OXIGEN SERVICES INDIA PVT. LTD.,NEW DELHI V. JCIT, RANGE-76, NEW DELHI

MA 405/DEL/2023

AI Insights

The case involves Oxigen Services India Pvt. Ltd. filing a miscellaneous application against an earlier ITAT order which dismissed their appeal without adequately addressing the legal precedents and arguments they presented. The main legal issue was the calculation of the limitation period for the levy of penalty under section 271C of the Income Tax Act, specifically whether it should be calculated from the date of reference made by the Assessing Officer (AO) to the Joint Commissioner of Income Tax (JCIT) or from the date when the JCIT issued a show cause notice. The Tribunal acknowledged that the earlier order did not consider the relevant judicial decisions, which constituted a mistake apparent from the record, and thus allowed the recall of the order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397134 (ITAT-DELHI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Other Referred Cases: Principal Commissioner of Income-tax (Central)-2 v. Mahesh Wood Products (P.) Ltd, PCIT-7 vs Rishikesh Buildcon Pvt. Ltd., PCIT- 5 vs JKD Capital & Finlease Limited, Modipon Ltd. vs Addl. CIT (TDS), ACIT Vs Saurashtra Kutch Stock Exchange Ltd, Honda Siel Power Products Ltd. Vs CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Assessee Lawyers: PRAVEEN KUMAR
• Keywords: Period of limitation; TDS; Competent authority; Initiation of penalty proceedings

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E”, NEW DELHI. BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI VIMAL KUMAR, JUDICIAL MEMBER MA No.405/Del/2023 (arising in ITA No.4902/DEL/2018) (Assessment Year : 2013-14) Oxigen Services India Pvt. Ltd., vs. JCIT, Range 76, G – 4, Community Centre, New Delhi. C – Block, Naraina Vihar, New Delhi – 110 028. (PAN: AABCI1405K) (APPLICANT) (RESPONDENT) APPLICANT/ASSESSEE BY : Shri Praveen Kumar, CA REVENUE BY : Shri Manoj Kumar, Sr. DR Date of Hearing : 30.05.2025 Date of Order : 30.05.2025 O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. This misc. application is filed by the applicant/assessee against the order of the Tribunal in ITA No.4902/Del/2018 dated 31.07.2023 for Assessment Year 2013-14 on the ground that there is mistake apparent on record and accordingly, prayed to recall the order. 2. At the time of hearing, ld. AR submitted as under :- “1. The abovementioned appeal of the Applicant has been dismissed by the Hon'ble Bench vide Order dated 31.07.2023 (copy enclosed). 2 MA No.405/Del/2023 2. A perusal of the said order reveals that there are certain mistakes therein which are apparent from record & merit rectification u/s 254(2}. Hence this Miscellaneous Application (M.A). 3. In the impugned order, inter alia following mistakes apparent from the record are noticed: i) The appeal of the Applicant has been dismissed by the Hon'ble Bench without recording, discussing and distinguishing with reasons the multiple binding decisions of Jurisdictional High Court of Delhi and coordinate Bench of IT AT Delhi in its favor relied upon by the Applicant as mentioned in synopsis filed on 10.04.2023 and as referred to in the course of hearing on 19.07.2023. Non consideration of case laws relied upon including of Jurisdictional High Court of Delhi and coordinate Bench of ITAT Delhi, is clearly a mistake apparent from the record. 4. The basic issue to be adjudicated by the Hon'ble Bench in this year was whether period of limitation (6 months) u/s 275(1 )(c) of the Act for levy of penalty u/s 271C is to be calculated from the date of reference made by AO to Ld. JCIT or from the date when Ld. JCIT issued show cause notice. 5. It is the contention of the assessee that such period of limitation of 6 months is to be calculated from-the end of the month in which the reference for levy of penalty was made by the Assistant Commissioner of Income Tax (\"ACIT\" or Ld. AO) to Ld. JCIT and not from the month when show cause notice was issued by Ld. JCIT. 6. Accordingly, penalty order dated 19/04/2016 passed u/s 271 C of the Act is barred by limitation, as Ld. AO has made reference to Ld. JCIT vide letter dated 11/09/2015 and penalty order should have had passed till 31/03/2016 (i.e. 6 months from end of Sept 2015). Date of reference by Ld. AO/ACIT to Ld. JCIT is to be considered as date of action for initiation of penalty and not the date when Ld. JCIT issued show cause notice for levy of penalty u/s 271. 7. In support of its contention, the applicant relied upon various binding case laws of Jurisdictional High Court of Delhi and coordinate Bench of ITAT Delhi in its favour in the synopsis filed and also referred to in the course of hearing before Hon'ble ITAT Bench. 8. The issue is directly covered by the judgment of the Hon'ble Jurisdictional High Court of Delhi in case of Principal Commissioner of Income-tax (Central)-2 v. Mahesh Wood Products (P.) Ltd [2017] 82 taxmann.com 39. In this case, penalty was levied under Sections 271 D and 271 E of the Act as a result of the contravention of Sections 269SS and 269T of the Act. Based on reference from the AO dated 23.7.2012: Add. CIT issued notice on 28.8.2012 and thereafter levied penalty on 26.2.2013. While upholding the order of the ITAT in quashing the subject penalty order, Hon'ble High Court held as under; 3 MA No.405/Del/2023 \"9. However, this question came up for consideration in PCIT v. JKD Capital & Finlease Ltd.