RAMAN CHAWLA,NEW DELHI V. ACIT, CIRCLE-61(1), NEW DELHI

MA 95/DEL/2023

AI Insights

The case involves Raman Chawla, the applicant, who sold equity shares and claimed a deduction under Section 54F for the purchase of a new residential property. The Assessing Officer (A.O.) disallowed the deduction, citing ownership of two other residential properties, which was confirmed by the CIT(A) and the Tribunal in the initial order. However, the applicant argued that the Tribunal failed to consider several relevant judgments and the actual use of the property in question during the initial proceedings. The Tribunal acknowledged the oversight and recalled the previous order for re-adjudication.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474839 (ITAT-DELHI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2015-2016
• Other Referred Cases: Navin Jolly Vs. ITO, Sanjeev Puri Vs. DCIT, Kapil Nagpal Vs ITO, Saurashtra Cement Ltd. Vs. CIT(A), Honda Siel Power Products Ltd, GPVR Engineering Ltd. Vs. ACIT, Reliance Telecom Ltd., Universal Cold Storage Ltd Vs. DCIT, Saurashtra Kutch Stock Exchange Limited, Amore Jewels, R.A. Boga vs. AAC, Kil Kotagiri Tea and Coffee Estates Company Ltd. vs. ITAT, CIT vs. Quilon Marine Produce Co, Modu Finblo vs. 1st WTO, CIT vs. S.S.Gupta, Jyotsna Suri vs. ITAT, Seth Madanlal Modi vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: RELYING UPON
• Keywords: Set aside; Additional evidence; Tax effect; Revision of order
• Section: 263; 254(2); 54F; 80IA

Judgement Text

" 1 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘F’ NEW DELHI BEFORE S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER M. A NO. 95/Del/2023 (A.Y 2015-16) in (ITA No. 3931/Del/2019) Raman Chawla C-4/66, Safdarjung development Area, New Delhi PAN: AAMPC4618G (APPLICANT) vs ACIT Circle-61(1) Room No. 2005, 20th Floor, Civic Centre, Minto Road, New Delhi (RESPONDENT) Applicant by Sh. Salil Kapoor, Adv. Sh. Tarun Chanana, Adv. and Sh. Raman Chawla, CA & Adv Sh. Sumit Lalchandani. Respondent by Sh. Sanjay Kumar, Sr. DR ORDER PER YOGESH KUMAR U.S., JUDICIAL MEMBER: The present Miscellaneous application filed u/s 254(2) of the Income Tax Act, 1961 (‘Act’ for short) with a prayer to rectify the error apparent on record in the order dated 31/10/2022. 2. Brief facts of the case are that, during the year consideration the Assessee sold 6650 equity shares of Appian Associates Infrastructure Pvt. Ltd. and long-term capital gain on sale of such Date of Hearing 17.01.2025 Date of Pronouncement 29.01.2025 2 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT shares was computed at Rs. 7,77,45,622/. Thereafter, the Assessee acquired one residential house at A-23/21, DLF City, Phase-1, Gurgaon, Haryana on 22.07.2014 and claimed deduction under Section 54F of the Act amounting to Rs. 5,70,92,987/-.The Ld. A.O. disallowed the same and held that the Assessee is not eligible to claim deduction under Section 54F of the Act since the Assessee is the owner of two residential properties other than the new residential house purchased i.e.(1). C-4/66, Safdarjung Development Area, New Delhi-110016. (2).C-23, Usha Niketan, Safdarjung Development Area, New Delhi-110016. 3. It was the case of the Assessee before the A.O. that Property No. C-23, Usha Niketan, Safdarjung Development Area is the registered office of Devshi Earthmovers Pvt. Ltd. in which the Assessee is the Director which is engaged in business of trading part of heavy earthmovers Machineries and Diesel engine components and its products are used for loaders, bulldozers, dump trucks, tractors, excavators etc., the Assessee is also a partner in the firm i.e. M/s Nagar Goel having its Branch Office at C-23, Usha Niketan, Safdarjung Development Area, New Delhi. 3 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT However, the claim of the Assessee of deduction u/s 54F of the Act in respect of ‘Long Term Capital Gain’ arising from capital gain on the sale of shares and subsequent acquisition of residential property has been denied by the A.O. on the ground that the Assessee has violated the condition prescribed u/s 54F of the Act, which has been confirmed by the Ld. CIT(A) and also by the Tribunal vide order dated 31/10/2022. 