2019 (9) TMI 387 - AT - Income Tax

ITAT dismisses assessee's late-filed application under Income Tax Act; stresses adherence to limitation period.

Shri Anil Kumar Nevatia Versus Income Tax Officer Ward-40 (1), 3, Govt. Place (West) Kolkata-700 001.

The ITAT dismissed the Miscellaneous Application filed by the assessee as it was filed beyond the limitation period prescribed under Section 254(2) of the ... Rectification u/s 254 - period of limitation of 6 months - relevant date - date of service of order or date of pronouncement of the order in the open court - HELD THAT:- Appellate Tribunal has to pass an order u/s 254(2) of the Act within a period of six months, from the end of the month in which the impugned order sought to be rectified was passed. This sub-Section does not talk about the rights of the parties. Income Tax Appellate Tribunal is a creature of the statute and hence its powers are circumscribed by the statute. Hence, we cannot treat beyond the powers given by the statute. Thus, in our view the ITAT does not have any power to pass an order u/s 254(2) of the Act beyond a period of six months from the end of the month in which the order sought to be rectified, was passed u/s 254(1) of the Act. Coming to the argument of the assessee that the term “from the date of order” means the date of communication or knowledge of the order, comes to the petitioner, we find that the order has been pronounced on the open court on 19.09.2018 and hence we have to conclude that the petitioner had the knowledge of the order on the pronouncement of the date. MA filed by the assessee is beyond limitation, hence the same is dismissed. Issues:1. Calculation of period of limitation for filing a Miscellaneous Application (MA) before the ITAT.2. Interpretation of the term 'order' in relation to the period of limitation.3. Consideration of case laws and judgments during the course of hearing.4. Applicability of Section 254(2) of the Income Tax Act, 1961 for rectification by the ITAT.5. Limitation period for rectification under Section 254(2) of the Act.Issue 1: Calculation of period of limitation for filing a Miscellaneous Application (MA) before the ITAT:The assessee filed a MA before the ITAT, claiming a mistake apparent on record in the Tribunal's order dated 19.09.2018. The delay in filing the MA was 66 days. The assessee argued that the period of limitation should be calculated from the date the ITAT's order was served on them, which was 05.12.2018. The ITAT considered this argument in light of Section 254(2) of the Act, which provides a six-month period for rectification. However, the ITAT concluded that the MA was filed beyond the limitation period, leading to its dismissal.Issue 2: Interpretation of the term 'order' in relation to the period of limitation:The assessee contended that the term 'order' should be construed as the date of communication or knowledge of the order to them. Citing judgments from the Bombay High Court and the Supreme Court, the assessee argued that the date of effective service of the order should be considered for calculating the limitation period. However, the ITAT held that the order was pronounced in open court on 19.09.2018, and the assessee was deemed to have knowledge of the order on that date. The ITAT emphasized that the power to pass an order under Section 254(2) of the Act is limited by the statute and cannot exceed the prescribed time limit.Issue 3: Consideration of case laws and judgments during the course of hearing:The assessee claimed that certain case laws presented during the hearing were not considered by the Bench, leading to a mistake apparent on record. Relying on Supreme Court judgments, the assessee argued that non-consideration of cited judgments during the hearing could constitute a mistake under Section 254(2) of the Act. However, the ITAT emphasized that the power to rectify orders is constrained by the statute and does not extend beyond the specified time frame.Issue 4: Applicability of Section 254(2) of the Income Tax Act, 1961 for rectification by the ITAT:Section 254(2) of the Act empowers the ITAT to rectify any mistake apparent from the record within six months from the end of the month in which the order was passed. The ITAT clarified that its powers are limited by the statute, and it cannot exceed the prescribed time frame for rectification under Section 254(2) of the Act. The ITAT highlighted that the rights of the parties are not a consideration in this context, as the ITAT's authority is derived from the statute.Issue 5: Limitation period for rectification under Section 254(2) of the Act:Referring to a judgment by the Ahmedabad Special Bench of the Tribunal, the ITAT reiterated that the limitation period of four years provided under Section 254(2) applies to rectification actions, whether initiated suo motu or at the request of parties. The ITAT concluded that the MA filed by the assessee was beyond the limitation period, leading to its dismissal.In conclusion, the ITAT dismissed the Miscellaneous Application filed by the assessee due to being beyond the limitation period prescribed under Section 254(2) of the Income Tax Act, 1961.