2025 (10) TMI 1331 - AT - Income Tax

Rectification plea dismissed as time-barred u/s 254(2); application filed beyond six-month limitation period from date of order

The ITAT Mumbai dismissed the assessee's miscellaneous application as barred by limitation under section 254(2) of the Income-tax Act. The Tribunal held ... Validity of rectification of mistake - period of limitation - HELD THAT:- As per the provisions of section 254(2) of the Act, the Tribunal can rectify any apparent mistake within six months from the end of the month in which the order was passed. We find that as per section 254(2) of the Act, the Tribunal can rectify the mistake only within six months from the end of the month in which the order was passed. The miscellaneous application itself has been filed on 09/04/2025, i.e. beyond six months from the end of the month in which the order was passed, as the order of the Tribunal has been passed on 13/08/2024. Accordingly, we find that the miscellaneous application filed by the assessee has to fail as unadmitted. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the miscellaneous application for rectification/recall of the appellate order was barred by limitation under section 254(2) of the Income-tax Act. 1.2 Whether the contentions raised by the applicant disclosed a 'mistake apparent from the record' rectifiable under section 254(2), or amounted in substance to a request for review of the earlier appellate order. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Limitation under section 254(2) for filing miscellaneous application Legal framework 2.1 The Tribunal noted that under section 254(2) of the Act, it may rectify any mistake apparent from the record 'at any time within six months from the end of the month in which the order was passed'. Interpretation and reasoning 2.2 The appellate order sought to be rectified/recall was passed on 13/08/2024. 2.3 The miscellaneous application was filed on 09/04/2025. 2.4 The Tribunal held that the statutory six-month period under section 254(2) is to be computed 'from the end of the month' in which the order was passed and that the application filed on 09/04/2025 was beyond this prescribed period. 2.5 The Tribunal recorded that the assessee had not produced any judicial precedent or ruling supporting a power in the Tribunal to condone delay in filing an application under section 254(2). 2.6 The Tribunal referred to and followed the decision of the jurisdictional High Court in Leena Power Tech Engineers (P.) Ltd. v. Deputy Commissioner of Income-tax, wherein it was held that the Tribunal has no power to condone delay in entertaining an application under section 254(2), and that once the period prescribed has expired, questions of 'sufficient cause' become irrelevant. The High Court had in turn approved the view taken in earlier decisions including Ram Baburao Salve and the Karnataka High Court decision in Karuturi Global Ltd. v. Dy. CIT. Conclusions 2.7 The miscellaneous application was held to be barred by limitation under section 254(2) and, therefore, not maintainable. 2.8 On this ground alone, the application was dismissed as unadmitted. Issue 2: Nature of the relief sought - rectification of 'mistake apparent' versus impermissible review Interpretation and reasoning 2.9 Notwithstanding the finding on limitation, the Tribunal proceeded to observe 'even, on merits' that the applicant was in substance seeking a review of the earlier order, which is not permissible under section 254(2). 2.10 The Tribunal reproduced its earlier findings on the merits of the appeal, including: (a) The Assessing Officer had conducted a 'thorough inquiry', issuing notices (including under section 133(6)) and utilizing the Verification Unit. (b) Identity of the parties to the transactions was not conclusively established despite documentary evidence produced by the assessee. (c) The Departmental Representative had highlighted issues such as creditworthiness of the parties, non-filing of income-tax returns by several parties, non-declaration of business income, and failure of identification in verification, and had contended that mere inclusion of transactions in GST returns did not establish identity. (d) The Assessing Officer's verification revealed discrepancies, ambiguity about the nature of business of the parties, and that 9 out of 28 parties had not filed ITRs. (e) The first appellate authority treated the purchases as bogus and, following the jurisdictional High Court judgment in PCIT v. Ashwin P Bajaj, restricted the disallowance to 12.5% of the alleged bogus purchases, which the Tribunal had 'found no infirmity in'. (f) The Tribunal had already considered the High Court decision in Ashok Kumar Rungta and distinguished it on the footing that in that case the Assessing Officer's inquiries were insufficient, whereas in the present case a comprehensive investigation had been conducted and adequate opportunities were afforded to the assessee. 2.11 The Tribunal noted that the miscellaneous application essentially challenged the correctness of these factual and legal conclusions, invoked further case law, and contended that certain materials and authorities had not been properly appreciated. The Tribunal treated these contentions as an attempt to re-argue the appeal and to secure a different conclusion on the same material, i.e., a review of the earlier decision rather than rectification of a patent error. Conclusions 2.12 The Tribunal held that the issues raised by the assessee did not disclose any 'mistake apparent from the record' within the meaning of section 254(2) but constituted a request for review of the earlier decision, which is beyond the Tribunal's powers under that provision. 2.13 Even on merits, therefore, the miscellaneous application was held to be not sustainable as it sought an impermissible review rather than rectification of an apparent error. Overall conclusion 2.14 The miscellaneous application was dismissed as barred by limitation under section 254(2), and, in any event, as an impermissible attempt to review the earlier appellate order rather than to rectify a mistake apparent from the record.