4. The Ld. Counsel for the Assessee submitted that the Assessee has relied on the Judgment of Hon’ble Karnataka High Court reported in Navin Jolly Vs. ITO (2020) 424 ITR 462 (Karnataka High Court) and the Order of Co-ordinate Bench of the Tribunal in the case of Sanjeev Puri Vs. DCIT in ITA No. 5474/Del/2014 and 2477/Del/2015 which were not considered by the Tribunal while passing the final order dated 31/10/2022. Further submitted that the Jurisdictional High Court’s Judgment in the case of Kapil Nagpal Vs ITO 351 Delhi is also directly applicable to the case of the Assessee, however, the same has not been considered by the Tribunal. The Ld. Counsel further submitted that the Hon'ble High Court in the case of Saurashtra Cement Ltd. Vs. CIT(A)(325 ITR 4 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT 422) laid down the ratio that, failure to consider a binding judicial precedent by the Tribunal constitutes an error affecting the core of matter and warrants rectification, furthermore, the Judgment of High Court is not merely persuasive, but binding and non- application amounts to manifest error. Rectifying such an error is essential to uphold the justice and ensure adherence to legal principals. The Ld. Counsel relying on plethora of Judgments, sought for rectifying the error apparent from the record. 5. Per contra, the Ld. Departmental Representative submitted that the power conferred u/s 254(2) of the Act are very limited, once the Appeal is decided on its merit the Tribunal cannot invoke the provision of Section 254(2) of the Act and rectify any error, therefore, sought for dismissal of the Appeal. 6. We have heard both the parties and perused the material available on record. It is found from the Paper Book produced by the Assessee, during the appeal proceedings the Assessee relied on Judgment of the Hon’ble High Court of Karnataka in the case of Naveen Joli Vs. ITO (2020) 424 ITR462 (Karnataka) and the order of Coordinate Bench of the Tribunal in the case of Sanjeev Puri Vs. 5 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT DCIT in ITA No. 5474/Del/2014 and 2477/Del/2015, which are not considered by the Tribunal while passing the final order as per the Assessee and as per the Ld. Assessee's Representative, those Judgments are squarely applicable to the case of the Assessee. 7. Further, it is found that, the Tribunal while deciding the Appeal, considered the master plan for Delhi and held that since the property in question is in residential area which cannot be treated as commercial for the purpose of income tax statute for computation of capital gain. However, it is also the grievance of the Assessee is that both the Lower Authorities have not relied on the master plan, however, Tribunal without confronting the same, relied on the master plan and without considering Judgments relied by the Assessee's Representative and without considering the contentions of the Assessee that the actual use of property to be considered in determining the status of the property, decided the Appeal against the Assessee which is error apparent from record. The Ld. Assessee's Representative has also relied on the Judgment of Hon'ble High Court in the case of Saurashtra Ltd. Vs. CIT, wherein it is held that failure to consider judicial precedent 6 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT constitute a fundamental error effecting the core of the matter and warrants rectification. Considering the above facts and circumstances, we are of the opinion that there is an apparent from the record in the order of the Tribunal dated 31/10/2022 which requires fresh adjudication. 8. In so far as the power confers u/s 254(2) of the Act and the argument canvassed by the Department's Representative are concerned, the Co-ordinate Bench of the Tribunal in the case of GPVR Engineering Ltd. Vs. ACIT in MA Nos. 58 and 59/HYD/2022 (ITA 1617 & 1618/HYD/2017) held as under: - “25. So far as the contention of Revenue with regard to the terms of decision of hon'ble Supreme Court in the case of Reliance Telecom Ltd. (supra), in our view, the said decision is binding on all the Tribunals as well as the courts below. However, on perusal of the said decision, it is abundantly clear that the Tribunal cannot revisit its earlier order and go into details on merits. However, the hon'ble Supreme Court in the case of Reliance Telecom Ltd (supra) at Paras 3.1 and 3.2 has categorically held that the Tribunal has power to rectify any mistake apparent from the record only and further it held that the powers under Section 254(2) of the Act are akin to Order XLVII Rule 1 CP and the Tribunal is not required to re-visit its earlier order and to go into detail on merits and the powers under Section 254(2) of the Act are only to rectify/correct any mistake apparent from the record. 