MGG INFRA PROJECTS PRIVATE LIMITED,AJMER V. .INCOME TAX OFFICER, AJMER

MA 21/JPR/2024

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The case involves M/s. MGG Infra Projects Pvt. Ltd., which filed a miscellaneous application against a penalty imposed for non-disclosure of an income tax refund in their return. The penalty of Rs. 1,96,362 was levied under section 270A of the Income Tax Act for the assessment year 2017-18, concerning an interest on an income tax refund received for the assessment year 2013-14. The Tribunal had previously dismissed the company's appeal due to inordinate delay and non-appearance. The company argued that the Tribunal had 'set aside' the issue of the refund instead of addressing the penalty in their earlier appeal, claiming a mistake apparent from the record. However, the Tribunal found that the application did not substantiate a mistake that could be rectified under section 254(2) of the Act, referencing the Supreme Court's decision in CIT (IT-4) vs. Reliance Telecom Ltd. and other cases which restrict the scope of rectification to correcting only apparent mistakes.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23927 (ITAT-JAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-12-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: CIT (IT-4) vs. Reliance Telecom Ltd., Nirma Ltd. vs. PCIT, R.L. Traders vs. ITO, Ward 47(1)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANOOP SINGH; LD
• Keywords: Set aside; Opportunity of being heard; Accommodation entries
• Section: 254(2)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH “B”, JAIPUR BEFORE SHRI GAGAN GOYAL, ACCOUNTANT MEMBER AND SHRI NARINDER KUMAR, JUDICIAL MEMBER MA No. 21/JPR/2024 (A.Y.2017-18) (Arising out of ITA No. 728/JP/2017) M/s. MGG Infra Projects Pvt. Ltd., Shop No. 13-14, 1st Floor, JLN Shopping Center, Hospital Road, Ajmer PAN No.: AAHCM 8569J ..... Appellant Vs. Income Tax Officer, Ward 2(1), Ajmer ..... Respondent Applicant by : Mr. Sunil Porwal, CA, Ld. AR Respondent by : Mr. Anoop Singh, Addl. CIT, Ld. DR Date of hearing : 19/12/2024 Date of pronouncement : 19/12/2024 O R D E R PER GAGAN GOYAL, A.M: The present miscellaneous application has been filed by the assessee against the order passed by the Co-ordinate Bench in ITA No. 728/JP/2024 dated: 08/02/2024. 2 The order of Hon'ble ITAT in this case was passed / pronounced on 08/02/2024. The issue involved in appeal alleged in para (a) of the application was: “(a) Levy of penalty u/sec. 270A of the Act of Rs. 1, 96,362/- [on account of interest on income tax refund Rs. 3, 81,284/-]. Thus it is not the issue of the interest on income tax of Rs. 3,81,284/- since this was received in this year. Pertaining to refund for A.Y. 2013-14. But since not disclosed in the return of income hence penalty u/sec. 270A of the Act levied of Rs. 1, 96,362/-.” Applicant claims that Bench, while deciding the appeal has \"Set Aside\" the \"Interest on income tax refund of Rs. 3, 81,284/-,Whereas it was issue of penalty u/sec. 270A of the Act that was to be decided and as such the mistake is apparent and needs review. 2. We have gone through the Miscellaneous Application (M.A.) filed by the assessee company and carefully considered the issue raised by the assessee through this application. The only issue before us is whether, the penalty imposed on the assessee u/s. 270A of the Act is sustainable or not in this case. It is observed this M.A. is filed against the ITA No. 728/JP/2017. This Income Tax Appeal filed by the assessee was against the penalty imposed by the AO and duly confirmed by the Ld. CIT (A). The appeal of the assessee was dismissed by the coordinate bench on the ground of inordinate delay and non-appearance by the assessee. 3. While dismissing the appeal of the assessee against the penalty order, coordinate bench thoroughly dealt with the issue of inordinate delay and non- cooperative behaviour of the assessee. Once an order is passed considering the 3 specific facts of the matter the same can’t be the subject matter of M.A. as provided in section 254(2) of the Act. Provisions of section 254(2) of the Act are reproduced herein below as under for ready reference as under: Orders of Appellate Tribunal. “254. (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. (1A) (2) The Appellate Tribunal may, at any time within six months from the end of the month in which the order was passed, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub- section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard : Provided further that any application filed by the assessee in this sub-section on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees. 4. The similar issue has been dealt in and decided by Hon'ble Apex Court recently in the matter of CIT (IT-4) vs. Reliance Telecom Ltd. [2021] 133 taxmann.com 41 (SC), wherein Apex Court held as under: \"The court has considered the order passed by the Tribunal allowing the miscellaneous application in exercise of powers under section 254(2) and recalling its earlier order as well as the original order passed by the Tribunal. [Para 3.1] Having gone through both the orders passed by the Tribunal, the court is of the opinion that the order passed by the Tribunal recalling its earlier order is beyond the scope and ambit of the powers under section 254(2). While allowing the application under section 254(2) and recalling its earlier order, it appears that the Tribunal has re-heard the entire appeal on merits as if the Tribunal was deciding the appeal against the order passed by the Commissioner (Appeals). In exercise of powers under section 254(2), the tribunal may amend any order passed by it under sub-section (1) of section 254 with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) are akin to order XLVII rule 1 CPC. While considering the application under section 254(2), the Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under section 254(2) are only to rectify/correct any mistake apparent from the record. [Para 3.2] In the instant case, a detailed order was passed by the Tribunal when it originally passed an order, by which the Tribunal held in favour of the revenue. Therefore, the said order could not have been recalled by the Tribunal in exercise of powers under section 4 254(2). If the assessee was of the opinion that the order passed by the Tribunal 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 Tribunal recalling its earlier order. Therefore, as such, the order passed by the Tribunal recalling its earlier order which has been passed in exercise of powers under section 254(2) is beyond the scope and ambit of the powers of the Tribunal conferred under section 254(2). Therefore, the order passed by the Tribunal recalling its earlier order is unsustainable, which ought to have been set aside by the High Court. [Para 4] 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 Tribunal and the parties filed detailed submissions based on which the Tribunal passed its order recalling its earlier order; (ii) the revenue had not contended that the Tribunal 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); and (iii) that the merits might have been decided erroneously but Tribunal had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before Tribunal. [Para 5] 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 Tribunal and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the Tribunal to pass the order de hors section 254(2). As observed hereinabove, the powers under section 254(2) 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 Tribunal 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 Tribunal 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. [Para 6] 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 Tribunal recalling its earlier order deserve to be quashed and set aside and are accordingly quashed and set aside. The original orders passed by the Tribunal passed in the respective appeals preferred by the revenue are hereby restored. [Para 7] In Nirma Ltd. vs. PCIT [2019] 108 taxmann.com 317 (SC) Hon’ble Apex Court held as under: \"Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of (Power of rectification) - Assessment year 1999-2000 - Assessee filed return claiming deduction of interest under section 36(1)(iii) in respect of premature redemption of secured premium notes issued by company - Assessing Officer rejected assessee's claim - Tribunal after taking into consideration various aspects of case, confirmed order passed by Assessing Officer - Assessee thereupon filed 5 a miscellaneous application seeking rectification of Tribunal's order on ground that it contained several errors - Tribunal allowed said application - High Court by impugned order held that since Tribunal had rejected assessee's claim of deduction under section 36(1)(iii) after taking into consideration facts on record and findings recorded by authorities below in detail, impugned rectification order was to be set aside - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [Para 2] 5. It's a settled law that Tribunal is a final fact-finding authority and while doing so, Tribunal is not bound to keep itself handicapped on the wisdom of departmental representative/ Authorised Representatives of assessee putting forward the facts and applicable law before the bench. Members presiding the bench have ample experience of law applicable and capable to analyse the facts at their own. No doubt members are bound to consider the arguments put forward by both the sides, but nothing stops bench to apply their own mind and criteria to adjudicate the matter before them. In this appeal, whole matter was discussed in detail and law applicable was applied. 6. On similar facts again Hon'ble Apex Court in the case of R.L. Traders vs. ITO, Ward 47(1) [2018] 100 taxmann.com 332 (SC) held as under: \"1. the petitioner's grievance is that the impugned order of the Income Tax Appellate Tribunal (ITAT), declining to rectify its previous order, is in error of law. 2. The petitioner/assessee was aggrieved by the imposition of penalty based upon the findings of the Assessing Officer (AO) that one Sh. Pradeep Kumar Bansal [hereafter \"Sh. Bansal\"] had provided accommodation entries and that the credit claimed was not genuine. Its appeal before the CIT (A) was unsuccessful as was its further appeal to the ITAT. It, therefore, approached the ITAT again, under Section 254(2) of the Income-tax Act, 1961 [hereafter \"the 1961 Act\"], contending that the ITAT's previous orders needed rectification because vital facts had been overlooked. 6 3. It is urged by the petitioner that the ITAT overlooked a salient fact that no opportunity to cross-examine the said Sh. Bansal was ever provided to it. In this regard, learned counsel relies upon the statement on oath provided during the assessment proceeding and submits that the least the Revenue could have and ought to have done was to provide an opportunity to it (the assessee) to examine him (Sh. Bansal); in not doing so, the ITAT fell into error. 4. This Court has considered the overall circumstances of the case. On merits, the petitioner was unsuccessful before the three statutory authorities. Therefore, as far as the appreciation of facts and application of law is concerned, there is no question of interference under Article 226 of the Constitution. In any event, the narrow compass within which this Court is called upon to exercise jurisdiction under Article 226 is to consider whether the ITAT's refusal to rectify its previous order (which was based upon the merits of the matter, including the allegation of denial of natural justice), was illegal. 5. the Court is of the opinion that having regard to the extremely circumscribed jurisdiction of the ITAT while considering the rectification application, its view cannot be considered unreasonable. The writ petition is accordingly dismissed as unmerited.\" 6. notwithstanding, the above judicial pronouncement which restrains the tribunal to deal with it its earlier order except in the cases were the mistake is apparent from record. In this matter the arguments put forward by the applicant running into so many grounds and a lengthy argument by the counsel of the assessee itself proves that matter under consideration may not be acceptable/suits to the expectation of the assessee, but for sure not falling under the purview of section 254(2) of the act. 7. In view of the above discussion on facts and the law as pronounced by the Hon’ble Apex Court as mentioned (supra), the grounds raised by the assessee are found to be untenable, hence rejected. 8. In the result, the M.A. of the assessee is dismissed. Order pronounced in the open court on 19th day of December 2024. Sd/- Sd/- (NARINDER KUMAR) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur, िदनांक/Dated: 19/12/2024 7 Copy of the Order forwarded to: 1. अपीलाथ\r/The Appellant , 2. \u000eितवादी/ The Respondent. 3. आयकर आयु\u0015 CIT 4. िवभागीय \u000eितिनिध, आय.अपी.अिध., Sr.DR., ITAT, 5. गाड\u001e फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, Jaipur Details Date Initials Designation 1 Draft dictated on PC on 19.12.2024 Sr.PS/PS 2 Draft Placed before author 19.12.2024 Sr.PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8 Date on which the file goes to the Head clerk 9 Date of Dispatch of order "