(supra). The date on which the AO recommended initiation of penalty proceedings was taken to be the relevant date as far as Section 275(1)(c) was concerned. There was no explanation for the delay of nearly five years in the ACIT acting on the said recommendation. The Court held that the starting point would be the 'initiation' of penalty proceedings. Given the scheme of Section 275(1)(c) it would be the date on which the AO wrote a letter to the ACIT recommending the issuance of the SCN. While it is true that the ACIT had the discretion whether or not to issue the SCN, if he did decide to issue a SCN, the limitation would begin to run from the date of letter of the AO recommending 'initiation' of the penalty proceedings.\" \"10. In the present case, the limitation in terms of Section 275 (1) (iii) of the Act began to run on 23rd July, 2012 and the last date for passing the penalty orders was 31st January, 2013. Therefore, the penalty orders issued on 26th February 2013 were clearly barred by limitation.\" [Note - Term ACIT in above judgement refers to Adl. CIT] 9. Same view has also been taken in following binding judicial precedents of jurisdictional high court of Delhi: (i) PCIT-7 vs Rishikesh Buildcon Pvt. Ltd. [ITA No. 577/2018, 580/2018, 583/2018] (Delhi High Court)- 17.11.2022 - Section 275(1)(c) r.w section 271 D (ii) PCIT- 5 vs JKD Capital & Finlease Limited [!TA No. 780/2015 (81 taxmann.com 80) (Delhi High Court)- 13.10.2015] - Section 275(1)(c) r.w section 271E 10. Also, same view has been taken in the under mentioned binding decision of coordinate bench of Hon'ble Delhi ITAT which is a direct judgement on penalty u/s 275(1 )(c) r.w.s 271 C. Hon'ble ITAT relied on the decision of Hon'ble Delhi High Court in the case of JKD Capital & Finlease Limited (supra). • Modipon Ltd. vs Addl. CIT (TDS) [ITA No. 1897/Del/2012, 1978/Del/2012, 1979/Del/2012, 27/Del/2015, 828/Del/2015 & 829/Del/2015 (Delhi ITAT)- 26.04.2016- Section 275(1)(c) r.w section 271C Decision of coordinate Bench of IT AT is binding and must be followed as interalia held in CIT vs L.G. Ramamurthy 110 ITR 453, 462-63 (Mad). (iii) It is submitted that section 275(1 )(c) is the applicable common provision which prescribed limitation for levy of penalty u/s 271 C, 271 D & 271 E. Section 275 provides limitation for imposition of penalties under various sections covered under Chapter XXI. We quote from section 275 as under: 4 MA No.405/Del/2023 Quote 275. (1) No order imposing a penalty under this Chapter shall be passed- (a) ….. (b) ….. (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. Unquote (underlining is ours) The provisions of section 271 D & 271 E are similar to the provisions of section 271 C. Penalty under all these sections are to be levied by Joint Commissioner and not by Assessing officer/ACIT]. Ratio of decisions under section 271 D & 271 E are applicable to penalty u/s 271 C also as inter alia held in the decision of Modipon Ltd (supra). Thus, the issues involved is covered issue in assessee's favour. (iv) However, despite the issue being covered in assessee's favour, in para 8 of the Hon'ble ITAT order dated 31.07.2023 it is mentioned without reason or detail that \"We have also gone through the case laws relied upon by the assessee during the arguments and find that they are not applicable to the facts of the case.\" However, it is not discussed as to how the above multiple binding judicial precedents of Jurisdictional High Court of Delhi are not applicable on the facts of the case. Moreover, no contra judgement has been cited by Hon'ble ITAT on section 271 (1)(c) on the above proposition. The decision taken in the impugned ITAT order dated 31.07.2023 (Refer para 7) that \"any initiation of penalty by any non-Competent Authority (Ld. AO or ACIT in this case) is non-est in the eyes of law\" is contrary to the aforesaid binding judicial precedents. (v) It is submitted that non-consideration of decisions of Jurisdictional High Court and Coordinate Bench of ITAT Delhi relied upon and of the decisions having bearing on the issue involved constitutes mistake apparent from record capable of rectification u/s 254. In this regard, the applicant inter alia relies upon the decision of Hon'ble Supreme Court in the case of ACIT Vs Saurashtra Kutch Stock Exchange Ltd [2008] 305 ITR 227 (SC) wherein it was held that non consideration of decision of Jurisdictional High Court or of Supreme Court can be said to be a 'mistake apparent from record' which can be rectified under section 254(2). We are quoting from the relevant paras as under. 5 MA No.405/Del/2023 39. As stated earlier, the decision was rendered in appeal by the Income- tax Appellate Tribunal, Rajkot. Miscellaneous Application came to be filed by the assessee under sub-section (2) of section 254 of the Act stating therein that a decision of the 'Jurisdictional Court', i.e., the High Court of Gujarat in Hiralal Bhagwati's case (supra) was not brought to the notice of the Tribunal and thus there was a \"mistake apparent from record\" which required rectification. 40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a \"mistake apparent from the record\"? