order insofar it had not only taken cognizance of reasons assigned by first appellate authority but had also approved them, impugned order of recall must be held to be vitiated by error of law - Held, yes” (please refer page no 11-19 of judgement set 9. Similarly, the same view has been held by the Honorable Supreme Court in the case of Commissioner of Income-tax Vs. Karam Chand Thapar & Bros. (P.) Ltd reported in 176 ITR 535 has held as under: It is equally settled that the decision of the Tribunal has not to be scrutinised sentence by sentence merely to find out whether all facts have been set out in detail by theTribunal or whether some incidental fact which appears on record has not been noticed by the Tribunal in its judgment. If the Court, on a fair readins of the judgment of the Tribunal. finds that it has taken into account all relevant materials and has not taken into account any irrelevant material in basing its conclusions, the decision of the Tribunal is not liable to be interfered with, unless, of course. The conclusions arrived at by the Tribunal are perverse. It was not necessary for the Tribunal to state in its judgment specifically or in express words that it had taken into account the cumulative effect of the circumstances or had considered the totality offacts, if the judgment of the Tribunal showed that it had, in fact, done so. Thus, there was no reason to interfere with the decision of the Tribunal. Accordingly, the appeal was to be dismissed, (please refer page no 20-28 of judgement set” M.A. No. 08/Asr/2021 (In I.T.A.No. 513/Asr/2017) 6 4. We respectfully relied on the order of Apex Court, CIT(IT-4) Mumbai vs Reliance Telecom Ltd. 133 taxmann.com 41 (SC). The observation is extracted as below:- “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 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.” The recalling the observation of a speaking order of ITAT is beyond the jurisdiction of Bench. So, the MA application of the revenue is dismissed. M.A. No. 08/Asr/2021 (In I.T.A.No. 513/Asr/2017) 7 Accordingly, the Miscellaneous Application 8/Asr/2021 of the revenue is dismissed. 5. In the result, the Miscellaneous Application of the revenue bearing M.A. No. 08/Asr/2021isdismissed. Order pronounced in the open court on 22 .03.2023 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order