THE ITO, WD-2(5), TRIVANDRUM V. M/S.KIZHUVILAM SERVICE CO-OP BANK , TRIVANDRUM

MA 61/COCH/2020

AI Insights

The case involves a miscellaneous petition filed by the Revenue under section 254(2) of the Income Tax Act, 1961, seeking rectification of an earlier Tribunal order concerning the treatment of interest on investments with banks by M/s. Kizhuvillam Service Co-operative Bank Ltd. The Revenue contended that the Tribunal had erroneously relied on a previous decision and sought a review of the order. The Tribunal, however, found no mistake apparent from the record in its earlier decision and emphasized that its powers under section 254(2) are limited to rectifying mistakes apparent from the record, not revisiting the merits of the case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34394 (ITAT-COCHIN)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Other Referred Cases: Kizhathadiyoor Service Co-operative Bank Ltd. in ITA No. 525/Coch/2014, Reliance Telecom Limited (2021) 133 taxmann.com 41 (SC) / (2022) 284 taxmann.com 517 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: SANTOSH P ABRAHAM
• Section: 254(2)

Judgement Text

"MP No.61/Coch/2020 M/s. Kizhuvillam Service Co-operative Bank Ltd., Thiruvananthapuram IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH : COCHIN BEFORE SHRI INTURI RAMA RAO ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER MP No.61/Coch/2020 (Arising out of ITA No.221/Coch/2018) Assessment Year: 2014-15 ITO Ward-2(5) Thiruvananthapuram Vs. M/s. Kizhuvillam Service Co- operative Bank Ltd Chirayinkeezhu Kizhuvillam Mudapuram Thiruvananthapuram 695 314 Kerala PAN No.AABAK3830E APPELLANT RESPONDENT Assessee by : Santosh P Abraham, Adv. Revenue by : Smt. Leena Lal, Sr. D.R. Date of Hearing : 03.01.2025 Date of Pronouncement : 24.03.2025 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This miscellaneous petition u/s. 254(2) of the Income Tax Act, 1961 (in short “The Act”) filed by the Revenue seeking rectification of the order of the Tribunal dated 19.08.2019 in ITA No. 221/Coch/2018 for the AY 2014-15. 2. Before us, the ld. DR vehemently submitted that the only issue raised in this miscellaneous petition is for the treatment of interest on investments with banks as income from other sources and not as income from business and whether the assessee is entitled to deduction of interest income u/s. 80P(2) of the Act. MP No.61/Coch/2020 M/s. Kizhuvillam Service Co-operative Bank Ltd., Thiruvananthapuram Page 2 of 5 Further, ld. DR also submitted that the decision given in the order passed in ITA No. 221/Coch/2018 dated 19.08.2019 by relying on the decision in the case of Kizhathadiyoor Service Co-operative Bank Ltd. in ITA No. 525/Coch/2014 dated 20.07.2016 may be reconsidered and reviewed after recalling for hearing and pass appropriate orders on the issue specified. 3. The ld. AR of the assessee on the other hand vehemently objected the miscellaneous application filed by the assessee by contending that the Tribunal has no jurisdiction to revisit its earlier order and go into the details on merit of the case already decided and submitted that through this miscellaneous application, the ld. DR is seeking to reverse the impugned order of the Tribunal dated 19.08.2019. 4. We have heard both the parties and perused the entire material on record. The main contention of the ld. DR is that the tribunal had erroneously relied on the decision in the case of Kizhathadiyoor Service Co-operative Bank Ltd. in ITA No. 525/Coch/2014 dated 20.07.2016 while passing the order in ITA No. 221/Coch/2018 dated 19.08.2019 and prayed to reconsider and review after recalling for hearing and pass appropriate orders on the issue specified. On going through the order of the Tribunal dated 19.08.2019 we find that the Tribunal has considered all the relevant facts and passed a detailed reasoned order after the Hon’ble High Court vide its judgment dated 07.06.2019 in ITA No. 21/2019 restored the case to the ITAT. Since we found no mistake in the order dated 19.08.2019 on the face of the record which needs rectification, we are of the opinion that ITAT has no power to rehear the entire appeal on merits again in the grab of miscellaneous application. MP No.61/Coch/2020 M/s. Kizhuvillam Service Co-operative Bank Ltd., Thiruvananthapuram Page 3 of 5 4.1 Reliance is also placed on the Hon’ble Supreme Court in the case of Reliance Telecom Limited (2021) 133 taxmann.com 41 (SC) / (2022) 284 taxmann.com 517 (SC) wherein held as follows:- \"3.1 We have considered the order dated 18-11-2016 passed by the ITAT allowing the miscellaneous application in exercise of powers under section 254(2) of the Act and recalling its earlier order dated 6-9-2013 as well as the original order passed by theITAT dated 6-9-2013. 3.2 Having gone through both the orders passed by the ITAT we are of the opinion that the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is beyond the scope and ambit of the powers under section 254(2) of the Act.While allowing the application under section 254(2) of the Act and recalling its earlier order dated 6-9-2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC.While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record. 6. 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 ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors section 254(2) of the Act. As observed hereinabove, the powers under section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that.\" MP No.61/Coch/2020 M/s. Kizhuvillam Service Co-operative Bank Ltd., Thiruvananthapuram Page 4 of 5 Even the observations that the merits might have been decided erroneously and the ITAT 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 ITAT 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.” 5. Thus we are of the firm opinion that section 254(2) of the Act can be invoked only with a view to rectifying any mistake apparent from the record. The Revenue cannot seek a review of the order passed by the Tribunal through a miscellaneous application u/s. 254(2) of the Act, as held by the Hon’ble Supreme Court in the case of Reliance Telecom Limited (supra). We further clarify that if the Revenue is of the opinion that the order passed by the Tribunal is erroneous either on facts or in law, in that case the only remedy available to the Revenue is to prefer an appeal before the Hon’ble High Court. 6. In the result, the miscellaneous application filed by the Revenue is dismissed. Order pronounced in the open court on 24th Mar, 2025 Sd/- (Inturi Rama Rao) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated: 24th Mar, 2025. VG/SPS MP No.61/Coch/2020 M/s. Kizhuvillam Service Co-operative Bank Ltd., Thiruvananthapuram Page 5 of 5 Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(Judicial) 5. The DR, ITAT, Cochin. 6. Guard file By order Asst. Registrar, ITAT, Cochin "