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a \"mistake apparent from the record\" which could be rectified under section 254(2). (Underlining is ours) (vi) Reliance is also placed on the decision of Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. Vs CIT [2007] 295 ITR 466 (SC) wherein it was held as per head note as under: \"Rule of precedent' is an important aspect of legal certainty in rule of law. That principle is not obliterated by section 254(2). When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the Court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. In the instant case, the Tribunal was justified in exercising its powers under section 254(2) when it was pointed out to the Tribunal that the judgment of the co-ordinate Bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material, which was already on record. The Tribunal had acknowledged its mistake; it had accordingly rectified its order. If prejudice had resulted to the party, which prejudice is attributable to the Tribunal's mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake. The same thing had been done in the instant case. [Para 13] (Underlining ours) Accordingly, there is clear mistake apparent from record in the said ITAT order dated 31.07.2023 being non consideration of binding decisions of Jurisdictional High Court of Delhi and coordinate bench of Hon'ble ITAT Delhi. As such, the same may please be rectified. Prayer: In view of the facts and law involved it is submitted that this M.A of the Applicant be allowed and consequently either the above mistakes apparent from record be rectified and the related grounds of appeal no. 1 in the Applicant's appeal be 6 MA No.405/Del/2023 allowed or alternatively the impugned said order be recalled and reheard for decision in accordance with law and facts involved including synopsis & case law and submissions relied upon by the Applicant. It is stated that no any other M.A has been filed against the impugned ITAT order. We may please be provided opportunity if any further information/ clarification etc. is required with respect to the above. Trust your honors would accede to this prayer of the Applicant.” 3. Ld. AR of the assessee, relying on his above submissions, submitted that despite the issue being covered in assessee's favour, in para 8 of the Hon'ble ITAT order dated 31.07.2023 it is mentioned without reason or detail that \"We have also gone through the case laws relied upon by the assessee during the arguments and find that they are not applicable to the facts of the case.\" However, it is not discussed as to how the above multiple binding judicial precedents of Jurisdictional High Court of Delhi are not applicable on the facts of the case. He further submitted that moreover, no contra judgement has been cited by ITAT on section 271 (1)(c) on the above proposition. Further he submitted that non-consideration of decisions of Jurisdictional High Court and Coordinate Bench of ITAT Delhi relied upon and of the decisions having bearing on the issue involved constitutes mistake apparent from record capable of rectification u/s 254. In this regard, the applicant inter alia relies upon the decision of Hon'ble Supreme Court in the case of ACIT Vs Saurashtra Kutch Stock Exchange Ltd [2008] 305 ITR 227 (SC) wherein it was held that non consideration of decision of Jurisdictional High Court or of 7 MA No.405/Del/2023 Supreme Court can be said to be a 'mistake apparent from record' which can be rectified under section 254(2). Accordingly, he pleaded that the order may be recalled. 4. On the other hand, ld. DR of the Revenue objected to the above submissions and submitted that the order passed u/s 254(1) cannot be reviewed. 5. Considered the rival submissions and material placed on record. We observed that the coordinate Bench has considered the findings of ld. CIT (A) and not considered the materials/judgements/decisions submitted before them by the assessee. The non-consideration of factual material submitted before the Bench is also a mistake apparent on record. We are aware that we cannot review our own order u/s 254(2) of the Act. However, the judgments relied on before us clearly shows that the same submitted were not considered comprehensively. In this regard, we find force from the judgment of Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. wherein it was held that, “non-consideration of decision of jurisdictional High Court and of Supreme Court can be said to be a mistake apparent from record which can be rectified under section 254(2)”. For the sake of repetition, we are reproducing the relevant paras of the aforesaid judgment as under :- “39. As stated earlier, the decision was rendered in appeal by the Income- tax Appellate Tribunal, Rajkot. Miscellaneous Application came to be filed by the assessee under sub-section (2) of section 254 of the Act stating therein that a decision of the 'Jurisdictional Court', i.e., the High Court of Gujarat in Hiralal Bhagwati's case (supra) was not brought to the notice of the Tribunal and thus there was a \"mistake apparent from record\" which required rectification. 8 MA No.405/Del/2023 40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a \"mistake apparent from the record\"? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a \"mistake apparent from the record\" which could be rectified under section 254(2).” 6. Further we also find force from the judgment of Hon’ble Supreme Court in the case of Honda Siel Power Products Ltd. vs. CIT (supra). Therefore, we are inclined to recall the order and direct the Registry to fix the case for hearing in due course. 7. In the result, the misc. application filed by the assessee is allowed. Order pronounced in the open court on this 30th day of May, 2025 after the conclusion of the hearing. Sd/- sd/- (VIMAL KUMAR) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30.05.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "