2023 (5) TMI 1413 - AT - Income Tax

Revenue's rectification application valid when filed within six months of receiving order, not order date under section 254(2)

ACIT (Central) -1 Indore Versus Shri Manish Kedia

ITAT Indore held that Revenue's rectification application filed beyond six months from order date was maintainable. Following Delhi HC's decision in ... Maintainability of rectification application beyond period of limitation - AR submitted that the language of section 254(2) is very clear which provides for filing of M/A within six months from the end of the month in which the order was passed. Since in the present case, the original order disposing of appeal was passed on 31.01.2022, the prescribed limit got expired on 31.07.2022. Hence, the M/A filed by Revenue on 25.08.2022 is barred by limitation - HELD THAT:- Hon’ble Delhi High Court in Pacific Projects Limited [2020 (12) TMI 1085 - DELHI HIGH COURT] has made a detailed analysis of the provision of section 254(2) and categorically held that the time-limit of 6 months would have to be computed with reference to the actual receipt of order by the parties. We are duty bound to follow the judicial discipline and obey the decision of Pacific Projects Limited (supra) which has clearly held that the time-limit has to be computed with reference to the date of receipt of order. No other decision of any High Court against this proposition held by Hon’ble Delhi High Court has been cited before us. Therefore the Revenue’s M/A filed within 6 months with reference to the date of actual receipt of order by Revenue is valid. Consequently, the objection raised by Ld. DR is rejected. Reverting back to the merit of application, it is undisputably agreed by both sides that the tax effect was more than Rs. 50 lakhs. Therefore, the original appeal of Revenue was maintainable and could not have been dismissed by ITAT. Issues:1. Interpretation of section 254(2) of the Income-tax Act, 1961 regarding the time limit for filing a Misc. Application.2. Validity of the Misc. Application filed by the Revenue seeking recall of the Order dated 31.01.2022 of ITAT, Indore Bench in ITA No. 82/Ind/2021 for assessment-year 2018-19.3. Consideration of tax effect in determining the maintainability of the Revenue's appeal.Analysis:1. The main issue in this case revolves around the interpretation of section 254(2) of the Income-tax Act, 1961, which governs the time limit for filing a Misc. Application. The Revenue filed a Misc. Application seeking recall of an order dated 31.01.2022, contending that the tax effect was actually above Rs. 50 lakh, contrary to the earlier dismissal based on low tax effect. The Assessee objected, citing the limitation period of six months from the end of the month in which the order was passed. The Assessee relied on legal precedents, including a decision by the Hon'ble Punjab & Haryana High Court, to argue that the Misc. Application filed by the Revenue on 25.08.2022 was time-barred. However, the Revenue argued for a practical and logical interpretation of the provision, emphasizing the importance of actual receipt of the order by the party concerned.2. The validity of the Misc. Application filed by the Revenue was a crucial aspect of the judgment. The Assessee contended that the application was time-barred, as it was filed beyond the prescribed limit under section 254(2). The Assessee relied on legal precedents to support this argument. On the other hand, the Revenue argued that the time limit should be computed with reference to the actual receipt of the order by the parties, as held in a decision by the Hon'ble Delhi High Court. The Tribunal, after considering the arguments and legal precedents, concluded that the Misc. Application filed by the Revenue on 25.08.2022, within six months of the actual receipt of the order, was valid. Consequently, the objection raised by the Assessee was rejected, and the Tribunal proceeded to consider the merits of the application.3. The consideration of tax effect played a significant role in determining the maintainability of the Revenue's appeal. Both parties agreed that the tax effect was more than Rs. 50 lakhs, making the original appeal of the Revenue maintainable. As a result, the Tribunal admitted the Misc. Application, recalling the impugned order dated 31.01.2022 passed by the ITAT, Indore. The registry was directed to list the original appeal for hearing after providing due notices to the parties. Ultimately, the Misc. Application was allowed, leading to the reconsideration of the Revenue's appeal based on the revised tax effect assessment.