Rectification application under Section 254 rejected for delayed PF ESI payments - no apparent error found

ITAT Bangalore rejected assessee's rectification application under Section 254 regarding delayed PF ESI payments. The Tribunal held no apparent error existed in its original order warranting rectification. The assessee's contention that Tribunal should have followed recent decisions remitting matters to AO was rejected as factually distinguishable. ITAT clarified that Section 254(2) allows only rectification of apparent mistakes from record, not review of orders. The auditor had correctly identified delayed PF ESI payments in Form 3CD, contrary to SC precedent. ITAT emphasized that if assessee considers order erroneous, remedy lies in appeal to HC, not miscellaneous application. Application partly allowed.

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Issues Involved:
1. Whether the Tribunal wrongly relied on case laws not relevant to the grounds of appeal.
2. Whether the Tribunal should have remitted the case back to the Assessing Officer for verification of payment to ESI and PF accounts.
3. Whether the Tribunal has jurisdiction to revisit its earlier order under section 254(2) of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Wrong Reliance on Case Laws:
The assessee filed a miscellaneous application under section 254(2) of the Income-tax Act, 1961, seeking rectification of the Tribunal's order dated 27.06.2024. The assessee contended that the Tribunal wrongly relied on the case of Manikandan Vazhukkappara Kumaran (ITA No.577/Bang/2023) instead of the more recent ITAT decision in ITA No.806/Bang/2023, which remitted a similar issue back to the Assessing Officer for verification. The Tribunal acknowledged that there was a mistake in referring to the decisions relied upon by the parties and agreed that this mistake was apparent on the face of the record, thus needing rectification.

2. Remitting the Case Back to the Assessing Officer:
The assessee argued that during the course of the argument, it was agreed by the Bench to remit the issue back to the Assessing Officer to verify the payment made to ESI and PF accounts within 15 days from the end of the month in which the salary is paid. However, the Tribunal found that the decision in the case of MTR Maiya's (ITA No.95/Bang/2023) was not applicable as it was based on an earlier decision of the Calcutta Bench, which was superseded by the Supreme Court's decision in Checkmate Services Ltd vs CIT-1 (2023) 6 SCC 45. The Tribunal concluded that there was no purpose in remitting the issue back to the AO as the delayed payments were already pointed out by the auditor and accepted by the assessee.

3. Jurisdiction to Revisit Earlier Order:
The Tribunal emphasized that under section 254(2) of the Income-tax Act, 1961, it has limited jurisdiction to rectify any mistake apparent from the record and cannot revisit its earlier order to rehear the entire appeal on merits. The Tribunal cited the Supreme Court's decision in Reliance Telecom Limited (2021) 133 taxmann.com 41 (SC), which held that section 254(2) powers are akin to Order XLVII Rule 1 CPC and are only for correcting mistakes apparent from the record, not for re-adjudicating the merits. The Tribunal reiterated that if the assessee believes the order is erroneous, the appropriate remedy is to appeal to the High Court, not to seek a review through a miscellaneous application.

Conclusion:
The Tribunal partly allowed the miscellaneous application for statistical purposes, acknowledging the mistake in the reference to case laws but maintaining that there was no change in the final result of the original order dated 27.06.2024. The Tribunal concluded that section 254(2) cannot be invoked to reargue the case on merits and that the assessee's remedy lies in appealing to the High Court if they believe the order is erroneous. The order was pronounced in the open court on 30th July, 2024.

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