2018 (12) TMI 903 - AT - Income Tax

Tribunal dismisses assessee's application for rectification under Income Tax Act

The Tribunal dismissed the miscellaneous application by the assessee seeking rectification under section 254(2) of the Income Tax Act, 1961, regarding ... Rectification of mistake - ITAT has not remitted the issue to the file of the Assessing Officer after admitting the additional evidence - reconsideration/reapplication of the order of the ITAT in the garb of rectifications of mistake apparent from the record - Held that:- The power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions, as has been shown in the present case. Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. Thus we find that the issue pointed out by the assessee does not fall under the realm of mistake apparent from the record liable to be rectified u/s. 254(2) - It is settled law that reappreciation/ re-adjudication is not permissible in the garb of the rectification of mistake in the order of the Tribunal. - Decided against assessee. Issues:1. Rectification of mistake apparent from the record regarding admission of additional evidences and reconsideration of transfer pricing adjustment on corporate fees.Analysis:The Appellate Tribunal ITAT MUMBAI considered a miscellaneous application seeking an order under section 254(2) of the Income Tax Act, 1961 against the tribunal's order in ITA No. 689/Mum/2017 for the assessment year 2012-13. The assessee urged that the Tribunal erred by not remitting the issue to the Assessing Officer after admitting additional evidence, claiming it as a mistake apparent from the record. However, the Tribunal held that such reconsideration or reapplication of the order is not permissible under the law. The Tribunal referred to the decision of the Hon'ble jurisdictional High Court in CIT vs. Ramesh Electric and Trading Co., emphasizing that a mistake apparent on the record must be obvious and patent, not requiring a long process of reasoning or involving debatable points of law. The power of rectification under section 254(2) can only be exercised for obvious and patent mistakes, not errors of judgment or issues requiring re-adjudication.The Tribunal highlighted that failure to consider an argument advanced by either party for reaching a conclusion does not constitute an error apparent on the record. It emphasized that rectification under section 254(2) is not meant for reappreciation or re-adjudication of issues already decided by the Tribunal. Therefore, the Tribunal dismissed the miscellaneous application by the assessee, concluding that the issue raised by the counsel does not fall under the realm of rectifiable mistake apparent from the record. The decision was based on settled law that rectification under section 254(2) does not allow for re-adjudication in the guise of rectifying mistakes in the Tribunal's order.In summary, the Tribunal clarified that the admission of additional evidence did not entitle the assessee to seek reconsideration of the transfer pricing adjustment issue on corporate fees. The Tribunal's decision was based on the principle that rectification under section 254(2) is limited to correcting obvious and patent mistakes, not for revisiting or re-arguing issues already decided by the Tribunal. The dismissal of the miscellaneous application reaffirmed the legal position that rectification cannot be used as a tool for re-adjudication or reappreciation of matters already addressed in the Tribunal's order.