YASH ORGANICS LTD.,AHMEDABAD V. THE DY.CIT, CIRCLE-8, AHMEDABAD

MA 142/AHD/2024

AI Insights

Yash Organics Ltd. filed a Miscellaneous Application seeking modification of the Tribunal's earlier order which confirmed an addition under section 68 of the Income Tax Act for the block period from 02/08/1996 to 11/02/2000. The application argued that the Tribunal had not considered certain decisions and grounds related to the gross profit rate applicable to the additions. The Tribunal, however, found that all aspects had been considered in the original order and that the findings were based on substantial evidence, including discrepancies in the transactions with M/s. Raj Chemicals. The Tribunal dismissed the application, emphasizing that its powers under Section 254(2) are not meant for re-evaluating the case on merits but for correcting apparent mistakes.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25189 (ITAT-AHMEDABAD)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Other Referred Cases: CIT vs. Reliance Telecom Limited
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B. P. SRIVASTAV
• Assessee Lawyers: KETAN SHAH; AMAN SHAH
• Keywords: Set aside; Opportunity of being heard
• Section: 254(2); 68; 13

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER MISCELLANEOUS APPLICATION No. 142/Ahd/2024 (In IT(SS)A. No.164/Ahd/2014) (Ǔनधा[रण वष[ / Assessment Year : Block Period: 02/08/1996 to 11/02/2000) Yash Organics Ltd. 903,Sapphire Complex, C. G. Road, Navrangpura, Ahmedabad - 380009 बनाम/ Vs. Deputy Commissioner of Income Tax Circle-8, Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACY0532A (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Ketan Shah & Shri Aman Shah, A.Rs. Ĥ×यथȸ कȧ ओर से/Respondent by : Shri B. P. Srivastav, Sr. DR Date of Hearing 03/01/2025 Date of Pronouncement 09/01/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: The present Miscellaneous Application is filed by the assessee with a request to modify the order of this Tribunal in IT(SS)A No. 164/Ahd/2014 dated 20.09.2024 for the Block Period: 02/08/1996 to 11/02/2000. 2. Shri Ketan Shah, Ld. AR of the assessee submitted that the assessee had taken a ground that if the addition was sustained then the GP will be 108.47%. Further in the submissions, it was contended on the basis of various decision that only GP rate was MA No. 142/Ahd/2024 [Yash Organics Ltd. vs. DCIT] - 2 – required to be applied on the additions as proposed by the AO. The Ld. AR submitted that neither the decisions relied upon by the assessee in this respect were considered nor the Ground No.4 taken by the assessee in this regard was adjudicated, which was a mistake apparent from the record. The Ld. AR further submitted that the factual findings given by the Tribunal in the order dated 20.09.2024 was contrary to the facts as brought on record in the paper books filed and that the findings were perverse. To buttress this contention, the Ld. AR specifically pointed out that the finding given in Para Nos. 13 & 14 of the order regarding seized material and regarding genuineness of transactions with Raj Chemicals, was incorrect. He further submitted that the finding recorded that Raj Chemical reflected cash deposit prior to issue of draft to the assessee, was factually incorrect and no evidence was brought on record in this regard, whereas the assessee had submitted voluminous evidences regarding genuineness of the transactions. 3. Per contra, Shri B. P. Srivastava, the Ld. Sr. DR submitted that the Tribunal had carefully considered all the aspects and given a categorical finding and that the order of the Tribunal was neither incorrect nor perverse. He submitted that there was no element left out for any rectification as no mistake was apparent in the order of the ITAT. He, therefore, submitted that the application of the assessee is liable to be rejected. 4. We have carefully considered the rival submissions. All the grounds raised by the assessee in the original appeal pertained to MA No. 142/Ahd/2024 [Yash Organics Ltd. vs. DCIT] - 3 – addition of Rs.3,55,53,117/- with reference to the sales made by the assesse to M/s. Raj Chemicals. This addition was made by the AO u/s.68 of the Act and in this connection the assessee had raised subsidiary grounds that no incriminating material was found during the search and that the addition cannot exceed net profit disclosed by the assessee. The incriminating materials found in the course of search have been discussed in detail in the order dated 20.09.2024. It was categorically noted that the evidences collected during the search and subsequent enquiries had established that the solvent sold by the assessee to M/s. Raj Chemical were not delivered to him but were dispatched somewhere else. In view of this fact, it was held that the Revenue had rightly doubted the genuineness of the sales as appearing in the books of the assessee in the name of Raj Chemicals. The proprietor of M/s. Raj Chemicals was absconding and the bank account of M/s. Raj Chemicals had reflected cash deposits prior to issue of draft to the assessee. On the basis of these evidences, it was held that the genuineness and creditworthiness of the transactions of the assessee with M/s. Raj Chemicals was not established. The assessee has now contended that there was no evidence on record that there were cash deposits in the bank account of M/s. Raj Chemicals prior to issue of draft to the assessee. This finding was given on the basis of facts as recorded in the assessment order as well as in the order of Ld. CIT(A). The onus to establish the genuineness and creditworthiness of its transaction with M/s. Raj Chemicals, was on the assessee. No evidence was brought on record before us that there were no cash deposits in the bank accounts of Raj Chemicals prior to issue of MA No. 142/Ahd/2024 [Yash Organics Ltd. vs. DCIT] - 4 – draft to the assessee. Under the circumstances, we do not find that the factual findings as recorded by the Tribunal in the order was incorrect. The assessee never produced a copy of the bank statement of the relevant bank of Raj Chemicals to establish that there were no cash deposits in the bank account prior to issue of bank draft to the assessee. In the absence of any such evidence on record, we do not find any mistake in the order. 5. As regarding Ground No.4, the said ground reads as under: “4. Without prejudice to the above it is prayed that in any case the addition cannot exceed net profit disclose by the assessee, In reference to the addition made of M/s. Raj Chemicals.” Thus, this ground was only a subsidiary ground challenging the addition of Rs.3,55,53,117/- made u/s.68 of the Act in respect of credits appearing from M/s. Raj Chemicals and was taken without prejudice to the earlier grounds. Since, the addition in this case was made u/s.68 of the Act, which was upheld after considering the fact of the case, this subsidiary ground was found infructuous, as the addition u/s.68 of the Act is not required to be confined only to the extent of net profit disclosed by the assessee. If such a plea was accepted, no addition can ever be made u/s 68 of the Act. The addition u/s.68 of the Act is independent of the net profit disclosed by the assessee. Therefore, it was not found necessary to adjudicate this ground separately. Since, the addition made u/s.68 of the Act was confirmed and all the grounds taken by the assessee pertained to this addition only, all the grounds were dismissed. MA No. 142/Ahd/2024 [Yash Organics Ltd. vs. DCIT] - 5 – 6. In view of the above facts, we do not find any mistake apparent from the record in the order dated 20.09.2024 passed by the Tribunal. By filing the present Miscellaneous Application, the assessee has requested to recall the order and allow another opportunity of being heard on the issues which have all been considered in the order. The provision of Section 254(2) of the Act is intended to rectify only the mistake apparent from the record and we do not find any mistake in the order. The power of Section 254(2) of the Act cannot be utilized to recall and review the order on its merits. If the assessee is of the opinion that the findings given by the Tribunal in the order are incorrect or perverse, it is free to file an appeal before the Hon’ble High Court. The Hon’ble Supreme Court in the case of CIT vs. Reliance Telecom Limited (2021) 133 taxmann.com 41 (SC) has categorically held as under: “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 06.09.2013 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 06.09.2013, 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. 4. In the present case, a detailed order was passed by the ITAT when it passed an order on 06.09.2013, by which the ITAT held in favour of the Revenue. Therefore, the said order could not have been recalled by the Appellate Tribunal in exercise of powers under Section 254(2) of the Act. If the Assessee was of the opinion that MA No. 142/Ahd/2024 [Yash Organics Ltd. vs. DCIT] - 6 – the order passed by the ITAT 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 ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 06.09.2013 which has been passed in exercise of powers under Section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under Section 254 (2) of the Act. Therefore, the order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 is unsustainable, which ought to have been set aside by the High Court. 7. Considering the totality of the facts, the Miscellaneous Application filed by the assessee is required to be dismissed for the reason as discussed above and also on account of judicial discipline following the judgement of Hon’ble Supreme Court in the case of Reliance Telecom Ltd. (supra). 8. In the result, the Miscellaneous Application filed by the assessee is dismissed. This Order pronounced on 09/01/2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 09/01/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "