ITAT Mumbai recalls prior order u/s 254(1) due to Supreme Court ruling on delayed P.F./E.S.I.C. payments.

The ITAT Mumbai allowed the Revenue's Miscellaneous Application to recall its prior order dated 25/05/2022 under section 254(1) of the Income Tax Act, 1961. This decision was influenced by a subsequent Supreme Court ruling that upheld disallowances related to delayed payments of P.F./E.S.I.C. The Tribunal recognized the binding nature of Supreme Court decisions under Article 141 of the Constitution, leading to the recall for a fresh hearing on the appeal's merits. Both parties were given the opportunity to present their arguments at the new hearing, with the appeal to be scheduled before the regular Bench.

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Issues:
Recall of order under section 254(2) of the Income Tax Act, 1961 based on subsequent Supreme Court decision.

Analysis:
The Appellate Tribunal ITAT Mumbai received a Miscellaneous Application (M.A.) from the Revenue seeking the recall of an order dated 25/05/2022 passed under section 254(1) of the Income Tax Act, 1961. The issue in question was the disallowance on account of alleged delay in payment of P.F. / E.S.I.C. under section 36(1)(va) r/w section 2(24) of the Act. The Revenue argued that a subsequent decision by the Hon'ble Supreme Court in a different case upheld such disallowances, warranting a recall of the Tribunal's order for a fresh hearing on the merits of the case. The Assessee vehemently opposed the recall request.

Upon considering the submissions, the Tribunal noted that its previous decision in favor of the Assessee was based on a precedent that was subsequently overruled by the Hon'ble Supreme Court. Referring to the principle that judicial decisions act retrospectively, the Tribunal acknowledged that a subsequent decision of the Supreme Court, which is binding under Article 141 of the Constitution of India, can be a basis for rectifying an order under section 254(2) of the Act. Citing the importance of maintaining legal consistency and the doctrine of precedent, the Tribunal found merit in the Revenue's application for recall based on the subsequent Supreme Court decision.

In line with the judicial pronouncements and legal principles discussed, the Tribunal allowed the Revenue's Miscellaneous Application, recalling the previous order for a fresh hearing on the appeal's merits. Both parties were granted the opportunity to present their arguments during the new hearing, and the appeal was to be scheduled before the regular Bench after notifying the parties. The decision was pronounced in open court on 13/04/2023.

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