26. However, in our view there is a distinction between erroneous order passed on merits and an order passed on account of mistake apparent from the record. In the present Tribunal's order dt.23.11.2021, the Tribunal had committed various mistakes as 7 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT mentioned in foregoing paras, however it can be summarized as under: (i) The Tribunal has not followed the earlier decisions in the case of assessee; (ii) The Tribunal had by mistake mentioned that the previous bench(es) has not considered the Explanation to section 80IA while deciding the case in respect of the assessee; (iii) The Tribunal has not adjudicated the facts in the present case; (iv) The Tribunal has relied upon the decision of M/s. NEC NCC MAYTAS - JV Vs. DCIT (supra) without bringing on record how the said decision is applicable in the facts of the present case and; (v) The Tribunal committed mistake by not considering the order passed by ld.PCIT u/s 263 of the Act and subsequent order giving effect passed by the Assessing Officer for A.Y. 2011-12 and 2012-13. In our considered opinion, the Tribunal has power to rectify any mistake apparent on the face of the record and the hon'ble Supreme Court in the case of Honda Siel Power Products Ltd (supra) held that when there was a mistake, error or omission on part of the Tribunal, then it is the duty of Tribunal to set it right. 27. In the present case, since the facts have not been adjudicated, which have not been denied by the Revenue and therefore, there are mistakes apparent from record. It is settled position of law that the mistakes of the Court should not harm any person. 28. The mistake apparent from record had not been defined in the I.T Act, however there are many mistakes which had been considered by the Hon'ble Supreme Court and High Courts as mistake apparent from record. I. M/s.Universal Cold Storage Ltd Vs. DCIT (2020) 168 Taxman 178 (Mad) - When the Tribunal passed order dismissing the appeal of assessee on account of non- appearance of the assessee, then it has power to recall its order. 8 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT II. Hon'ble Supreme Court of India in Assistant Commissioner of Income Tax vs. Saurashtra Kutch Stock Exchange Limited (2008) 219 CTR (SC) 90 settled long ago that non-consideration of the decision of the jurisdictional High Court /Supreme Court constitutes mistake apparent from record and is rectifiable within the meaning of section 254(2) of the Income Tax Act, 1961. III. Non-consideration of the decisions of the constitutional/writ court touching upon the issue under consideration and ignored by the Hon'ble tribunal while adjudicating the matter in dispute, Amore Jewels (2018) 2 NYPCTR 734 (Bom) holding that non consideration of case laws cited and hence covered under s 254(2) (4) R.A. Boga vs. AAC (1977) 110 ITR 1 (P&H)(FB), IV. A mistake apparent from record means an 'obvious or patent mistake' or a 'glaring and obvious mistake'. Hotly debatable issues are excluded; hardly debatable issues are included. The issue may be complicated, yet the mistake may be simple. It is a mistake apparent from record. The test is not complexity of the issue but simplicity of the mistake. V. Sun Engineering Works (P) Ltd. (1992) 198 ITR 297 (SC), \"it is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration, and to treat it to be complete law declared by this Court\". The Tribunal has ended up doing something which, as is the law laid down by the Hon'ble Supreme Court, is impermissible in law. That cannot but be a glaring, obvious and patent error and, accordingly, liable to be rectified under s. 254(2) of the Act. To suggest that a conscious mistake, even if that be a mistake apparent from record, cannot be rectified under s. 254(2) is somewhat devoid of logic and rationale. If a conscious mistake is a mistake apparent from record, there is no reason for not rectifying the same under the provisions of law. To err is human but there cannot be any justification for perpetuating an error. VI. In Laxmi Electronic Corporation Ltd. vs. CIT (1991) 188 ITR 398 (All) the Tribunal had omitted to consider a preliminary objection that the appeals were barred by time although the same had been urged in arguments before the Tribunal. The Court held that the proposition that a contention urged but not dealt with by the Tribunal can be taken as having been negatived is not inconsistent with the power of the Tribunal to reopen the appeal where it is brought to its notice that an important contention raised by the party was not dealt with by the Tribunal in its 9 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT order. The Court held that such a power must be held to be inherent in the Tribunal since it would be a case where the party has suffered prejudice for no fault of his and on account of the mistake or error on the part of the Tribunal. It held that the failure to deal with the preliminary