2023 (5) TMI 154 - AT - Income Tax

Tribunal dismisses Revenue's application, clarifies limits on rectification under Income Tax Act

The Tribunal dismissed the Revenue's Miscellaneous Application seeking to recall its earlier order, emphasizing that rectification under section 254(2) of ... Rectification of mistake - scope of section 254(2) - rectification of mistake apparent from record itself or rectification in error of judgment - Misc. application filed against another Misc. application - HELD THAT:- We find that on identical facts and circumstances and issues, the Pune Tribunal in the case of Mercedes Benz Education Academy, Pune [2019 (5) TMI 1976 - ITAT PUNE] has categorically held that there is no provision in the Act to allow filing of Misc. application against the order passed by the Tribunal in another Misc. application. Thus Misc. application cannot be filed against another Misc. application and the Tribunal has no power to adjudicate upon subsequent application u/s 254(2) of the Act. In view of the aforestated discussion, we find no force in the Misc. application filed by the Revenue which is rejected and dismissed. Issues involved:The judgment involves the issue of recalling an order of the Tribunal passed under section 254(2) of the Income Tax Act, 1961 based on a Miscellaneous Application filed by the Revenue.Issue 1: Recalling the Tribunal's order based on a Miscellaneous Application:The Revenue filed a Miscellaneous Application (M.A.) under section 254(2) of the Income Tax Act, seeking to recall the Tribunal's order dated 21-06-2022 passed in M.A. 97/PUN/2021 arising from ITA No. 1672/PUN/2017 for A.Y. 2013-14. The Revenue contended that the Tribunal had wrongly presumed the need for prior written approval from the concerned CIT for cases with additions exceeding Rs. 10 lakhs. The Revenue cited the case of Pranoy Roy, CBDT Circular No.2/2015, and the chargeability of interest u/s 234A as grounds for seeking the order's recall. The Revenue argued that the Tribunal's order contained a mistake apparent from the record and requested its recall in the interest of justice.Issue 2: Scope of exercising powers under section 254(2) of the Act:The Tribunal considered the scope of exercising powers under section 254(2) of the Act in light of various judicial pronouncements. It was emphasized that the power for rectification under this section can only be exercised for obvious and patent mistakes that are apparent from the record. The Tribunal referred to decisions by the Hon'ble Supreme Court and High Court, highlighting that rectification under section 254(2) is limited to correcting mistakes apparent from the record itself and not errors of judgment. The Tribunal cited the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. and the case of CIT Vs. Ramesh Electric & Trading Company to support this view.Issue 3: Filing of Miscellaneous Application against another Miscellaneous Application:The Tribunal examined the permissibility of filing a Miscellaneous Application against another Miscellaneous Application. Referring to a Pune Tribunal decision in a similar context, it was held that there is no provision in the Act to allow the filing of a Miscellaneous Application against an order passed by the Tribunal in another Miscellaneous Application. Additionally, a Delhi Special Bench decision emphasized that section 254(2) can only be invoked to rectify mistakes in orders passed under subsection (1) of Section 254, and subsequent applications on the same issue are not maintainable before the Tribunal. The Tribunal concluded that the Revenue's Miscellaneous Application seeking to recall the earlier M.A. was not legally tenable, and the Tribunal had no power to adjudicate upon subsequent applications under section 254(2) of the Act.In conclusion, the Tribunal dismissed the Revenue's Miscellaneous Application, highlighting the legal limitations on filing such applications against orders passed under section 254(2) of the Income Tax Act.