Deputy Commissioner of Income-tax, Circle - 7, Punes V. Annuj Goel, Pune

MA 97/PUN/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3850 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-06-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 07-01-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule 8D
• Section: 234B; 14A; 260A; 139(1); 254(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, PUNE SHRI INTURI RAMA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM M.A. No. 97/PUN/2021 Arising out of ITA No. 1672/PUN/2017 Assessment Year : 2013-14 The Jt. CIT (OSD) Central Circle 1(1) Pune Applicant Vs. Anuj Umesh Goel L/H of Mr. Umesh Sitaram Goel San Mahu Complex, 5 Bund Garden Road, Poona Club Pune-411 001 PAN: AAWPG 2098 Q Respondent Applicant by : Shri M.G. Jasnani Respondent by : Shri Krishna V. Gujarathi Date of Hearing : 17-06-2022 Date of Pronouncement : 21-06-2022 ORDER PER PARTHA SARATHI CHAUDHURY, JM : This Miscellaneous Application has been filed by the Revenue arising out of ITA No. 1672/PUN/2017 for assessment year 2013-14 u/s. 254(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) seeking rectification in the order of Tribunal dated 24-02-2020. 2. Briefly stated the relevant facts are that the assessee is an individual engaged in the business of Real Estate Development and Construction of residential as well as commercial projects. The assessee filed the return of income on 31.08.2014 declaring total income of Rs.10,44,53,300/-. During the year under consideration, the assessee also had income from house property, income from business and income from other sources. The case was selected for scrutiny. The Assessing Officer made disallowance (1) on account of application of section 14A of the Income tax Act, 1961 (hereinafter referred to 2 M.A. No. 97/PUN/2021 Arising out of ITA No. 1672/PUN/2017 A.Y. 2013-14 as „the Act‟) read with Rule 8D(2)(iii) of the Income-tax Rules, 1962 (hereinafter referred to as „the Rules‟) and (2) charged interest u/s 234A and 234B of the Act qua the self-assessment payments u/s 140A of the Act. 3. In the first appellate proceedings, the ld. CIT(A) upheld the order of Assessing Officer. 4. Aggrieved with the order of the CIT(A), the assessee filed an appeal before the Tribunal. 5. After hearing both the parties and perusing the material on record, the Tribunal found that the co-ordinate Bench of Pune Tribunal decided the issues in group cases of the assesse vide order dated 29-03-2019. The relevant findings of the Tribunal are in paras 7 to 13 and the same read as under: “7. The first issue raised in this appeal is against confirmation of disallowance u/s.14A. The facts apropos this issue are that the assessee earned exempt income but did not offer any disallowance u/s.14A. The AO computed disallowance at Rs.30,35,585/- only under Rule 8D(2)(iii), being, 0.5% of the average value of investments. The assessee pleaded in the same manner before the ld. CIT(A) as was done for the earlier year that only common expenses should be considered and the expenses incurred exclusively in relation to taxable income, should be reduced. The assessee submitted such calculation which has been reproduced at page 12 of the impugned order, thereby working out a sum of Rs.13,297/- as relatable to both exempt and taxable streams of income. Similar to his action for the preceding year, the ld. CIT(A) not only sustained the disallowance as made by the AO but also enhanced the disallowance u/s 14A by such an amount of Rs.13,297/-. The assessee is aggrieved by the confirmation as well as enhancement of the addition. 8. Having heard both the sides and gone through the relevant material on record, we find that this issue is similar to that of A.Y. 2010-11 which has been determined hereinabove. It is observed that out of the expenses claimed to have been incurred by the assessee exclusively for taxable income, there is an item of common expense, which is Professional fee of Rs.58,521/-. Following our above decision for earlier year, we direct to delete the enhancement of disallowance made by the ld. CIT(A). At the same time, the disallowance is restricted to common expenses incurred by the assessee at Rs.71,818 (namely Rs.13,297 + Rs.58,521). This issue is partly decided in favour of the assessee. 9. The only other issue which survives in the instant appeal is against the computation of interest u/s.234A and 234B of the Act. The fact apropos this issue are that the assessee admittedly filed his return beyond due date u/s. 139(1) of the Act. The AO completed the assessment and determined the amount of interest u/s.234A at Rs.25,97,300/-. The assessee argued before the ld. CIT(A) that the amount of self-assessment tax paid by him should have been proportionately reduced in the calculation of interest u/s.234A. The ld. CIT(A) directed the AO to follow CBDT Circular No.2/2015, dated 10-02-2015. The assessee is aggrieved by such a decision of the ld. CIT(A) in not giving further relief in interest u/s.234A in respect of self-assessment tax paid after the due date u/s.139(1) but before the filing of return of income. 10. We have heard both the sides and gone through the relevant material on record. It is an undisputed position that the assessee filed return belatedly and hence, is liable to be visited with interest u/s.234A of the Act. The case of the assessee is that the amount of self-assessment tax paid by him prior to the filing of return should be reduced in the process of calculation of interest under this section. We want to clarify at the 3 M.A. No. 97/PUN/2021 Arising out of ITA No. 1672/PUN/2017 A.Y. 2013-14 outset that the dispute in the extant appeal is only regarding the calculation of interest and not for the duration for which the interest is so chargeable. Section 234A though provides certain amounts of taxes etc. under sub-section (1) to be reduced from the amount of tax on total income determined under regular assessment for the purpose of calculation of interest u/s 234A, but there is no specific mention for the exclusion of the amount of self-assessment tax. It is worthwhile to mention that the Hon’ble Supreme Court in CIT Vs. Pranoy Roy and Another (2009) 309 ITR 239 (SC) has dealt with the chargeability of interest u/s.234A. In that case, the return was due to be filed on 31-10-1995 but the same was actually filed on 29-09-1996, i.e. after a delay of about 11 months. The assessee paid selfassessment tax on 25-09-1995, i.e. before the due date of filing return of income u/s.139(1). Relying on the language of the provision, the AO did not allow credit for the payment of self-assessment tax in the calculation of interest u/s 234A of the Act. When the matter finally came up before the Hon’ble Supreme Court, it was held that the amount of self-assessment tax paid before the due date of return of income ought to have been reduced. Pursuant to this judgment, the CBDT has come up with a Circular No.2/2015, dated 10-02-2015 providing that “ no interest u/s.234A of the Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing of return of income”. It is this circular which has been followed by the ld. CIT(A) in restoring the matter to the AO for making a fresh calculation of disallowance of interest u/s.234A. 11. The case of the assessee is that though the impugned order provides for exclusion of self assessment tax paid before the due date of the return of income, but there is no such direction for reducing the amount of selfassessment tax paid by the assessee after the due date but before the actual filing of return. It is the case of the assessee that similar direction ought to have been given for such later interest payment as well. We find force in the argument of the ld. AR. It is a settled legal position that payment of interest u/s.234A is a compensation to the Revenue for deprivation of the amount of tax due, for the period it is not paid. The Hon’ble Supreme Court in Pranoy Roy (supra) dealt with a situation in which the amount of self-assessment tax was paid before the due date u/s. 139(1). There was no amount of self assessment tax paid after the due date. The Hon’ble Court, therefore, directed to reduce such an amount of self assessment tax in the calculation of interest u/s 234A. It was so decided on the ground that once the amount of self assessment tax was paid, the Revenue could not be considered as deprived of the amount of tax due to it. As interest u/s 234A is compensatory, following the rationale, we hold that the consequence will be no different if the amount of self-assessment tax is also paid after the due date but before the filing of return of income. In such a scenario, the Revenue will stand compensated to the extent of payment of selfassessment tax made after the due date and accordingly the amount of interest u/s 234A for the period during which such an amount stood paid, needs to be computed on the proportionately reduced amount of tax accordingly. Under these circumstances, we set-aside the impugned order and remit the matter to the file of the AO for calculating the amount of interest u/s.234A afresh after considering date-wise payments of self-assessment tax made by the assessee, both before and after the due date u/s 139(1)......” 7. The facts and issues raised in the present appeal are broadly similar to the facts and issues in group cases of assessee (supra). Therefore, we direct the Assessing Officer to comply with the directions of Tribunal in group cases of assessee (supra) and decide the same. The Assessing Officer shall give reasonable opportunity of hearing to the assessee while deciding the issues. Thus, the grounds raised by the assessee are partly allowed as above. 8. In the result, the appeal of assessee is partly allowed as above.” 6. Now, the department has filed the present Misc. application seeking rectification of order of the Tribunal stating that the Tribunal has wrongly presumed that in any case where there is an addition of more than Rs. 10 lakhs in a case selected under CASS prior written approval is needed from concerned CIT. 4 M.A. No. 97/PUN/2021 Arising out of ITA No. 1672/PUN/2017 A.Y. 2013-14 7. We find that in this case, the Tribunal has given a categorical finding on the issue considering the relevant facts on record and various judicial pronouncements. There is no mistake much less apparent from record. We find that the Revenue has not pointed out any specific mistake apparent in the order of the Tribunal. The Revenue by filing this Misc. application desires this Tribunal to review its own order, which in our considered opinion, the Tribunal does not have any power u/s 254(2) of the Act to review its order. The power vested with the Tribunal relates to the mistake apparent from record only. The Tribunal after considering the grounds raised in the appeal decided the appeal and passed the order. If the Revenue has any grievance against the order of the Tribunal, the Revenue can go before the Hon’ble High Court by filing appeal u/s 260A of the Act. The Tribunal cannot review its own order in the garb of power vested u/s 254(2) of the Act. Review of the order will tantamount to rehearing of the appeal which power is not vested with the Tribunal. The Tribunal after considering the submissions of both the parties has passed the order discussing the provisions of the law. In our opinion, there is no mistake much less apparent from record in the order of the Tribunal. 8. That there are series of decisions of the Hon'ble Supreme Court as well as Hon'ble High Court expounding scope of exercising powers under section 254(2) of the Act. We do not deem it necessary to recite and recapitulate all of them, but suffice to say that core of all these authoritative pronouncements is that power for rectification u/s 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. For fortifying this view, we make a reference to the decision of the Hon'ble jurisdictional High Court in the case 5 M.A. No. 97/PUN/2021 Arising out of ITA No. 1672/PUN/2017 A.Y. 2013-14 of ACIT Vs. Saurashtra Kutch Stock Exchange Ld., (2003) 262 ITR 146 which has been upheld by the Hon'ble Supreme Court reported in (2008) 305 ITR 227. The Hon'ble High Court has laid down following proposition while concluding the judgment: "(a) The Tribunal has power to rectify a mistake apparent from the record on its own motion or on an application by a party under s. 254(2) of the Act; (b) An order on appeal would consist of an order made under s. 254(1) of the Act or it could be an order made under sub-section (1) as amended by an order under sub-s. (2) of s. 254 of the Act; (c) The power of rectification is to be exercised to remove an error or correct a mistake and not for disturbing finality, the fundamental principle being that power of rectification is for justice and fair play; (d) That power of rectification can be exercised even if a mistake is committed by the Tribunal or even if a mistake has occurred at the instance of party to the appeal; (e) A mistake apparent from record should be self-evident, should not be a debatable issue, but this test might break down because judicial opinions differ and what is a mistake apparent from the record cannot be defined precisely and must be left to be determined judicially on the facts of each case; (f) Non-consideration of a judgment of the jurisdictional High Court would always constitute a mistake apparent from the record, regardless of the judgment being rendered prior to or subsequent to the order proposed to be rectified; (g) After the mistake is corrected, consequential order must follow and the Tribunal has power to pass all necessary consequential orders." 9. That in the clauses No. (c) and (e) of the aforestated judgment, it is very categoric that what can be rectified is a mistake apparent from record determined as per facts of each case and the finality cannot be disturbed. We have already examined that there is no apparent mistake in the order of the Tribunal and Revenue is just trying to seek a review of the order in the garb of this Misc. application which is not permitted within the legal framework so far as Tribunal is concerned. In the instant case the Tribunal has already given precise findings on law and facts as per all the materials / documents / evidences placed before it. Such finality of order cannot be disturbed u/s 254(2) of the Act petition in absence of any mistake apparent from record. 10. We further find that the Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric & Trading Company reported as 203 ITR 497 has held 6 M.A. No. 97/PUN/2021 Arising out of ITA No. 1672/PUN/2017 A.Y. 2013-14 that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment. The relevant observations of the Hon'ble High Court are as under: “The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake which the Tribunal is entitled to correct is not an error of judgment but a mistake which is apparent from the record itself.” 11. In view of above, the Misc. application filed by the Revenue is dismissed. Order pronounced in the open Court on this 21 st June 2022 Sd/- sd/- (INTURI RAMA RAO) (PARTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated : 21 st June 2022 Ankam Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The Pr. CIT - 4 Pune 4. The CIT(A)-5 Pune 5. The D.R. ITAT ‘A’ Bench Pune. 5. Guard File BY ORDER, /// TRUE COPY //// Sr. Private Secretary ITAT, Pune. 7 M.A. No. 97/PUN/2021 Arising out of ITA No. 1672/PUN/2017 A.Y. 2013-14 Date 1 Draft dictated on 17-06-2022 Sr.PS/PS 2 Draft placed before author 21-06-2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 21-06-2022 Sr.PS/PS 7 Date of uploading of order 21-06-2022 Sr.PS/PS 8 File sent to Bench Clerk 21-06-2022 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order