objection relating to the maintainability of the appeal on the ground of limitation amounted to an error apparent on the face of the record which empowered the Tribunal to reopen the appeal and rectify the mistake if it was so satisfied. VII. In Kil Kotagiri Tea and Coffee Estates Company Ltd. vs. ITAT (1988) 174 ITR 579 the Kerala High Court held that where the Tribunal had relied on a decision of a single Judge of the Kerala High Court which was subsequently overruled the order passed by the Appellate Tribunal disclosed a mistake apparent from the record and that the Tribunal ought to have exercised its powers under Section 254(2) and rectified its order on the basis of the assessee's application for rectification. VIII. Non consideration of a provision of law which would have material bearing on the decision is a glaring obvious and self- evident mistake apparent from the record. Such a mistake would be required to be corrected (CIT vs. Quilon Marine Produce Co. (1986) 157 ITR 448). Modu Finblo vs. 1st WTO (1995) 53 ITD 53 (Pune) (TM) ITO vs. Gilard Electronics (1986) 18 ITD 176 (JP), ACIT vs. Sornamy Alkington Ltd. (1994) 49 ITD 207 (Delhi). Similarly, non consideration of a Rule World also be rectifiable CIT vs. Ballabh Prasad Agarwalla (1997) 90 Taxman 283 (Cal.) IX. 257 ITR 440 (Raj) - CIT vs. S.S.Gupta - A finding of fact was reached against the Assessee on the basis of material which was conveyed to the Tribunal after the hearing was over without affording an opportunity to the assessee to explain the information, which information apparently vitiated the order. On a miscellaneous application filed by the assessee the Tribunal recalled its order and reheard the appeals. The High Court on an appeal preferred by the department confirmed the order of the Tribunal. X. 179 CTR 265 (SC) - Jyotsna Suri vs. ITAT - The Tribunal decided the matter on merits without considering the application for adducing additional evidence pending before it. The Assessee filed a rectification application which was rejected. The High Court while deciding the appeal on merits affirmed the view of the 10 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT Tribunal and held that no application u ITR s 254(2) would lie in the circumstances. On an appeal, the Supreme Court set aside the order of the High Court and remanded the matter back to the file of the Tribunal to decide the application u ITR r 29 on merits and thereafter dispose of the appeal on merits. XI. 261 ITR 49 (Del - Seth Madanlal Modi vs. CIT - The Tribunal admittedly relied on a wrong section while passing the order on merits. The Assessee filed an application for rectification on that ground. The Tribunal upheld the application MA Nos.58 & 59/Hyd/2022 GPVR Engineers Limited and recalled its order. The Department went in appeal, the High Court upheld the decisions of the Tribunal inasmuch as reliance on a wrong provision of law tantamount to an error apparent on record. Also see 267 ITR 450 (Mad) Prithviraj Chohan vs. CIT. XII. Similarly, in case the Tribunal had dismissed the appeal of the assessee on account of low tax effect as per the CBDT Circular. or case of the assessee falls in any exceptions mentioned in board circular, then in our view the Tribunal has power to recall the order as the mistakes are apparent on the face of the record. XIII. Lastly, in the case of Cumbum Co-operative Town Bank Limited, Prakasam in the Tribunal has recalled its order, as the Tribunal had allowed the appeal of the assessee by relying upon the wrong provisions of law. 29. In view of the above, respectfully following the decisions of hon'ble Supreme Court in the case of Honda Siel Power Products Ltd (supra) and III Member case in the case of ITO Vs. M/s. Minnow Trading Company Pvt. Ltd (supra), and Cumbum Co-operative Town Bank Limited (supra), we are of the opinion that the assessee has made out the case for recalling of the order. Accordingly, we recall the impugned order dt.23.11.2021. In view of the above we hereby direct the Registry to fix the matter for re-hearing in its due course for adjudication on merit of the appeal and grounds raised therein. Ordered accordingly. 11 M.A No. 95/Del/2023 Raman Chawla Vs. ACIT 9. In view of above discussions, we recall the order dated 31/10/2022 in ITA No. 3931/Del/2019 and the registry is hereby directed to restore the Appeal to its original number and fix the appeal for hearing on due course and notify the parties concerned. Order pronounced in the open court on 29th January, 2025 Sd/- Sd/- (S RIFAUR RAHMAN) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29/01/ 2025 R.N, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "