2023 (4) TMI 1385 - AT - Income Tax

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

Asstt. Commissioner of Income Tax Circle-6 (1) (1), Mumbai Versus M/s. Creative Textile Mills Pvt. Ltd.

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, ... M.A. filed seeking recall of the order passed u/s 254(1) - disallowance on account of alleged delay in payment of P.F. / E.S.I.C. u/s 36(1)(va) r/w section 2(24) allowed by ITAT - HELD THAT:- While deciding the aforesaid issue, Tribunal following its earlier decision rendered in Kalpesh Synthetics Pvt. Ltd. [2022 (5) TMI 461 - ITAT MUMBAI] allowed the appeal filed by the assessee. Subsequently, the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] held that payment towards employee’s contribution to P.F. / E.S.I.C. after the due date prescribed under the relevant statute is not allowable as a deduction under section 36(1)(va) of the Act. We find that in ACIT v/s Saurashtra Kutch Stock Exchange [2008 (9) TMI 11 - SUPREME COURT] held that non-consideration of the decision of the Hon'ble Jurisdictional High Court or the Hon'ble Supreme Court can be said to be a “mistake apparent from record” which can be rectified under section 254(2) We find that in Lakshmi Sugar Mills Co. Ltd. [2012 (6) TMI 39 - DELHI HIGH COURT] held that where the Larger Bench of the Hon'ble Supreme Court overrules its earlier decision on which the Tribunal relied on, the said decision of the Tribunal can be rectified u/s 254(2) of the Act since the decision of the Hon'ble Supreme Court operates retrospectively. Therefore, we find merit in the present M.A. filed by the Revenue seeking recall of the Tribunal’s order on the basis of the subsequent decision of the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT] Accordingly, the order passed in assessee’s appeal is recalled for a fresh hearing of the appeal on merits 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.