2021 (7) TMI 529 - AT - Income Tax

Appellate Tribunal Grants Exemption for Covid-19 Delay, Dismisses Revenue's Review Petition

The Income Tax officer, Ward-4 (2) (3), Bengaluru. Versus Late Susan Cherian, L/R by Mr. Abraham Cherian

The Appellate Tribunal condoned the delay in filing the miscellaneous petition due to the Covid-19 lockdown, granting exemption under section 54F of the ... Rectification u/s 254 - DR submitted that this tribunal has erred in granting exemption under section 54F of the Act, to assessee as assessee violated provisions of section 54 (3) of the Act - HELD THAT:- We note that this tribunal denied the exemption under section 54F by following decision of Hon’ble Karnataka High Court in case of Anand Basappa [2008 (10) TMI 99 - KARNATAKA HIGH COURT] Hon’ble Karnataka High Court in case of CIT vs McDowell and Co Ltd [2008 (3) TMI 301 - KARNATAKA HIGH COURT] following the decision of Honda Siel Power Products Ltd [2007 (11) TMI 8 - SUPREME COURT] has held that the power under section 254 (2) of the Act cannot be exercised so as to review order passed by the Tribunal. Hon’ble court held that application of principles laid down by the superior courts to the facts of the case on erroneous understanding of such principles, recording of an erroneous finding by the Tribunal based on facts on record, formation of a conclusion on erroneous application of provision of law to the facts of the case, etc., cannot be held to be a mistake apparent from record warranting rectification by the Tribunal in exercise of its power under section 254 (2) of the Act. We are of the view that by reconsidering the application of principles laid down by Hon’ble Supreme Court to the facts of the case or by reconsidering its findings recorded or by reconsidering the application of the relevant provisions of law to the facts of the case in the present pet miscellaneous petition under section 254(2) this Tribunal would be exercising power of review of its earlier order on merits but not rectification of mistake apparent from record and such review would certainly is beyond the scope of section 254(2). Issues involved:1. Delay in filing the miscellaneous petition due to Covid-19 lockdown.2. Granting exemption under section 54F of the Act.3. Scope of section 254(2) regarding review of the order dated 19/02/2020.Analysis:1. Delay in filing the miscellaneous petition due to Covid-19 lockdown:The Appellate Tribunal considered the delay in filing the miscellaneous petition by the revenue due to the Covid-19 lockdown. The Ld. CIT DR filed an affidavit explaining that the lockdown and government guidelines affected the timely filing. The Tribunal noted that the Supreme Court had extended the period of limitation due to the pandemic. Consequently, the Tribunal condoned the delay in filing the petition as there was a reasonable cause that prevented the revenue from meeting the original deadline.2. Granting exemption under section 54F of the Act:The revenue contended that the Tribunal erred in granting exemption under section 54F to the assessee, alleging a violation of section 54(3) of the Act. The Ld.AR argued that the revenue's petition sought a review of the order dated 19/02/2020, which was beyond the scope of section 254(2) of the Act. The Tribunal examined the submissions from both sides and referred to the decision of the Hon'ble Karnataka High Court in the case of Anand Basappa, where exemption under section 54F was denied. Additionally, the Tribunal cited the decision in CIT vs McDowell and Co Ltd., emphasizing that the power under section 254(2) cannot be used to review orders based on erroneous application of law or facts. The Tribunal concluded that reviewing the application of legal principles or findings in the present petition would amount to a review of the earlier order on merits, which is beyond the scope of section 254(2). Consequently, the issue raised by the assessee was dismissed.3. Scope of section 254(2) regarding review of the order dated 19/02/2020:The Tribunal clarified that the scope of section 254(2) does not extend to reviewing orders based on the application of legal principles or findings. Citing the decisions of the Hon'ble Karnataka High Court and the Hon'ble Supreme Court, the Tribunal emphasized that rectification under section 254(2) is limited to correcting mistakes apparent from the records, not for reviewing orders on merits. Therefore, the Tribunal dismissed the issue raised by the assessee regarding the review of the order dated 19/02/2020.In conclusion, the Appellate Tribunal addressed the issues of delay due to the Covid-19 lockdown, the grant of exemption under section 54F, and the scope of section 254(2) in reviewing orders, providing a detailed analysis and legal interpretation in its judgment delivered on 22nd June 2021.