Sri.V.Ganesan, Calicut V. The DCIT, Calicut

MA 97/COCH/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2496 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 04-09-2014
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: C B M WARRIER
• Keywords: Rectification of order; Reasonable cause
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM M. P. NOS. 97-99/COCH/2014 (ARSG. OUT OF I.T.A. NOS. 98-100//COCH/2014) ASSESSMENT YEARS : 2007-08, 2008-09 & 2009-10) SHRI V. GANESHAN, POOJA CHERUVANNUR, FEROKE, KOZHIKODE. [PAN:ANDPG 1570D] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX,CIRCLE-2(1), KOZHIKODE. (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI C.B.M. WARRIER, CA REVENUE BY SHRI K.K. JOHN, SR. DR DATE OF HEARING 14/11/2014 DATE OF PRONOUNCEMENT 21/11/2014 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THE ASSESSEE HAS MOVED THESE THREE MISCELLANEOUS P ETITIONS SEEKING RECALL OF THE COMMON ORDER DATED 18-07-2014 PASSED BY THIS BENCH FOR THE ASSESSMENT YEAR 2007-08-2009-10. 2. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAS CATEGORICALLY BROUGHT ON RECORD THAT THE BORROWED MONEY WAS NOT U SED IN THE MONEY LENDING BUSINESS. ACCORDING TO THE LD. AR IF THE B ORROWED MONEY WAS NOT INVESTED IN THE MONEY LENDING BUSINESS THE AMOUNT O F INVESTMENT SHOULD BE M.A. NOS.97-99/COCH/2014 2 ONLY RS. 38,80,000/- IN PLACE OF RS.88,80,000/- AS PER THE ASSESSMENT ORDER DATED 18-02-2011 AND THE INTEREST SHOULD HAVE BEEN CALCULATED ONLY ON RS.38,80,000/-. THE LD. AR FURTHER SUBMITTED THAT THE INVESTMENT IN THE MONEY LENDING BUSINESS AS PER THE ORDER OF THE BENC H WAS RS.88,80,000/- WHICH INCLUDED THE BORROWED MONEY ALSO WHICH IS NOT THE OBSERVATION OF THE BENCH IN PARA 9 OF THE ORDER. THE LD. AR SUBMITTED THAT THE ABOVE IS DUE TO A MISTAKE WHICH MAY BE RECTIFIED IN ORDER TO ADO PT THE INVESTMENT IN THEM MONEY LENDING BUSINESS AT RS.38,80,000/- AND D ETERMINE INTEREST INCOME ON THAT AMOUNT. 3. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE RE IS NO MISTAKE APPARENT FROM RECORD SO AS TO RECALL THE ABOVE ORDE R OF THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. IN THE PRESENT CASE, CONSIDERING THE ARGUMENT OF THE ASSESSEES CO UNSEL, WE ARE OF THE OPINION THAT THIS WOULD AMOUNT TO REVIEW OF THE EAR LIER ORDER OF THE TRIBUNAL FOR WHICH THE TRIBUNAL HAS NO POWER TO DO SO. WHIL E PASSING THE ORDER, IN THE INSTANT CASE, THE TRIBUNAL HAS GIVEN A CATEGORI CAL FINDING THAT THE BORROWED MONEY WAS NOT USED IN THE MONEY LENDING BU SINESS. BEING SO, THE QUESTION OF GIVING ANY CREDIT TOWARDS PAYMENT O F INTEREST ON BORROWED FUNDS FROM BANK DOES NOT ARISE. NOW THE ASSESSEE WA NTS TO RE-ARGUE THE M.A. NOS.97-99/COCH/2014 3 SAME ISSUE ONCE AGAIN FOR WHICH THE TRIBUNAL CANNOT BE FORUM AND THE REMEDY LIES ELSEWHERE. 5. FURTHER, IT IS WELL SETTLED THAT STATUTORY AUT HORITY CANNOT EXERCISE POWER OF REVIEW UNLESS SUCH POWER IS EXPRESSLY CONF ERRED. THERE IS NO EXPRESS POWER OF REVIEW CONFERRED ON THIS TRIBUNAL. EVEN OTHERWISE, THE SCOPE OF REVIEW DOES NOT EXTENT TO RE-HEARING OF TH E CASE ON MERIT. 6. IT IS HELD IN THE CASE OF CIT VS. PEARL WOOLLE N MILLS (330 ITR 164): HELD, THAT THE TRIBUNAL COULD NOT READJUDICATE THE MATTER UNDER SECTION 254(2). IT IS WELL SETTLED THAT A STA TUTORY AUTHORITY CANNOT EXERCISE POWER OF REVIEW UNLESS SU CH POWER IS EXPRESSLY CONFERRED. THERE WAS NO EXPRESS POWER OF REVIEW CONFERRED ON THE TRIBUNAL. EVEN OTHERWISE, TH E SCOPE OF REVIEW DID NOT EXTENT TO REHEARING A CASE ON THE MERITS. NEITHER BY INVOKING INHERENT POWER NOR THE PRINCIPL E OF MISTAKE OF COURT NOT PREJUDICING A LITIGANT NOR BY INVOLVING DOCTRINE OF INCIDENTAL POWER, COULD THE TRIBUNAL RE VERSE A DECISION ON THE MERITS. THE TRIBUNAL WAS NOT JUSTIF IED IN RECALLING ITS PREVIOUS FINDING RESTORING THE ADDITI ON, MORE SO WHEN AN APPLICATION FOR THE SAME RELIEF HAD BEEN EA RLIER DISMISSED. 7. THE SCOPE AND AMBIT OF APPLICATION OF SECTION 25 4(2) IS VERY LIMITED. THE SAME IS RESTRICTED TO RECTIFICATION OF MISTAKES APPARENT FROM THE RECORD. WE SHALL FIRST DEAL WITH THE QUESTION OF THE POWER OF THE TRIBUNAL TO RECALL AN ORDER IN ITS ENTIRETY. RECALLING THE ENTIRE ORDER OBVIOUSLY WOULD MEAN PAS SING OF A FRESH ORDER. THAT DOES NOT APPEAR TO BE THE LEGISLA TIVE INTENT. THE M.A. NOS.97-99/COCH/2014 4 ORDER PASSED BY THE TRIBUNAL UNDER S. 254(1) IS THE EFFECTIVE ORDER SO FAR AS THE APPEAL IS CONCERNED. ANY ORDER PASSED UNDER S. 254(2) EITHER ALLOWING THE AMENDMENT OR REFUSING TO AMEND GETS MERGED WITH THE ORIGINAL ORDER PASSED. THE ORD ER AS AMENDED OR REMAINING UN-AMENDED IS THE EFFECTIVE OR DER FOR ALL PRACTICAL PURPOSES. AN ORDER UNDER S. 254(2) DOES N OT HAVE EXISTENCE DE HORS THE ORDER UNDER S. 254(1). RECALL ING OF THE ORDER IS NOT PERMISSIBLE UNDER S. 254(2). RECALLING OF AN ORDER AUTOMATICALLY NECESSITATES REHEARING AND READJUDICA TION OF THE ENTIRE SUBJECT-MATTER OF APPEAL. THE DISPUTE NO LON GER REMAINS RESTRICTED TO ANY MISTAKE SOUGHT TO BE RECTIFIED. P OWER TO RECALL AN ORDER IS PRESCRIBED IN TERMS OF RULE 24 OF THE ITAT RULES, 1963, AND THAT TOO ONLY IN CASE WHERE THE ASSESSEE SHOWS THAT IT HAD A REASONABLE CAUSE FOR BEING ABSENT AT A TIME WHEN TH E APPEAL WAS TAKEN UP AND WAS DECIDED EX-PARTE. JUDGED IN THE AB OVE BACKGROUND THE ORDER PASSED BY THE TRIBUNAL IS INDE FENSIBLE. 8. THE WORDS USED IN S. 254(2) ARE SHALL MAKE SUCH AMENDMENT, IF THE MISTAKE IS BROUGHT TO ITS NOTICE. CLEARLY, IF THERE IS A MISTAKE, THEN AN AMENDMENT IS REQUIRED TO BE CARRIED OUT IN THE ORIGINAL ORDER TO CORRECT THAT PARTICULAR MISTAKE. THE PROVI SION DOES NOT INDICATE THAT THE TRIBUNAL CAN RECALL THE ENTIRE OR DER AND PASS A M.A. NOS.97-99/COCH/2014 5 FRESH DECISION. THAT WOULD AMOUNT TO A REVIEW OF TH E ENTIRE ORDER AND THAT IS NOT PERMISSIBLE UNDER THE IT ACT. THE P OWER TO RECTIFY A MISTAKE UNDER S. 254(2) CANNOT BE USED FOR RECALLIN G THE ENTIRE ORDER. NO POWER OF REVIEW HAS BEEN GIVEN TO THE TRI BUNAL UNDER THE IT ACT. THUS, WHAT IT COULD NOT DO DIRECTLY COULD N OT BE ALLOWED TO BE DONE INDIRECTLY. 9. IN THE CASE OF CIT VS. HINDUSTAN COCA COLA BE VERAGES (P) LTD. (2007) 207 CTR (DEL) 119; (2007) 293 ITR 163 ( DEL), THEIR LORDSHIPS WHILE CONSIDERING THE POWERS OF THE TRIBU NAL UNDER S. 254(2) OF THE IT ACT, 1961 OBSERVED AS UNDER: UNDER S. 254(2) OF THE IT ACT, 1961, THE TRIBUNAL HAS THE POWER TO RECTIFY MISTAKES IN ITS ORDER. HOWEVER, IT IS PLAIN THAT THE POWER TO RECTIFY A MISTAKE IS NOT EQUIVALENT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RECTIFIED. RECTIFICATION IS A SPECIES OF THE LARGER CONCEPT OF REVIEW. ALTHO UGH IT IS POSSIBLE THAT THE PREREQUISITE FOR EXERCISE OF EITH ER POWER MAY BE SIMILAR (A MISTAKE APPARENT FROM THE RECORD), BY ITS VERY NATURE THE POWER TO RECTIFY A MISTAKE CANNOT RESULT IN THE RECALL AND REVIEW OF THE ORDER SOUGHT TO BE RECTIFI ED. 10. THUS THE SCOPE AND AMBIT OF APPLICATION U/S. 2 54(2) IS AS FOLLOWS: (A) FIRSTLY, THE SCOPE AND AMBIT OF APPLICATION OF S. 254(2) OF IT ACT IS RESTRICTED TO RECTIFICATION OF THE MISTAKES APPARENT FROM THE RECORD. (B) SECONDLY, THAT NO PARTY APPEARING BEFORE THE TR IBUNAL SHOULD SUFFER ON ACCOUNT OF ANY MISTAKE COMMITTED B Y THE TRIBUNAL AND IF THE PREJUDICE HAS RESULTED TO THE P ARTY, WHICH PREJUDICE IS ATTRIBUTABLE TO THE TRIBUNALS MISTAKE /ERROR OR M.A. NOS.97-99/COCH/2014 6 OMISSION, AND WHICH AN ERROR IS A MANIFEST ERROR, T HEN THE TRIBUNAL WOULD BE JUSTIFIED IN RECTIFYING ITS MISTA KE. THE RULE OF PRECEDENT IS AN IMPORTANT ASPECT OF LEGAL CERTAINT Y IN THE RULE OF LAW AND THAT PRINCIPLE IS NOT OBLITERATED BY S. 254(2) OF THE ACT AND NON-CONSIDERATION OF PRECEDENT BY THE TRIBU NAL CAUSES A PREJUDICE TO THE ASSESSEE. (C) THIRDLY, POWER TO RECTIFY A MISTAKE IS NOT EQUI VALENT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RE CTIFIED. (D) FOURTHLY, UNDER S. 254(2) AN OVERSIGHT OF A FAC T CANNOT CONSTITUTE AN APPARENT MISTAKE RECTIFIABLE UNDER TH E SECTION. (E) FIFTHLY, FAILURE ON THE PART OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGEMENT. (F) SIXTHLY, EVEN IF ON THE BASIS OF A WRONG CONCLU SION THE TRIBUNAL HAS NOT ALLOWED A CLAIM OF THE PARTY IT WI LL NOT BE A GROUND FOR MOVING AN APPLICATION UNDER S. 254(2) OF THE ACT. (G) LASTLY, IN THE GARB OF AN APPLICATION FOR RECTI FICATION UNDER S. 254(2) THE ASSESSEE CANNOT BE PERMITTED TO REOPEN A ND REARGUE THE WHOLE MATTER AS THE SAME IS BEYOND THE SCOPE OF S.254(2) OF THE IT ACT. 11. KEEPING IN MIND THE ABOVE PARAMETERS, NOW WE P ROCEED TO CONSIDER AND DISPOSE OF THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE AS UNDER. 12. IN THE INSTANT CASE, THE TRIBUNAL WHILE DECIDIN G THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 18/07/2014 HAS CONSIDERED THE ELABORATE ARGUMENTS ADVANCED BY THE AUTHORISED REPRESENTATIVE S OF BOTH THE PARTIES BEFORE IT. IN THIS REGARD, WE WOULD LIKE T O MENTION THAT IN THE ORDER, THE TRIBUNAL FIRST METICULOUSLY MENTIONED TH E ARGUMENTS OF THE M.A. NOS.97-99/COCH/2014 7 LEARNED AR FOR THE ASSESSEE, THE POINTS RAISED BY H IM. THEREAFTER, THE TRIBUNAL CONSIDERED THE SAME AND PASSED A SPEAKING ORDER FOR NOT ENTERTAINING THE CLAIM OF THE ASSESSEE. 13. IN THE RESULT, ALL THE THREE MISCELLANEOUS P ETITIONS FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21-11-2014 SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 21ST NOVEMBER, 2014 GJ COPY TO: 1. SHRI V. GANESHAN, POOJA CHERUVANNUR, FEROKE, K OZHIKODE. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2( 1), KOZHIKODE. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN